Use Transporeon to connect freight procurement and audit

Setting the stage for Integrated Transportation Management

Integrated Transportation Management (ITM) has emerged as a crucial aspect for organisations seeking to gain a competitive edge. Savvy managers now leverage state-of-the-art technology as a unique opportunity in their ITM initiatives to establish innovative transportation service arrangements and ensure they stay ahead of their rivals. 

Integrated Transportation Management explained 

Integrated Transportation Management empowers companies to gain precise visibility into their transportation execution across different modes and categories. This helps them to understand where hidden costs lie and to subsequently identify the appropriate measurements and interventions to better control costs, as well as enhance customer service.  

This kind of visibility and control over costs enables them to adapt swiftly to marketplace changes that drive demand fluctuations and supply chain disruptions. 

Companies that adopt ITM achieve significant savings in two primary ways:  

• Firstly by improving overall network performance, leading to a reduction of more than 15% in freight expenses;  

• Secondly by aggregating and eliminating unnecessary freight movements, resulting in a transportation cost reduction of 10-15%.  

When executed effectively, ITM unlocks savings that can be reinvested in growth initiatives, improved customer service, and risk mitigation. Mastering ITM provides a distinct competitive advantage in industries where logistics efficiency is paramount. 

Three components driving your ITM control 

To deploy end-to-end control on transportation performance, companies typically deploy and integrated three types of systems: 

Money and operations as your key drivers 

The logical starting point for implementing ITM is, as always, a financial one. This means strategic procurement, getting the right tariffs for the right services, and then paying the right invoice amount charged. 

Simple, isn’t it? But how can you keep both procurement and invoicing in sync? 

• How do you validate that your logistics partners have actually carried out their services against agreed planning? 

• What makes you so sure they delivered according to agreed SLA and contract during the execution of your delivery? 

Freight Audit and Pay services are traditionally the finance department’s responsibility. They focus on matching invoices to static transactional data in the ERP system and have no view on the actual accuracy of the delivered service. It’s just a match against a price and a product code. 

Research shows that companies miss out on huge savings and improvement potential as a result. Many components of transportation costs stay hidden in the supply chain, outside of the control of the finance department and remain untouched this way. By limiting Freight Audit and Pay to the finance team, companies can only deploy static ERP-level checks whereas the underlying process is highly dynamic and happening in the logistics operations. 

This is where we make our claim to start integrating Transport Operations Solutions at both the start and end of your transportation process. 

Research by Accenture reveals that transportation represents a significant portion of material costs for product-based industries, ranging from $30million to $60million for every $1billion spent. 

Integrating Freight Procurement and Auditing with Transport Operations equates to substantial benefits for large companies, including: 

• a potential reduction of up to 15% in freight expenses through improved network performance; 

• an additional 10-15% reduction in transportation costs can be achieved by consolidating and eliminating freight movements;

• improvements like significant savings and improved network distribution expenditure can translate into a 5-10% increase in operating income. 

How to set up Transport Operations 

To set up Transport Operations effectively, it is crucial to establish connections between the procurement and finance departments within your organisation. Additionally, you must integrate process levels as well as your subcontractors in the agreement to create a strong foundation. 

Once connected, the finance and procurement departments must deploy a Transport Operations System that facilitates planning, execution, and operational and financial reporting of supply chain services necessary for order fulfillment. 

Transporeon offers a seamless solution that connects these systems natively into an end-to-end platform environment. 

Connect to your service providers, contracts, and SLAs 

Incorporating external service providers into the process is vital for effective ITM. Integrating service performance into your processes ensures accurate procurement, execution, and Freight Auditing. It is crucial to align the agreed pricing and service level agreements (SLAs) with these service providers and manage them dynamically in your operations. 

With 155,000 carriers already connected, Transporeon offers you extensive possibilities to design your ideal network. 

How to take action with Transporeon 

This blog has provided an overview of how a seemingly simple process like Freight Procurement and Auditing becomes a powerful business tool when incorporated in a dynamic Transportation Platform.

Get in touch with one of our dedicated specialists to start your journey towards Integrated Transportation Management.