© GT Nexus, Inc.

How to Optimize and Manage the Integrated Lifecycle of Freight Rates and Service on a Collaborative Platform

Reduce Transportation Spend

A STRATEGIC IMPERATIVE FOR MANUFACTURERS

Allocating transportation spend in a global supply chain requires manufacturers to partner with multiple carriers and logistics providers. Managing these transportation contracts throughout their lifecycle requires dealing with large amounts of data in many formats.

Transportation needs change so frequently when sourcing is done across continents that a manufacturer cannot achieve the lowest possible spend — while maintaining customer service — without

an automated system. They must have a way to manage the lifecycle of freight rates and service, from the bid process to the fi ne-tuning of allocation plans, in order to avoid additional one-time costs.

Impact of Poor Transportation Spend Management

When manufacturers don’t have the tools to manage the cycle of transportation contracts, the whole process becomes less effi cient. Expenses that could be eliminated by automa-tion end up cutting into the operating margin and adding to the cost of goods sold. When their systems aren’t in the cloud, companies must deal with:

Rates that are not automated

Diffi culty deciding which carriers, rates, and service levels to use

Lack of standardization in use of programs like Excel

Shipments at a more expensive rate than intended

Overspending on additional one-time transportation costs

No analysis of breakdown of charges (duties, broker fees, lane utilization issues)

The Root of the ProblemThe core cause of poorly managed transportation spend lies in manual processes and too much non-standardized informa-tion. This hinders optimal spending and complicates decision making.

1. Incredibly complicated transportation strategy

Global transportation planning involves thousands of lanes in many regions, over varied modes, and all within the con-straints of different units of measurement, currencies, and terms. Because of this, manufacturers must deal with:

Non-normalized information

Huge administrative burden

Diffi culty in “closing the loop”

2. Decentralized operations

Large manufacturers often are comprised of various and competing business units, sometimes grown through acqui-sition, and usually lacking centralized control. This leads to:

Wasted money from different spending strategies in each division

3. Extremely dynamic environment

So many players and factors in organizing transportation make it diffi cult to predict outcomes. This high level of change and volatility means manufacturers get:

Unpredictable spend over time

© GT Nexus, Inc.

On average, companies spend 5-10% of revenues on logistics-related expenses. Savings are needed, but are sometimes diffi cult to fi nd.

The Challenge

As demand shifts and fl uctuates, manufacturers should be able to quickly allocate and reroute goods according to the latest customer needs.

2

Plant

Plant

NetworkConnectivity

Agility

Customers

Customer

DC / Warehouse

Plan

Actual At-Risk DelayDynamic ETA

B

A

Sense more accurately

Operate more efficiently

Respond faster

Make better decisions

3

The SolutionCompanies that want to successfully manage a closed-loop transportation process across a global supply chain need more than a traditional ERP system to capture and analyze data on rates, carriers, and other partners involved in contracting trans-portation. They need a system that manages transportation spend in the cloud, from creating the bid through compliance and auditing.

In the cloud, bids are run based on data that’s standardized across currencies and rates. Carriers are easily and accurately compared and contracts are awarded based on what-if analysis of different allocation scenarios. Later, managers can compare spend to the original plan and adjust allocation accordingly.

Optimize and manage the integrated lifecycle of freight rates and service on a cloud-based platform.

Use a collaborative, data-driven RFP and allocation engine

Store data on rates centrally for all freight agreements

Close the loop on an integrated freight audit & payment platform

Measure compliance with a series of performance analytics

How to use it for transportation spend management:

1. Automate the buying process and evaluate alternatives

2. Manage complicated contracts over time in a systematic way

3. Audit invoices to avoid over-payment

Value PropositionsThe value of managing transpor-tation spend on a cloud platform is huge. Costly manual pro-cesses are eliminated and better decisions can be made. Benefi ts include:

1. Save at least 3-8% on annual freight spend

Gain optimal service at minimal cost

Consider real-world business rules

2. Save 12-15% on overall freight spend by reducing unplanned buys

3. Streamline bid process and contract management (lowers SG&A)

Access structured bid/response fl ow and automated analysis reports

4. Synchronize segmentation strategies with transport plans

5. Learn from carrier scorecard data to drive improvement

Transportation Spend Management and the Networked CompanyTo optimize transportation spend, companies must transform themselves from silo-based, inward-facing corporate operators to interconnected, highly agile business network orchestrators.

Managing transportation spend shouldn’t be about scrambling to catch and record informa-tion; managers need to focus on decision-making based on quality data in the cloud.

Cloud technology captures service contract data in a central location, letting manufacturers award and adjust contracts throughout the cycle.

Tune

Compliance/Audit

Carrier Response

Award Contracts

Counter/Negotiate

Carrier Routing Guide

Rates, Service Details,Carrier Awards, Amendments

Bid Analysis/Optimization

Service Contracts

Create/Submit Bid

Carrier Awards, Amendments