Creating and unlocking value in an organization starts with knowing precisely where things stand, and where the opportunities for improvement lie. This analysis focuses on the impact Electronic Freight Tendering has on Logistics Service Providers.
Commercial freight transportation is a very complex process. There is intense competition to provide lower charges as well as best in class customer service. This in turn increases pressure to improve execution of transportation orders. Electronic tendering proves to be a significant tool at the hands of transporters to reduce costs and improve customer service at the same time. Electronic tendering is fast, efficient and certain vs dialing for diesels.
Electronic tendering is in wide use today, however, many companies are still not leveraging its advantages. (based on participant data in Fig2).
Utilizing electronic tendering to communicate and confirm execution with carriers results in multiple benefits (Fig3). The data collected during tendering forms the basis for facilitating an annual spend re-bid exercise on a solid foundation.
Carrier charges vary with market dynamics of supply and demand. Electronic tendering
enables competition between carriers on prices and services and arbitrage against contract prices.
Charge Management cost is reduced by doing away with complex calculation of freight charges Abased on contract conditions, carrier approval of charges and audit costs. Post electronic Atendering, the freight charges are managed as per full and final consensually agreed rates and Aconditions for the order.
This also has a mobility component, especially for small and medium carriers who often are Adoing business in the field / driving the vehicle. Mobile tendering is an appropriate way to reach Aout to decision-makers in this competitive category of carriers.
KEY TAKEAWAY:
This analysis investigated the correlation between Transportation KPIs and electronic freight tendering. Performance data indicates that electronic tendering directly and significantly impacts transportation costs and customer service. There can be enormous improvement in areas such as annual spend re-bid, continuous move discount shipments, and reduce the effort for FTEs performing execution, visibility and charge management tasks.
This SAP Transport Tendering Mobile App - YouTube provides a quick overview of the mobile tendering functionality.
Note1: Electronic tendering is the process of optimally selecting a carrier for a shipment using internet based applications on computer/ mobile devices. There could be multiple tender types:
(1) Peer to peer – sequential tendering to preselected carriers
(2) Broadcast – simultaneous tendering to preselected carriers
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