Transportation cost control has been under intense pressure in recent years. Upward pricing drivers have included lengthening supply chains due to globalization, customers demanding faster and more frequent deliveries, carrier capacity challenges, stricter accessorial enforcement by carriers, and fuel surcharge gyrations.
Why Strategic Freight Procurement is a New Focus?
Rising freight costs are clearly the top pressure driving companies’ renewed focus on transportation procurement and payment. Companies realize they need to institute better spending control to ensure their purchasing volume leverage is being maximized and that shipments consistently follow corporate rules on using low-cost/best value carriers or service options.
However, cost is not the only factor on procurement and logistics professionals’ minds. Growing recognition of the critical role transportation flexibility and reliability play in overall supply chain performance is causing companies to re-examine their spend management processes. Increasing supply chain complexity caused by more manufacturing outsourcing and globalization is also making many companies’ traditional transportation procurement practices outdated.
The Challenges faced by the Shipper/LSP traditional process:
The Traditional process is manual and mainly done using Excel. SAP Strategic Freight helps to reduce high volume data and optimizing the procurement process.
What is SAP TM Strategic Freight Procurement?
SAP software for freight procurement helps you set expectations for upcoming transportation expenditures according to individual business units which varies depending on the shipping locations and trade lanes.
Also because your relationships with partners such as carriers change as your supply chain evolves, you may want to renegotiate existing contracts to include new business while changing the way you allocate shipment volumes among your LSPs/ carriers.
SAP software (from SAP TM 9.1) supports your entire strategic freight procurement operations by:
* Simplify contract negotiation processes.
* Preparing bids, proposals, and responses, and award and manage contracts/ long term Agreements.
* Efficiently managing contract negotiations by evaluating freight procurement expenditures – for example, annually or semi-annually.
* Can be employed with the strategic freight management function by itself or in conjunction with integrated logistics processes.
* SFP is a cycle of mutually work between shipper/ LSP and carrier.
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Hoe to use this is well explained here