As Freight Procurement Becomes A Priority, How Will Things Shake Up?

As Freight Procurement Becomes A Priority, How Will Things Shake Up?

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2021 was quite an interesting year for manufacturers, retailers, and distributors, leaving many c-suite executives turning over every stone across the company to figure out how to reduce-- or even maintain-- COGS. It's funny to think that something as critical as freight procurement might have flown under the radar until now. Why? Truckload costs hit all-time highs, blowing transportation budgets out of the water. And The Wall Street Journal says shipping and logistics costs are expected to keep rising in 2022. The c-suite has finally taken notice that freight procurement and transportation efforts can impact COGS. This is both good and bad. It’s good because freight procurement will now become a company priority and receive the love and attention it demands. But it can also mean trouble for folks who are reluctant to change. As key decision-makers look to optimize operations, the following concepts might impact transportation and freight procurement teams.  

Replacing Static Processes with Automated Ones 

The supply chain crisis and truck driver shortage resulted in record primary tender rejections, which in turn translated into an incredibly competitive-- and costly-- secondary market. Transportation teams who still rely on the decade's old, static freight procurement waterfall process will continue to have a difficult time managing volatile freight markets-- which experts believe isn't changing any time soon. These teams will begin to feel pressure from above to shift manual processes to automated ones. For example, new automation technology helps shippers dynamically source asset-based, compliant FTL carriers when additional freight capacity is needed. With new options and tools, shippers can choose to avoid the costly broker and spot market, mitigating increased truckload cost, obtaining complete data transparency, and improving key metrics such as OTD and OTIF. 

Getting Comfy with Artificial Intelligence (AI) 

In 2021 AI shifted from a cool buzzword to a reality for many innovative companies looking to become resilient. And more adoption is anticipated in the coming years. In fact, the percentage of logistics companies that use AI is expected to jump from 12% currently to 60% in six years. And as 2022 unfolds, and the c-suite becomes more familiar with the benefits of AI, freight procurement teams will be asked to uncover how AI can improve upon their efforts. Innovative shippers have already begun to leverage machine learning, smart business rules, predictive algorithms, and a system of measures to gauge the likelihood of a specific driver’s interest in hauling a particular load. What they’ve learned is that when there is driver interest, it results in lower truckload costs and stronger service levels (OTD).