Transportation Industry Research Report Shows Optimization of Sourcing Is Top Priority for Chief Supply Chain Officers
Multi-Round, Expressive, and Incremental Bidding Are Top Strategic Sourcing Processes sought for Cost Reduction amidst Complexity and Globalization
PITTSBURGH, Aug. 8, 2013 /PRNewswire/ -- Findings from the recently released Aberdeen Group report titled "Chief Supply Chain Officer Priorities under Globalization: Cross-Border Transportation Strategies" illustrate the market demand for and benefits achieved from transportation spend management and optimization solutions, such as those offered by CombineNet, the leading provider of best-in-class sourcing technology for global supply chains. The new Aberdeen benchmark report reveals that optimizing transportation spend is a critical strategy for enterprises – aimed at reducing costs, improving operational performance and guiding transportation realignments in the context of increasingly complex and multi-tiered global supply-chain networks.
Forty-eight percent of companies identified optimization of sourcing and carrier awards as a strategy for improving transportation – the most cited strategy. However 70 percent noted room for improvement, indicating that their current processes are not fully adequate for addressing the complexities of globalization.
CombineNet, through its advanced e-sourcing product CombineNet ASAP®, meets the needs of complex supply chains by allowing transportation teams to easily conduct and analyze larger-scale transportation events, often involving cross-border aggregation of many thousands of lanes, hundreds of invited carriers and totaling sometimes hundreds of thousands of individual bid points. CombineNet's Expressive Bidding® approach ensures closer and more creative collaboration with carriers, which helps to secure capacity before award decisions are made, and its Analytics and Optimization features allow for rapid creation and analysis of "what-if" scenarios to evaluate sourcing and contract allocation options with business stakeholders.
Citing survey results gathered from 163 global companies, the Aberdeen report identified three categories of businesses based on their transportation sourcing maturity and achievement of result: Best-in-Class, Industry Average and Laggard. Best-in-Class companies were identified as the top 20 percent in terms of key performance indicators of transportation cost and service levels. Aberdeen Group uncovered the following about Best-in-Class enterprises:
- They delivered a 3.4 percent reduction in baseline transportation cost versus last year, as compared to an 8 percent increase in cost for Laggards.
- Several have uncovered cost savings in excess of 30 percent -- directly related to cross-region optimization initiatives and while maintaining or improving carrier service levels.
- They are 1.2 to 1.9 times as likely as the other categories to optimize the collaborative bid and selection process – through capabilities like Expressive Bidding, strategic carrier allocation, electronically assisted bid processes or a combination of these.
- 75 percent collaborate and examine bundled and unbundled costs, and are 50 percent more likely to practice multi-round bidding – which allows them to secure best overall rates and to analyze the potential savings of bundling several low volume lanes.
- 74 percent track actual costs and accessorials, as compared to 38 percent of Laggards.
- 56 percent pursue strategic bid allocation based on business performance of carriers, indicating that the Best-in-Class use data for more strategic allocation of awards.
- They optimize for increasing complexity:
- They are 2.3 times as likely to optimize and support multi-legged, multi-mode and multi-period transportation plans.
- 62 percent practice incremental bidding as requirements change between bid contracts, a practice made significantly more manageable by advanced e-sourcing technology.
- 56 percent have an organization design/ structure that allows carriers to suggest alternate routing – versus only 38 percent for Laggards.
- They are 3.2 times as likely to automate optimization tools to effect near real-time control.
"All of these Best-in-Class practices we've highlighted from this revealing Aberdeen Group report are areas where CombineNet's solution offers robust capability and supporting services expertise," said Rich Wilson, Chief Executive Officer of CombineNet. "Companies with complex, globalized supply chains are finding that by automating transportation contract procurement, consolidating spend, optimizing mode shifts, and gaining complete spend visibility, they spur change. Their carriers respond with more innovative, expressive bids that often raise service levels while reducing costs."
"As the global marketplace continues to expand, supply chains become more complex and will require systemic transformation," said Bob Heaney, Senior Research Analyst, Supply Chain Management, Aberdeen Group and author of the report. "Best-in-Class companies are taking the lead, pursuing more control and visibility into freight cost that allows them a 'call to action' toward increased use of collaborative, highly interactive tools and solutions that will connect their transport and logistics activities."
To access the Aberdeen report, and an exclusive video in which Mr. Heaney dives deeper into the challenges of effective transportation sourcing and procurement, and reviews the strategies being implemented by organizations that Aberdeen considers Best-in-Class, please visit: http://www.combinenet.com/lp/aberdeen-report-and-wp.php
CombineNet, Inc. offers supply chain-driven companies proven solutions to advance the capabilities and outcomes of their strategic sourcing efforts. Powered by the award-winning, SaaS-based CombineNet ASAP® advanced e-sourcing platform, procurement teams can more easily tackle larger and complex spend categories, increase their spend under management, and optimize supplier award decisions for their business. CombineNet also offers best-of-breed SaaS products in Spend Analytics and Contract Management, as well as expert e-sourcing services to drive next-generation results for its global clientele, which includes: Procter & Gamble, A.P. Moller-Maersk, Coca-Cola, PepsiCo, Johnson & Johnson, Sears, Wendy's QSCC, Bayer, Hershey's, and more. www.combinenet.com
SOURCE CombineNet, Inc.
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