Transportation procurement is the process of sourcing and acquiring the best transportation services to move your products between locations (for example, from your warehouses to retailers).
From choosing the mode of transport to picking the right carriers, businesses need to analyze complex, real-time data to ensure they’re making cost effective, reliable decisions that keep their supply chain running smoothly.
Transportation procurement is essential to keep supply chains running efficiently and effectively. Selecting the right transportation methods ensures your goods arrive safely, reliably, and on time, avoiding delays or disruptions that affect business continuity.
Strategic transportation sourcing enables you to select the right carriers based on these and other factors that matter to your business, like cost and sustainability. By optimizing your transportation procurement using a powerful sourcing solution (like Keelvar), you can find ways to reduce costs and simplify workflows, saving time and money for your business.
So how do you go about finding the right suppliers and getting the best deals? There are a few different transportation procurement methods you can use.
Some of the most popular types of transportation procurement include:
Ensure a competitive bidding process for your transportation procurement with Keelvar
The type of transportation procurement method you use will depend on your specific business needs, circumstances, and market conditions. For example:
Transportation is a delicate ecosystem that’s affected by a range of factors, from fuel prices to labor shortages to inclement weather. Here are some common challenges in transportation procurement—and how to address them.
Transportation procurement is impacted by shifting market conditions, like the cost of fuel and increased demand during peak times (such as Black Friday and holiday season). As a result, prices can fluctuate, making it hard to know when it’s the right time to source transportation. Lock something in too early and you risk missing out on better prices; wait too long and you risk missing out entirely, as demand exceeds supply due to capacity constraints.
Long-term strategic contracts with trusted, reliable suppliers can help to mitigate this. By negotiating rates and agreements in advance, you can stay one step ahead and ensure your business has the transportation resources it needs while staying competitive.
Pro tip: Enrich your transportation sourcing with real-time benchmarking data and market intelligence. Bring valuable insights about ocean and road freight rates right into your sourcing platform to make more informed, strategic decisions that let you increase competition, enhance negotiations, and reduce costs.
Keelvar integrates with industry-leading benchmarking tools like Xeneta, FreightWaves SONAR, and DAT to give you real-time insights that fuel strategic decision-making
If the last few years have taught us anything, it’s that disruption can and will happen. From global pandemics to big boats getting stuck in canals, your procurement team needs to be able to combine proactive and reactive approaches to stay prepared for any scenario.
Staying on top of market conditions and trends is a big help here, enabling your team to take thoughtful action based on real-world circumstances. For the things you truly can’t anticipate (or control), you may need to rely on short-term or tactical sourcing to avoid further disruption.
Pro tip: If your procurement team is constantly in reactive firefighting mode, they won’t have time for the kind of big-picture strategic sourcing that helps them respond to, and mitigate, risk. To free up more time for impactful work, use autonomous sourcing to automate 100% of repetitive sourcing tasks, winning back hours to focus on high-priority work.
With transportation procurement, there are often so many factors and line items and data points (oh my!) that analyzing it all is beyond what any human can do.
Sourcing optimization software lets you evaluate even the largest data sets and run complex scenario analysis. Factor in price and non-price information (like reliability and sustainability) to prioritize long-term value, make award decisions that align with your business goals and values, and empower your team with in-depth insights that improve decision-making.
Keelvar’s AI-powered scenario analysis handles even the largest data sets with ease, so you can mitigate risk and make informed decisions
Building strong relationships with transport service providers can give you an advantage, unlocking cost savings and ensuring you’re first in line even when capacity is limited. But to create this kind of partnership, you need trust, transparency, and clear communication.
If you’re still using siloed emails and manually updated spreadsheets to run your procurement, it’s almost impossible to stay on top of supplier relationships. But when you bring all of your procurement activities and vendors into one central platform, you can manage everything from one place. This lets you effortlessly keep suppliers in the loop about the status of their bid, provide feedback, and streamline communication for greater visibility and collaboration.
Traffic light feedback shows suppliers where their bids currently rank, providing up-to-date information on their performance
Now that you know the challenges and how to handle them, let’s take a look at some best practices that can help you maximize your transportation procurement process and strategy.
Before you even start talking to suppliers, clearly outline your requirements. This can include things like preferred transportation type, budget, locations coverage needed, and anything else that will affect how you award the contract. (For example, if your company has set ESG goals, you can prioritize sustainable sourcing as part of your requirements.) Then, use this information to evaluate bids and proposals and find the supplier who ticks the right boxes.
Use historical data from your procurement software and real-time market intelligence from benchmarking tools to make data-driven decisions based on previous performance and current conditions.
Whether you use direct procurement, reverse auctions, or a tender process, create a competitive process to get the best results for your business. Using a combination of autonomous sourcing and sourcing optimization helps you to drive cost savings in every sourcing event, from large-scale strategic transportation procurement to automated workflows managed entirely by sourcing bots.
Keelvar’s Autonomous Sourcing can handle up to 100% of the tender process without sacrificing cost savings
A transport management system (TMS) is a tool that optimizes the logistics of your transportation, such as by finding the most efficient route and tracking shipments. Implementing a TMS gives you an additional layer of data about your transportation that you can use to continuously improve your transportation procurement.
Using the right transportation procurement software lets you turn one of the most time-consuming types of sourcing into a strategic advantage for your organization.
With an all-in-one sourcing solution, you can:
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