November 19, 2020

5 Ways Freight Systems Reduce Operating Expenditures & Total Costs

Miles Varghese
Miles Varghese
Helping independent freight forwarders/brokers better stay in-sync, collaborate, and improve operations with their shippers/clients. Co-founder & CEO @ Cargologik.com

Digital transformation continues in the supply chain, powered by a host of logistics startups and new technologies. It’s all in the goal of savings and improved processes. As reported by McKinsey & Company, “Companies have made significant improvements to manufacturing, service and maintenance operations through lean techniques: eliminating waste, inflexibility, and variability in their systems and reducing costs by up to 50% in the process. Yet few apply the same lean techniques in warehouse operations or transportation, even though they can have a dramatic effect. These operations represent 95% of the pharma logistics costs and, in our experience, companies can save 20-50% in warehousing and up to 40% in transportation.” As a result, supply chain companies and freight forwarders need to know the top five ways freight systems can lower operating expenditures. 

1. Freight Systems Generate FTE Savings

Reducing the amount of time back-office workers require in freight management is a leading benefit of implementing advanced freight systems. By leveraging these technologies, workers can be more productive, identify opportunities for improvement, and streamline all operations.

2. Collaborative Resources Reduce Delays

Improvements in freight management through collaborative resources effectively reduces delays in transportation management. For freight forwarders, that includes finding available carriers and sharing documentation as quickly as possible. Therefore, customers realize the benefits of faster delivery.

3. Faster Fulfillment and Transportation Result in Higher Customer Service Levels

Quick fulfillment and rapid transportation management eventually lead to higher customer service levels. That is the result of customers getting a product or item on time or ahead of time. Remember that those are critical factors in staying competitive with Amazon.

4. Streamlined Back-Office Management Shortens the Payment Clock

Improvements within the back-office management functions also help to shorten the payment clock. Since freight forwarders are a true third-party in the logistics space, progress within the back office is essential to ensuring carriers get paid on time. And that translates into a timely payment to the freight forwarder. Additionally, faster payment to partnering trading companies will open the doors to additional discounts, such as a freight forwarder-of-choice or carrier-of-choice designation for such parties.

5. Digital Resources Measure Business Performance

Deployed freight systems and digital resources also include the application of advanced analytics. In the modern supply chain, leveraging the full suite of analytics, including descriptive, diagnostic, predictive, and prescriptive analytics, is essential to success. These analytics track the entire shipment lifecycle from the cradle to the grave and help provide an understanding and pathway forward for logistics companies. As a result, they are better able to preempt disruptions and navigate uncertainty within the market. That translates into reduced operating expenditures and savings that can be used in other parts of the business, such as employee benefits to improve retention rates or new facilities to expand.

Leverage the Right Freight Systems With the Right Partner

Successful logistics management depends on the company’s ability to leverage the right freight systems. As digital transformation has given shippers a way to eliminate the middleman from the equation virtually, freight forwarders’ value will remain absolute going into 2021. With that in mind, it is essential to realize that freight systems can and do reduce operating expenditures and total costs in these five core ways. What are you waiting for? Sign up for Cargologik online to unlock the value of freight systems in your supply chain today.

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