In our previous article “How Index Based Buying is changing Logistics Procurement” we introduced the possibilities coming with a more widespread use of benchmarking data in procurement. We also talked about the limitations that benchmarking has today and about the new procurement intelligence already being used in current procurement strategies. To provide an insight into the actual practice of benchmarking for freight rates we asked the procurement manager of an internationally operating company of the automotive sector with 400 locations worldwide. They already use benchmarking data for their freight rates and told us which new strategies they might have adapted already for their tenders.
Some questions on the practical usage of benchmarking for freight rates:
How did benchmarking change your eProcurement strategy?
The strategy did not change significantly. Only the identification of fields of action has improved, which means to identify freight rates that are considerably different from the given index and therefore create an incentive to act.
Is the global volume still tendered all at once?
How do you utilise benchmarking data for freight rates in price negotiations with shipping companies?
We use the data to identify trades which we might have to renegotiate. Apart from that we use the benchmarking data to obtain target prices for low-volume routes with a modest availability of comparative bids in tenders.
How will benchmarking affect the transparency in this market?
It is going to affect the transparency in a positive way for sure.
How do you see the use of benchmarking spread in the procurement sector in the future?Benchmarking has always been important, but will become more and more widespread in the future due to the technological possibilities and fast availability of the data.
Excerpt form an interview with the procurement manager of an internationally operating company of the automotive sector with 400 locations worldwide.
SHIPSTA powers smart logistics procurement with a digital platform that connects shippers and carriers to ensure a frictionless procurement process for spot and contract buying, entirely online. It automates complex tasks, provides unrivalled visibility and supports fast data-driven decision-making. Designed and built by experts in logistics procurement, it is bringing transparency, automation and efficiency to the global logistics industry. It is used by some of the world’s largest companies to respond to market volatility, control freight costs and manage risk. The company was founded in 2015 and is based in Mertert, Luxembourg and Hamburg, Germany.