Track your performance [Chapter 6]
A chapter in our freight procurement best practices series, track the right performance metrics
The volume of spot-buy freight is often underestimated. We have seen customer overshoot their estimates by 400% after they started actually tracking it. Most expect spot-buy freight to be low in volume compared to the fixed-rate shipments. Therefore it is often forgotten or overlooked, especially as most companies do not capture it in their standard freight spend reporting.
Taking a look at your spot-buy quote performance data on a regular basis can be very enlightening and useful in various ways. A question that every shipper should ask is, “How much do I spend on spot-buy freight?”. There are still only a few managers we have come across that can give that answer without having to ask someone that then spends days to digging through scattered data. Even nowadays many shippers do not know the answer to that question and it is always more than they think or want to believe. A common answer we often hear is, that they don’t have any, which means they do not know.
Especially in times of recessions, drops in demand and cost-cutting, companies start looking at spot-buy freight again. However they should do so on a regular basis if they want to have the controls to actually influence it.
An automated process will often capture and allow shippers to extract data that gives them a great insight into their spot-buy freight performance. If a shipper manages to capture all the required data it will be able to answer the below questions:
- How much do we spend on Spot-Buy Freight?
- How much do we spend per business unit or location?
- How much do we spend per project or program?
- Which providers do we spend most Spot-Buy Freight on?
- How many quotations do we get per request?
- What is the cost avoidance?
- What is the opportunity cost?
- What are the reasons for spot-buy freight?
- What is often the reason for selecting a quote?
The above data is only accessible if a shipper automates the entire shipment lifecycle, which includes the quoting, booking, tracking as well as invoice submission of the logistics service. The latter is very important to close that last part of the transaction and also ensure logistics services providers follow through with tracking and proof of delivery information.