Hitting the Mark: How to Benchmark Supply Chain and Logistics Costs to Maximize Profits

Supply chain and logistics costs are rising every day. Freight capacity crunches and high transportation rates—especially among trucking companies—are driving up costs at every stage of the supply chain, leaving some companies wringing their hands as they watch their profit margins shrink. But not all.

These issues are affecting everyone—best-in-class firms know this, because they’re benchmarking their rates to ensure they’re not leaving opportunities on the table.

For companies that don’t regularly benchmark their end-to-end supply chain and logistics spending, it’s impossible to know where the bar is set industry-wide. As a result, it can feel like rising costs are as inevitable as death and taxes. Sometimes they are. But without a clear picture of what competitors are paying, companies with high freight spend leave themselves open to needless overspending and unrealistic target setting.

Competitive benchmarking is crucial, but it can be tough to start, and tougher still to use to its full advantage. We can spot, execute, and measure improvements—and put money back in the bottom line by following some best practices.

Do the research: gathering private data takes time and patience without a partner

Modern transportation management systems (TMS) provide a level of visibility that makes internal benchmarking more accessible than it’s even been. But that company-wide data is only half of the puzzle when it comes to competitive benchmarking. You also need a view into what competitors are spending. Since most companies are protective of their financial data, gathering that data is no walk in the park.

For companies that want to go it alone, it is possible to glean some insight into what key competitors and industry leaders are spending by collecting any available financial reports, press releases, and other publicly available materials. Another option is to conduct independent benchmarking research, although this can be costly and time-consuming.

Partnering with a logistics provider can eliminate these barriers. At CTSI-Global, for example, we process 5 million freight transactions every day—and that represents just a fraction of the data we collect. This wealth of data provides a clear picture of what the industry is paying at each stage of the supply chain, from warehousing costs to shipping rates.

Use it wisely: benchmarking is pointless if no improvements come of it

One in three supply chain leaders doesn’t know the financial impact of their company’s benchmarking initiatives, with 29% saying their organization doesn’t even measure the financial impact at all.

This defeats the purpose of benchmarking, making it more of a chore than a valuable tool. After all, insight is useless if it doesn’t lead to improvement.

Armed with benchmarking data, best-in-class companies can come to the table with all the information they need to negotiate for better rates. In many cases, benchmarking can be a real wake-up call, revealing areas in which a company has been overpaying for years.

Repeat it regularly: benchmarking is not a one-and-done deal

Things change. Companies, like costs, rise and fall. As such, successful benchmarking cannot be viewed as a one-time initiative, because the definition of best-in-class is always evolving. For companies to remain best-in-class, they need to regularly evaluate what best-in-class looks like, reassess their targets accordingly, and negotiate rates when the time is right.

At CTSI-Global, benchmarking is built into our culture. We can help companies gain visibility, benchmark their costs, and negotiate what they’re paying to ensure the best rates. Find out more by contacting us for a benchmarking consultation and preview.

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