When supply chain managers get out of bed in the morning, they do so with two goals in mind: coordinating their company’s logistics activities effectively, and helping to keep costs under control. But without true visibility into their operations and costs, both goals are a lot harder to achieve. Conducting a freight spend analysis can provide much-needed visibility—and help supply chain managers identify prime opportunities to save.
How is a freight spend analysis conducted?
In a nutshell, a freight spend analysis is a deep dive into all the freight invoices your company generated over a recent period (like the previous 30 days). By evaluating factors like routes, freight class, modes, and carriers used, shippers can gain insight into their freight operations, allowing them to establish accurate baselines, identify hidden costs and spot areas where their transportation spend could be reduced.
Shippers can sometimes analyze their freight spend themselves (e.g., by using a freight cost analysis template) if they have the right expertise and tools in-house. Not only can this be incredibly time-consuming, however, but there’s added value to be gained from working with an external provider.
CTSI-Global can leverage our decades of logistics experience, for example, to help shippers gain a richer understanding of what they’re paying now versus what they could be paying. We can also help supply chain professionals generate custom reports to present to team leaders, aligned with their key performance indicators (KPIs), illuminating data to make a more compelling case for strategic change.
How can a freight spend analysis help shippers save money?
First and foremost, a thorough freight spend analysis will provide answers to many pressing questions that supply chain managers have about their transportation spend, including:
- How does our actual spend compare to our projected cost per lane?
- Which lanes offer the biggest opportunities for savings?
- How often do we deviate from using approved carriers, and how does that impact our overall spend?
The answers to these questions can help shippers pinpoint specific areas in which they can reduce needless overspend and strategically bring costs down. For example, they may realize that they’re frequently overpaying by selecting the wrong category of truck for their freight, or by working with uncontracted carriers too often. Or, they may spot consolidation opportunities that can generate significant savings.
The bottom line is, a freight spend analysis eliminates a lot of unnecessary guesswork, empowering shippers to make more informed decisions, based on their past activity and spend. There’s a lot of future value to be gained from looking backward. As they say, those who don’t learn from history are doomed to repeat it—and if you’ve been overpaying month after month, an analysis can help you avoid doing the same in future.
How often should shippers conduct a freight spend analysis?
Freight spend can fluctuate dramatically from one month to the next, so it’s not enough to perform a freight spend analysis once and call it a day.
CTSI-Global’s robust freight audit and payment services and business intelligence tools can help you analyze your transportation spend on an ongoing basis—so you can continuously refine your operations and keep your costs in check. When you work with us, you’ll also have a vast team of analysts and logistics experts on your side, helping you access deeper insights and find even more opportunities to save.
Gain total visibility. Contact us today.