Arguably no industry is more dependent on temperature-controlled trucking than the food industry. Which is why the industry begins to pull its collective hair out when the calendar flips over to the summer. Not only does food production ramp up, but trucking capacity gets tight and freight costs go up.
However, thanks to the emergence of sophisticated technologies and a newfound push to modernize important business processes, especially within the complex supply chain, food manufacturers are using technology, powered by AI, to update their outdated freight procurement process. Not only are shippers able to eliminate millions of dollars in wasteful spend, but they are obtaining actionable data to make stronger, educated freight procurement decisions.
Using Technology to Eliminating Need for Middlemen
For decades, food shippers have relied on brokers to facilitate loads that have been rejected by their contracted carriers. Unfortunately, while it may seem to make sense to offload alternate procurement to a middleman, brokers are notorious for charging high hidden fees while obfuscating market values and providing limited data. Moreover, when capacity becomes more limited — during the summer or around holidays — brokers tend to slap on even higher margins than usual. Therefore, shippers have grown tired of being beholden to the broker market and are now using technology to dynamically source compliant, asset-based capacity which improves tender acceptance, OTD and OTIF to lower cost of goods sold.
Doing Away with the Static Tender Process
The static tender process has been a longstanding thorn in the side of virtually all shippers -- especially when it comes to refrigerated freight. Not only does the static tender process often rely on the broker market -- and cost mark-ups as a result — but it can also result in supply chain back-ups that bog down overall efficiency and imperil on-time delivery (OTD) rates. To combat this, thanks to the advances made in procurement tech and tools, food shippers can move to a dynamic tender process, enabling them to open capacity when needed most and get real-time bids directly from available compliant carriers. This means they no longer need to spend time following up on load status.
Driving COGS Success
As margins have become more stretched for shippers and carriers over the last year, tracking overall spend has become even more important. And with that, many shippers have begun to consolidate logistics under their cost of goods sold (COGS) umbrella — something which has been long overdue. However, it is virtually impossible to keep COGS data streamlined without a sophisticated approach and infrastructure to handle the deluge of data shipper procurement teams need to stay in line with COGS plans -- especially during hectic periods when capacity is tight, like the summer. Without this comprehensive technology strategy and infrastructure in place, not only do shippers risk going over their procurement budgets, but any overages could have undetected consequences on overall COGS performance that are not detected until much later.
The Final Word
Navigating the summer refrigerated freight marketplace is one of the most annoying and frustrating tasks that shippers and their procurement teams have to tackle. However, by embracing new strategies and tools, food shippers and their procurement teams can resolve many of the refrigerated capacity issues they face today and set themselves up for greater year-round success.
Mike Nervick is CEO of Sleek Technologies