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?
- Usually yes.
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.
The Future of Benchmarking
We see that in practice benchmarking for freight rates is being used and valued already. The signs are pointing towards an increased use for the renegotiations of freight rates. The analysis of benchmarking data will give procurers a clue about what a fair price might be for a specific lane to set target prices for their tenders. The future will show, how procurement strategies based on benchmarking data will spread and evolve. The respective company of the automotive sector already adapted to some of the technological possibilities today’s logistics provide and positively looks into the future.
With the technology of SHIPSTA you can use our Rate Management software to benchmark your own freight rates against the market in a matter of seconds and gain ultimate visibility. This way, fields of action with optimisation potential can be identified – data-based and tremendously fast – to save costs in procurement.
Interested to have a look into the SHIPSTA platform?
SHIPSTA was founded by Christian Wilhelm (CEO), Stefan Maratzki (CTO) and Oliver Ritzmann (CCO) in 2015. The innovative software company is headquartered in Luxembourg and has a branch in the Digital Logistics Hub in Hamburg. SHIPSTA has become one of the market leaders for eProcurement solutions in Germany. The eProcurement platform optimizes freight tenders by digitalizing and automating them. SHIPSTA’s clients include global companies from sectors such as food, high tech, pharma and automotive.
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