Whitepaper transportation procurement_payment

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Whitepaper transportation procurement_payment

  1. 1. Transportation Procurement and Payment Gain Control over Spend February 2010 Bob Heaney ~ Underwritten, in Part, by ~
  2. 2. Transportation Procurement and Payment: Gain Control over SpendPage 2 Executive SummaryThrough survey-based research conducted in January 2010 involving 236 Research Benchmarkrespondents, this Aberdeen Group benchmark report investigates the key Aberdeen’s Researchcapabilities that make transportation procurement and payment an Benchmarks provide an in-important strategic initiative in todays economy. Given the pressures being depth and comprehensive lookfaced by todays transportation organizations, this report details how Best- into process, procedure,in-Class shippers have leveraged transportation spend management methodologies, andsolutions together with process improvements to keep costs under control technologies with best practiceand maintain high levels of carrier and freight performance. identification and actionable recommendationsBest-in-Class PerformanceAberdeen used the following four key performance criteria to distinguishBest-in-Class performers with respect to transportation procurement andpayment. They achieve: • 5.71% year-over-year decrease in baseline freight spend (per unit handled) • 95.45% of carriers are compliant with their contract cost • 94.7% of carriers are meeting their SLA routing compliance • 2.84 days to process a freight invoice from receipt to payment “We’re optimistic that we canCompetitive Maturity Assessment save $3 to $4 million dollars inSurvey results show that the firms enjoying Best-in-Class performance reduced contract and accessorial rates.”shared several common characteristics. They are: ~ Gregg Bostick, Vice President • 1.85-times as likely as Industry Average, and 4.3-times as likely as of Transportation, Pinnacle Laggards to have a centralized spend management platform in place Foods capable of multi-language and multi-currency • 1.6-times as likely as Industry Average, and 6-times as likely as Laggards to use an electronic routing of a TMS solution for daily carrier selection • 1.3-times as likely as Industry Average, and 1.43-times as likely as Laggards to have a single person or department manage transportation spend globallyRequired ActionsIn addition to the specific recommendations in Chapter Three of thisreport, to achieve Best-in-Class performance, companies must: • Begin improving transportation spend management by automating either contract procurement or freight audit and payment • Complete the spend management loop to gain control over spend • Consider community benchmarking for even greater reduction of contracted rates© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  3. 3. Transportation Procurement and Payment: Gain Control over SpendPage 3Table of ContentsExecutive Summary....................................................................................................... 2 Best-in-Class Performance..................................................................................... 2 Competitive Maturity Assessment....................................................................... 2 Required Actions...................................................................................................... 2Chapter One: Benchmarking the Best-in-Class.................................................... 4 Business Context ..................................................................................................... 4 The Maturity Class Framework............................................................................ 5 The Best-in-Class PACE Model ............................................................................ 6 Best-in-Class Strategies........................................................................................... 7Chapter Two: Benchmarking Requirements for Success.................................10 Capabilities and Enablers......................................................................................14Chapter Three: Required Actions .........................................................................23 Laggard Steps to Success......................................................................................23 Industry Average Steps to Success ....................................................................23 Best-in-Class Steps to Success ............................................................................24Appendix A: Research Methodology.....................................................................26Appendix B: Related Aberdeen Research............................................................28Featured Underwriters..............................................................................................29FiguresFigure 1: The Pressure to Improve Transportation Spend Management ........ 5Figure 2: Best-in-Class Strategic Actions................................................................. 7Figure 3: Managements Directives for Creating Change ..................................10Figure 4: A Single Point of Control for Increased Flexibility ............................15Figure 5: Savings Start With Data Visibility and Access.....................................16Figure 6: Metrics that the Best-in-Class Use to Measure CarrierPerformance .................................................................................................................17Figure 7: Metrics that the Best-in-Class Use to Measure Internal Compliance .18Figure 8: The Transportation Closed Loop Process ..........................................19Figure 9: Technology Being Leveraged by the Best-in-Class.............................20TablesTable 1: Top Performers Earn Best-in-Class Status.............................................. 5Table 2: The Best-in-Class PACE Framework ....................................................... 6Table 3: The Competitive Framework...................................................................12Table 4: Key Knowledge Management Differentiators ......................................16Table 5: The PACE Framework Key ......................................................................27Table 6: The Competitive Framework Key ..........................................................27Table 7: The Relationship Between PACE and the Competitive Framework.........................................................................................................................................27© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  4. 4. Transportation Procurement and Payment: Gain Control over SpendPage 4 Chapter One: Benchmarking the Best-in-ClassBusiness Context Best-in-Class utilize highlyCompanies have been managing complex transportation procurement and automated technology:payment processes for a long time - they have been evolving and maturingsince the 1980s. How well those processes were being managed and the √ 60% TMS routing guide foroverall cost to the company has suddenly become more important from a day-to-day carrier selectioncorporate standpoint. In Aberdeens October 2009 report, Integrated decisionsTransportation Management: Improve Responsiveness with Real-Time Control of √ 53% specialized freight auditExecution, almost 65% of respondents indicated that managing transportation and payment tooland shipping costs was one of the biggest challenges facing theirorganization. The credit crunch and volatile fuel charges caught many √ 34% (TMS) transportationorganizations by surprise and they lacked sufficient processes to manage the procurement modulechanges effectively. This sudden shift in economic drivers still continues tobe a concern and is one of the key reasons behind the pressures facingmany logistics executives. In addition, the lowering of demand from endconsumers has resulted in several shippers scrambling to lower theirproduction and in turn lower their shipments to regional distributioncenters, customer warehouses, etc. The top strategy for 47% ofrespondents from a survey of 180 companies (from the October TMS 2009study) was to "renegotiate contracts with carriers" where Best-in-Classcompanies were 1.7-times as likely as Laggards to take this action – leavingample room for improvement.Not only have volatile freight costs and shipping charges forced manyexecutives to panic and throw more resources at trying to solve theproblem, but more groups within the organization are suddenly seeing thetrue costs behind transportation and are creating mandates to try and bringit under control. As shown in Figure 1, over one-third of the respondentsare in a situation where not only is more of the company aware of the costand service impact of transportation on the overall supply chain, but theyare now being faced with the company executives asking for something tobe done about it. Thirty-five to forty-five percent (35% to 45%) of theseexecutives are looking for process and technology improvement intransportation payment and procurement in the next 12-months.© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  5. 5. Transportation Procurement and Payment: Gain Control over SpendPage 5Figure 1: The Pressure to Improve Transportation SpendManagement Volatility of freight costs and/or f uel 50% surcharges Increasing awareness of the cost and 43% service impact of transportation Corporate mandate to improve or 30% f ormalize transportation spending control Sourcing complexity due to increased 24% globalization / low-cost country shif ts Customers demanding f aster and more 18% f requent deliveries 0% 10% 20% 30% 40% 50% 60% Percentage of Respondents, n = 236 Source: Aberdeen Group, February 2010This can be even more of an issue for companies which have very thin profitmargins, where operational efficiencies in the distribution process can becritical. But the complexity of the global supply chain and the scale ofinbound and outbound spend control demands a tighter synchronization ofboth the procurement and payment aspects of transportation management.The Maturity Class FrameworkAberdeen used four key performance criteria to distinguish the Best-in-Class from Industry Average and Laggard organizations. Table I providescompanies with a framework to benchmark their performance against thefour classifications.Table 1: Top Performers Earn Best-in-Class Status Definition of Mean Class Performance Maturity Class 5.71% year-over-year decrease in baseline freight spend (per unit handled) Best-in-Class: 95.45% of carriers are compliant with their contract Top 20% cost of aggregate 94.7% of carriers are meeting their SLA routing performance scorers compliance 2.84 days to process a freight invoice from receipt to payment© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  6. 6. Transportation Procurement and Payment: Gain Control over SpendPage 6 Definition of Mean Class Performance Maturity Class 3.08% year-over-year decrease in baseline freight spend (per unit handled) Industry Average: 88.45% of carriers are compliant with their contract Middle 50% cost of aggregate 88.2% of carriers are meeting their SLA routing performance scorers compliance 7.11 days to process a freight invoice from receipt to payment 0.65% year-over-year decrease in baseline freight spend (per unit handled) Laggard: 50.45% of carriers are compliant with their contract Bottom 30% cost of aggregate 57.8% of carriers are meeting their SLA routing performance scorers compliance 10.04 days to process a freight invoice from receipt to payment Source: Aberdeen Group, February 2010The Best-in-Class PACE ModelLeveraging technology is not enough to drive performance improvementsacross an organization. To achieve corporate goals that drive efficienciesand cost-savings around transportation spend requires a combination ofstrategic actions, organizational capabilities, and enabling technologies thatcan be summarized in Table 2.Table 2: The Best-in-Class PACE Framework Pressures Actions Capabilities Enablers Volatility of Improve our Overall Automated data conversion freight costs internal ability to Procurement and payment are both automated Electronic routing guides and/or fuel analyze freight and fully integrated Transportation procurement cost spend Measure carrier compliance to contract by and payment module of a surcharges Improve our invoice accuracy TMS internal ability to Transportation procurement managed globally Specialized freight audit and source and procurement tool Procurement negotiate freight Electronic invoice presentment and payment with Spend analytics rates carriers 3PLs, LSPs, or freight Incremental, multi-round, or expressive bidding companies with Freight audit and payment transportation procurement and payment or freight audit Formal root cause analysis for repeat invoice services. errors Tracking of total freight cost including accessorials Measure carrier compliance to contract by on- time delivery Source: Aberdeen Group, February 2010© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  7. 7. Transportation Procurement and Payment: Gain Control over SpendPage 7Best-in-Class Strategies Fast FactsConsistent with freight costs and volatility being the top two key pressuresamong respondents, companies are focusing their strategies on controlling √ Companies that have lessspend. Best-in-Class organizations are 1.3-times more likely than Industry than $10 processing cost perAverage and Laggard companies combined to be pressured by executives to invoice are more than twice as likely as their peers to useimprove transportation spend control. In response to both the external and a specialized freight audit andinternal pressures, most companies are planning to attack individual pieces payment toolof the spend management process (Figure 2). √ Companies that haveFigure 2: Best-in-Class Strategic Actions reduced contracted freight rates are twice as likely as their peers to use a Automate data collection and analysis 44% specialized transportation 46% on f reight spend / updates to rate tables 41% procurement tool Automate ability to source and negotiate 44% f reight rates and award optimal carriers 42% 32% Enf orce adherence to routing guide 30% / convert bid responses to rate tables 21% 20% Collaborate and synchronize data with 28% 26% carriers, suppliers, and trading partners 14% Tie transportation, carrier selection, 22% Best-in-Class 17% Industry Averageaudit, and payment together in one process 15% Laggard 0% 10% 20% 30% 40% 50% Percentage of Respondents, n = 236 Source: Aberdeen Group, February 2010Without some level of automation, auditing 100% of freight invoices can bea labor-intense process, and administrative costs eat away at whatevermonies are recovered due to closer scrutiny of invoices. Companies thatdont posses tools to assist with the process either throw labor at theproblem, or choose to only audit a small percentage of freight invoices. Theformer solution is very expensive; the latter fails to identify invoicing errors,and, more importantly, fails to provide an accurate shipment historydatabase that can be used to improve the entire spend managementprocess. A shipment history that only contains total cost on an invoice, andis not broken down by accessorial charges is of limited benefit whenanalyzing ways to improve network efficiency.Closing the LoopBest-in-Class companies in this study are three times as likely as their peersto practice closed loop transportation spend management, as evidenced bytheir achieving both automation and integration of procurement andpayment activities. Automation and integration are key characteristicsbecause they allow data to flow from step to step in repeatable processesand from one stage to the next across the strategic actions depicted in© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  8. 8. Transportation Procurement and Payment: Gain Control over SpendPage 8Figure 2. Industry Average and Laggard companies are 2.5-to 3-times morelikely to have manual processes in place, or to have automated one, but notboth of the key areas of spend management.Interestingly, most companies are in a situation where they have automatedtheir audit and payment processes in some way, but have no similar levels ofautomation in procurement. This is often due to the fact that for manycompanies, transportation procurement is not centralized. It is performed atthe local or department level based on legacy carrier relationships, andmanaged through the use of rudimentary tools like spreadsheets. Audit andpayment are more likely to have at least a base level of automation due tothe fairly widespread use of electronic invoice presentment and paymenttechnology, as well as companies greater propensity to work with managedservices providers in this area.Achieving a closed-loop system is usually a multi-step transition (see Figure8 for an illustration of this system). Recognizing that procurement andpayment are unique functions in most companies, this report expands uponthese two primary categories at the front and back ends of transportationspend, highlighting Best-in-Class methods for managing each. Aberdeen Insights — Strategy Best-in-Class companies are more likely to be honest with themselves about the importance of the auditing process, and realistic about their own abilities to do it well. Consequently, these companies often choose to outsource freight audit and payment, either as a permanent solution, or as an interim step until such time as they can improve their internal ability to do it. This is a strategy that has produced results, as evidenced by the fact that Best-in- Class companies that outsource freight audit and payment were more likely than their peers to posses the following capabilities through their managed service providers: • Practice electronic invoice presentment and payment with carriers • Practice formal root cause analysis for repeated invoice errors • Automatically audit invoices against electronic rate tables • Tracking of total freight cost including accessorials (e.g. detention and stop-off charges), fuel charges, and invoice dispute costs This is a testimony to the fact that managed service providers have made strides in improving their capabilities to serve the market. continued© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  9. 9. Transportation Procurement and Payment: Gain Control over SpendPage 9 Aberdeen Insights — Strategy Understanding the actual spend on transportation, including drilling down to all accessorials and surcharges is the most important first step to bringing spend under control and creating more strategic value. Despite the value of this information and its impact on the strategic actions behind transportation sourcing and procurement decisions, many organizations continue to rely on "perceived" costs versus actual costs and closing the loop on spend. Leveraging technology to track, analyze, and provide visibility to critical transportation spend data can be a differentiator and lead to reducing costs. Understanding actual costs by route, by carrier, or by the options available can be beneficial when planning and scheduling shipments. In addition to the value of data in the procurement process, leveraging this information and visibility in the audit and payment process can save hours of time and significantly reduce payment errors. The visibility of payment errors, improving payment compliance, and the ability to manage the audit and payment process strategically can have an additional costs savings impact.In the next chapter, we will see what the top performers are doing toachieve these gains.© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  10. 10. Transportation Procurement and Payment: Gain Control over SpendPage 10 Chapter Two: Benchmarking Requirements for SuccessWhile organizational changes can create a positive impact they should rarely How the Best-in-Class arebe enacted until an organization has first focused on process and Evaluating Freight Rates:technology. This approach is borne out in our survey results, as Best-in- √ 84% compare toClass companies were more likely to provide recommendations for process competitors rates for pricing(67%) and technology (64%) than for those concerning organizationalchange. √ 55% compare carries to internal historical pricingFigure 3: Managements Directives for Creating Change √ 43% utilize community data from peers Recommendations f or 67% Process Changes 69% Recommendations f or 64% Technology Enhancements 57% Recommendations f or 46% Best-in-Class Organizational Changes 44% All Others 0% 10% 20% 30% 40% 50% 60% 70% 80% Percentage of Respondents, n = 236 Source: Aberdeen Group, February 2010The following case study is an example of how one company has takencontrol of their transportation spend, and managed to turn the corner tobecome Best-in-Class. Pinnacle Foods Chooses Transportation Suite Starting With Audit and Payment Pinnacle Foods is a large food manufacturer with household brands such as Duncan Hines, Vlasic, and Swanson. The company had been completely outsourcing its transportation execution as well as audit and payment to a managed service provider, but was only enjoying limited success. So shortly after hiring a new Vice President of Transportation, the company chose to set out on the path of closed-loop transportation spend management to better handle their $125 million USD in annual spend. continued© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  11. 11. Transportation Procurement and Payment: Gain Control over SpendPage 11 Pinnacle Foods Chooses Transportation Suite Starting With Audit and Payment Pinnacle chose the application suite approach, with a single software vendor providing the various components in the spend management wheel. Pinnacle chose a TMS with a Software-as-a-Service (SaaS) model, and began the project by implementing tactical planning and execution. Because Pinnacle had a closed-loop vision in mind, the company decided to proceed next with improving the audit and payment side of the wheel. The Return on Investment (ROI) in this area might be less than it would be to improve procurement, but Pinnacle knew that the data that resulted from a better audit and payment process would allow them to realize those procurement savings to an even greater level—they would just have to wait a little longer to see it. The company chose to bring their outsourced audit and payment process in-house by using a freight payment module from their TMS provider. Pinnacle also chose to implement self-invoicing. After the carrier submits an electronic proof of delivery to Pinnacle via the online system or through EDI, they are given an additional five days to submit any accessorial charges that may have been incurred. At that point, Pinnacle’s TMS calculates the amount the carrier is due and makes a payment. Carriers are normally paid net 28 days, but Pinnacle agrees to pay within seven days if the carrier is willing to offer a discount for such services. The results of this process have been significant—Pinnacle has saved $120,000 USD annually over paying a third party provider to perform this service, and they have not had to commit any additional administrative labor to audit and payment. To close the loop, Pinnacle chose the same TMS provider to host their first ever national transportation bid. Since the company already automated their audit and payment process, a rich database of freight spend data exists so that Pinnacle can host a very accurate bid process. In addition, their on-demand TMS provider is making use of community spend data to identify areas where Pinnacle is paying rates that are much higher than their peers. The TMS provider was able to bring an additional 70 carriers to the bid table who might offer more competitive rates in those areas. “For us, it made sense to use a single technology platform for as much of the process as possible,” says Gregg Bostick, Vice President of Transportation for Pinnacle. “Our existing carriers are already communicating with us electronically through our TMS, so it was logical for us to use the same set of tools to host our freight bid. We’re optimistic that we can save $3 to $4 million dollars in reduced contract and accessorial rates.”© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  12. 12. Transportation Procurement and Payment: Gain Control over SpendPage 12Competitive AssessmentAberdeen Group analyzed the aggregated metrics of surveyed companies todetermine whether their performance ranked as Best-in-Class, IndustryAverage, or Laggard. In addition to having common performance levels, eachclass also shared characteristics in five key categories: (1) process (theapproaches they take to execute daily operations); (2) organization(corporate focus and collaboration among stakeholders); (3) knowledgemanagement (contextualizing data and exposing it to key stakeholders);(4) technology (the selection of the appropriate tools and the effectivedeployment of those tools); and (5) performance management (theability of the organization to measure its results to improve its business).These characteristics (identified in Table 3) serve as a guideline for bestpractices, and correlate directly with Best-in-Class performance across thekey metrics.Table 3: The Competitive Framework Best-in-Class Average Laggards Process Strategic bid allocation based on business performance of carriers 73% 47% 21% Practice multi-round bidding 58% 40% 30% Practice incremental bidding as requirements change between bid contracts 52% 29% 16% Centralized transportation spend management platform in place, capable of multi-language, multi-currency 52% 28% 12%Organization A single person or department is responsible for managing all spend activities across all of our departments/divisions 70% 54% 49% Transportation procurement managed globally 69% 44% 34% Knowledge Tracking of total freight cost including accessorials (e.g. detention and stop-off charges), fuel charges, and invoice dispute costs 64% 54% 33% Real-time ranking and analytics visible during procurement selection process 56% 34% 17% Over 90% of the companys transportation invoices are currently audited 44% 31% 19%© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  13. 13. Transportation Procurement and Payment: Gain Control over SpendPage 13 Best-in-Class Average LaggardsTechnology Utilizing electronic data conversion for: 65% - electronic 44% - electronic 33% - electronic invoice invoice invoice presentment and presentment and presentment and payment with payment with payment with carriers carriers carriers 57% -Electronically 37% -Electronically 19% -Electronically assisted bid assisted bid assisted bid analysis analysis analysis 10% - Electronic 54% - Electronic 29% - Electronic bid allocation bid allocation bid allocation optimization to optimization to optimization to award lanes award lanes. award lanes. Utilizing technology components: 60% - TMS routing 36% - TMS routing 10% - TMS routing guide for day-to- guide for day-to- guide for day-to- day carrier day carrier day carrier selection decisions selection decisions selection decisions 53% -Specialized 44% -Specialized 27% -Specialized freight audit and freight audit and freight audit and payment tool payment tool payment tool 34% -(TMS) 34% - (TMS) 13% - (TMS) Transportation Transportation Transportation procurement procurement procurement module module module Utilizing highly automated data conversion for: 50% - Audit and 32% - Audit and 12% - Audit and payment of payment of payment of truckload or less- truckload or less- truckload or less- than-truckload than-truckload than-truckload invoices invoices invoices 42% - Audit and 29% - Audit and 16% - Audit and payment of parcel payment of parcel payment of parcel carrier invoices carrier invoices carrier invoices 33% - 20% - 6% - Procurement Procurement of Procurement of of truckload or truckload or less- truckload or less- less-than-truckload than-truckload than-truckload contracts contracts contractsPerformance Practice online collaboration with carriers for invoice exception handling 44% 29% 22% Use incentive-based freight contracts 34% 20% 18% Source: Aberdeen Group, February 2010© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  14. 14. Transportation Procurement and Payment: Gain Control over SpendPage 14Capabilities and EnablersBased on the findings of the Competitive Framework and interviews with end “By outsourcing our audit and payment process we’ve beenusers, Aberdeen’s analysis of the Best-in-Class shows that the key to taking able to reduce our freightcontrol and managing transportation spend begins with gaining visibility to spend by more than $500kupstream transactions and using that data as critical input to subsequent since 2006. We’ve evenactivities from routing, audit and pay and back again to eventually feed future reduced our errors down to 12procurement decisions. While many strides are being made here, well over to 15 last year out of the more50% of all respondents are still relying on keying or manual processing for all than 15,000 bills we payfacets of the transportation spend process, including: yearly.” • Converting bid responses to contracts (78%) ~ Tim Knepple, Logistics • Creation of RFPs for transportation bids (75%) Manager, JustRite Manufacturing • Inputting carrier bid responses to a bid analysis tool (68%) • Converting freight contracts to rate tables (65%) • Inputting freight invoices into accounting systems (56%)It is often argued that automating processes first will bring better datavisibility; however many practitioners today are of the belief that gettingtechnology in place that provides data visibility is the most important stepbecause its that data that will help determine what additional technology isnecessary to drive more efficiency. The combination of technology withprocess, knowledge management and organizational changes will create themost impact. Best-in-Class performers are much further ahead and haveclearly separated themselves from the pack through achieving a 22% higherpercentage level of carriers who are compliant with contractual cost(95.45% Best-in-Class versus 74.14% of all other companies – IndustryAverage and Laggard companies combined).ProcessIt is important to select the right carriers and doing so can elevate thecarriers and a companys overall attainment of both contract cost androuting compliance. Top performers exceed 94% compliance (Table I) whileIndustry Average do not exceed 88.5% and Laggards do not exceed 58%.We see a key differentiator for the Best-in-Class: they are 1.5-times as likelyas the Industry Average and 3.5-times as likely as Laggards to utilize strategicbid allocation based on business performance of carriers (Table 3). Thisillustrates the principle that selection and knowledge are tightly linked - youneed visibility to performance data to both select carriers and then tomonitor/ensure contract compliance.Additionally, working in silos can be detrimental to any process, with orwithout access to valuable data. Collaboration internally and externally addsvalue to the decision making process and puts even more power in thehands of employees, letting them automate and inform decisions theyreresponsible for, while continuing to extend the processes to involve morestakeholders. The Best-in-Class have done a good job of increasingcollaboration in the bid process through 1) multi-round bidding, and 2)following up with incremental bidding to create more flexibility and controlin transportation spend management (Table 3). Frequent collaboration withcarriers and trading partners in the bidding process is yet another advantage© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  15. 15. Transportation Procurement and Payment: Gain Control over SpendPage 15of top companies. Best-in-Class performers are achieving practice levels of1.5- to 2-times higher than all others combined.Turning attention towards how to streamline procurement and paymentprocesses, the focus should be on managing exceptions and improving dataconversion in spend management across the global supply chain. The Best-in-Class are already doing more in utilizing global currency and multi-unitdata conversion as part of their solution with more than 50% practicing on acentralized transportation spend management platform capable of multi-language,multi-currency (Table 3). In an effort to take more control of transportationspend and create more flexibility to avoid excessive charges, companiesshould also investigate: • Real-time ranking and analytics visible during procurement selection process • Practicing online collaboration with carriers for invoice exception handling • Use of incentive-based freight contractsOrganizationThe freight audit and payment process is post execution - it can only ensureconformance to contracts or inform future negotiations. Its clear that thetrue value to an organizations transportation spend management is aroundthe sourcing and procurement of freight. As can be seen in Figure 4, theBest-in-Class are doing more to centralize control and focus on a globalvision for transportation spend management, providing them with a muchclearer view of the true cost of doing business.The Best-in-Class are also taking to heart the argument to outsourcecomponents that are non-differentiators and have typically taken moreresources to manage as relationships have become more complex.However, there is still room for some debate as many solutions have gottento the point where companies can now more effectively manage their ownfreight audit and payment process to their own comfort level. Almost 45%of respondents that currently are managing their own audit and paymentprocess have no plans to outsource any time soon. Both options should beconsidered in detail when restructuring the organization.Figure 4: A Single Point of Control for Increased Flexibility Best-in-Class Average Laggard “Our timelines were lengthy 70% 69% and required a lot of 54% collaboration between us and 49% 49% 44% the carrier. Now we can 34% 34% 33% 31% provide better visibility on our 25% 21% schedules and get more reliable commitments and rates from the carriers, creating a win-win for both of us.” A single person or Transportation Freight audit and All Freight Audit and department is procurement managed payment managed Payment outsourced, ~ Max Beach, Logistics Manager responsible for globally globally with no plans to at Northwest Pipe managing all spend change activities globally n = 236 Source: Aberdeen Group, February 2010© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  16. 16. Transportation Procurement and Payment: Gain Control over SpendPage 16For companies that typically manage their own freight audit and payment,without technology to automate and enable that process, the level ofcomplexity can only create more room for error. In the present study,more than half of all responding companies reported handling eitherprocurement or payment manually. In the new world of globaltransportation, the ramifications of errors are exacerbated and directly hitthe bottom-line when it comes to supply chain costs. Imagine having tomanually process hundreds or thousands of payments each month withoutany automation in place to streamline the review and payment. Addingheadcount to tackle problems is not going to be an option; executives needto re-evaluate the options available that dont include adding labor tomanage out-dated processes and to allow core resources to provide valuearound analysis, not interpreting blurry faxes.Knowledge ManagementThe Best-in-Class have done a better job of recognizing the value of dataand knowledge as part of a "closed loop" transportation managementprocess. This is illustrated by the level of current capabilities among Best-in-Class performers as compared to all others regarding collaborativeknowledge to ensure competitive freight rates (as illustrated in Table 4).Table 4: Key Knowledge Management Differentiators Best-in-Class Industry Average LaggardsPerformance measurements for competitive freight rates 90% - compare 84% - compare carriers 79% - compare carriers carriers to their to their competitors to their competitors competitors pricing pricing pricing 56% - compare 55% - compare carriers 52% - compare carriers carriers to their own to their own historical to their own historical historical pricing pricing pricing 50% -utilize community 43% - utilize community 31% - utilize community data from our peers data from our peers data from our peers Source: Aberdeen Group, February 2010In order for companies to truly leverage their transportation spend data andprovide access for employees to leverage that information and make betterbusiness decisions, the information cannot be kept on spreadsheets andreside on local databases at each location.Figure 5: Savings Start With Data Visibility and Access Freight Audit and "We really had no centralized Payment Knowledge and 37% visibility to our transportation Data are shared internally 33% spend. This was the first step at the global level 29% we needed to make in order to start the process of bringing our spend under control. Procurement Knowledge 33% Best-in-Class Without the visibility, and Data are shared everything else we did would 31% Average internally at the global 24% have been guess work." level Laggard ~ Chris Cavin, Director of n = 236 Transportation, RockTenn Source: Aberdeen Group, February 2010© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  17. 17. Transportation Procurement and Payment: Gain Control over SpendPage 17It is the level of sharing and visibility to detailed knowledge and its ease ofintegration into the overall transportation selection and managementprocess that allows top companies to deliver higher levels of performance incarrier contractual compliance and reduced cost. The gap between theBest-in-Class and Laggards focuses on the ability to move beyond traditionalprocesses like: • Manually processing bid and contract information with disparate data from numerous sources including printouts, faxes, and copies • Using spreadsheets to manage the bid process • Overly labor-intensive or incomplete audit processes that fail to match accurate activities and billing information • Manual processes for monitoring contract agreements and actual performance of carriers, often resulting in missed opportunities to flag billing / contract errors that could reduce spend • Lack of a means (other than labor-intensive data mining) to track and analyze data from the audit process in order to improve / negotiate relationships with carriers based on actual performance or contract changesPerformance ManagementWith much of the focus being on data visibility and access as a keycomponent of any transportation management process, and how it becomesa key input to closed loop transportation spend management; it is howeffectively companies use that data that can be a key differentiator. In Figure6 and Figure 7, its clear that the Best-in-Class have done an exceptional jobof setting up performance measurements with their carriers and internallyto ensure that key business goals are followed and lead to driving downtransportation spend.Figure 6: Metrics that the Best-in-Class Use to Measure CarrierPerformance 88% On-time delivery 88% 89% 80% Invoice accuracy 71% 54% 74% On-time pick-up 71% 54% 50% Data quality 39% 29% Best-in-Class Tender 44% Industry Average acceptance rate 31% 14% Laggard 0% 20% 40% 60% 80% 100% Percentage of Respondents, n = 236 Source: Aberdeen Group, February 2010© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  18. 18. Transportation Procurement and Payment: Gain Control over SpendPage 18Because more of the Best-in-Class have visibility to detailed transportationspend data, they are better positioned to leverage that information in amore dynamic fashion. This includes providing scorecards andmeasurements at all points along the transportation spend process. Forexample, it may be easy for companies, even with manual spreadsheets, totrack on-dime delivery. But the time to identify and utilize updated scoresfor on-time delivery as well as invoice accuracy and other metrics during thesourcing / tendering process is at risk with more complex situations, andcan have a dramatic effect on the ability to reduce overall costs.Its not only important to understand carrier performance, but also tounderstand internal compliance. Guidelines are in place for a reason andensuring that resources are using data to their advantage and making betterdecisions is important to controlling costs.Figure 7: Metrics that the Best-in-Class Use to Measure InternalCompliance 77% Payment time 64% 58% 57% Volume commitments 68% 67% 36% Invoice accuracy 51% 45% 32% Data quality 31% 25% 32% Best-in-Class Driver wait times 30% Industry Average 27% Laggard 0% 20% 40% 60% 80% 100% Percentage of Respondents, n = 236 Source: Aberdeen Group, February 2010TechnologyThe concept of technology enablement within a closed loop transportationmanagement platform is not new. Indeed this is very much in keeping with akey finding of Aberdeens research demonstrating that companies aredeparting from thinking about transportation management in a linear formatand, instead, as a closed loop, with each step in the process feeding thesubsequent ones. Figure 8 depicts the "closed-loop spend management"cycle, with the capabilities shown on the inner circle, and the enablingtechnologies that drive integration and automation in the two outermostcircles. A common, but less effective alternative to the closed-loop conceptinvolves having the electronic flow of data cease at the audit and pay step.The model shown in Figure 8 completes the loop by having the shipment© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  19. 19. Transportation Procurement and Payment: Gain Control over SpendPage 19history from the audit and pay step flow directly into a spend analytics step,which is then used as a tool to create the request for proposal in theprocurement process.Figure 8: The Transportation Closed Loop Process Source: Aberdeen Group, February 2010Aberdeen research has found that companies take one of three distinctapproaches with acquiring/adopting enabling technology: • A best-of-breed model • A collaborative outsourcing model (leveraging third party providers) • A single application suite.The "best-of-breed" model involves the use of a combination of specializedbid optimization tools, Transportation Management Software (TMS), auditand payment applications, and spend analytics solutions to produce afeature-rich platform of integrated applications. The outsourcing modeloften leverages the same tools and process but involves an alliance with alogistics service provider for procurement, audit/pay or both. Alternatively,with a transportation management suite (single application suite approach),the various steps in the loop are all offered by a single software developer.In each case, the critical link to the individual processes is automated dataconversion to ensure that there is an efficient information exchange at eachstep in the cycle.© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  20. 20. Transportation Procurement and Payment: Gain Control over SpendPage 20In almost every instance, companies that are able to leverage technology tomanage processes and remove the manual components of everyday tasksare able to focus more on delivering value versus manually managing andmanipulating data. In using the Aberdeen methodology to analyzetechnology usage, there continues to be greater adoption associated withthe Best-in-Class group and alignment with driving better performance inkey metrics. Across six different categories of technology usage (Figure 9),over 40% of the Best-in-Class are taking advantage of opportunities toautomate as much of the processes as possible.Figure 9: Technology Being Leveraged by the Best-in-Class Best-in-Class Average Laggard n = 236 65% 60% 57% 54% 53% 44% 44% 37% 36% 33% 34% 34% 29% 27% 19% 13% 10% 10% Electronic invoice Electronically assisted Electronic bid TMS routing guide for Specialized freight (TMS) Transportation presentment and bid analysis allocation optimization day to day carrier audit and payment tool procurement module payment with carriers to award lanes. selection decisions Electronic Data Conversion Technology Components Source: Aberdeen Group, February 2010In each case under electronic data conversion, the Best-in-Class are 2- to 6-times as likely as Laggards to have automation in place especially around thesourcing and procurement process, updating and auditing rate guides, andoptimally awarding lanes via electronic updates.Under technology components, they are again 2.5- to 6-times as likely asLaggards to use extensions of TMS procurement solutions and specializedfreight audit and payment tools to speed and automate the front-end toback-end of closed loop transportation process and enable tighter spendcontrol.Respondents have identified four key criteria for making technologyadoption and investment decisions, three of which point to the fact thatorganizations understand the value of these solutions and are insisting thatthere is an ability to create more of an end-to-end process environment.The four criteria are: • Feature and functionality / capabilities (67%) • Price (65%)© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  21. 21. Transportation Procurement and Payment: Gain Control over SpendPage 21 • The ability to interface with existing technology / solutions (65%) • Ability to extend functionality of existing solutions (52%)Following features, "price" is a key requirement and at 65% it is importantto contrast this with another key finding – over 40% of all respondents feelthat these solutions are still too expensive up-front, or too expensive /difficult to implement. For these companies much of the upfront costs andlead-times can be substantially reduced. As depicted in the Pinnacle casestudy earlier, and as discovered by many who have conducted the properdue diligence, it is important to be aware of the variety of solutions availabletoday and the deployment options they provide. The evolution of SaaS andon-demand offerings from most solution providers has delivered on thepromise to decrease these historical hurdles. Companies must invest thetime to educate their decision-making teams on the latest options in orderto complete the proper due diligence around these solutions. Case Study: Northwest Pipe Company Northwest Pipe Company is used to a lot of hands-on managing of their business in manufacturing large industrial pipe. However, the hands-on approach for managing transportation spend was suddenly not enough to keep up with the changing landscape of transportation needs. “We took a step back and realized that everything we were doing around managing our transportation was completely manual,” says Max Beach, Logistics Manager at Northwest Pipe. “We were managing a lot of paperwork and entering a lot of manual data; we were just keeping up, not being strategic.” Managing over 17,000 flat bed shipments per year in North America can be difficult, especially when rates and charges are changing under your feet. It was difficult to get a handle on exactly what contracts and commitments were in place and what the true level of spend was at any point in time. “We suddenly realized we had over 230 carriers but no idea if that was the right mix,” said Beach. Bringing a technology solution on-board that removed the manual processing and created online visibility was a catalyst for change. With lengthy planning times for their projects, getting quotes from carriers was difficult and required carriers to estimate extremely volatile costs. “Our timelines were lengthy and required a lot of collaboration between us and the carrier. Now we can provide better visibility on our schedules and get more reliable commitments and rates from the carriers, creating a win-win for both of us,” says Beach. Northwest Pipe has been running their solution some time and after only four months they’ve already seen tremendous improvement in the transportation spend management process. Utilizing the technology and services available to them from their spend management solution provider, their RFP events are more strategic and have uncovered savings they would not have been able to leverage in the past. “We’ve already seen a 30% drop in total freight spend and our ROI dropped from 18 months to four months. We are finally leveraging transportation as a differentiator and not a cost bucket,” concluded Beach.© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  22. 22. Transportation Procurement and Payment: Gain Control over SpendPage 22 Aberdeen Insights — Technology The adoption of technology to support the transportation spend management process has grown steadily year-over-year. Because theres been an increase in the awareness of the true cost of transportation and more direction from the top down to do something about it, companies are turning to vendors to help manage the complexity. At the same time, if you break down the details of where the increase in automation has occurred and where the focus has been, most companies are directly engaged in analyzing key spend data and using it as part of a more collaborative and dynamic bidding process, as well stressing collaboration during the audit and payment process for improved root cause analysis. To address these key areas many are looking to best-of- breed solutions to fill these needs. Best-of-breed solutions may be tailored for the needs of a particular industry, or offer specialize features that fill a unique requirement. Companies choosing this route should be aware that they will need to take greater responsibility for application integration. Conversely, Transportation Management Software Suites may offer all of the required capabilities from a single vendor, but may not have certain best-of-breed features. There is no right or wrong approach - but companies should understand the trade-offs with each method and be comfortable with them. A company with limited resources might consider working with a vendor that also offers managed services, one that has the ability manage the day- to-day processes initially or can help run the first carrier bid. Then, if it is desired, the shipper can wean itself off of the services and bring the processes in-house. Still others have found success in outsourcing both procurement and payment. The options are varied and successes are found in each technology/management solution.© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  23. 23. Transportation Procurement and Payment: Gain Control over SpendPage 23 Chapter Three: Required ActionsWhether a company is trying to move its performance in transportation Laggard Reasons for Notspend management from Laggard to Industry Average, or Industry Average Investing in Technology:to Best-in-Class, the following actions will help spur the necessary √ 36% software integration isperformance improvements: too difficult / expensive √ 33% upfront costs ofLaggard Steps to Success changing processes are too • Integrate and automate. Over 45% of Laggard companies rely high on spreadsheets to manage the procurement and payment √ 27% up-front costs of processes. The delay in decision making and error rate associated solution too high with managing a manual paper trail can increase the underlying costs of managing transportation spend. • Focus on value-add instead of punching the clock. The manual labor needed to manage paper processing of invoices is driving up the cost of managing spend and Laggard companies are expending the most at almost $24 per invoice. By automating or outsourcing the audit and payment process, resources can be utilized for more valuable activities like root cause analysis and bid optimization. • Incorporate a global view. Working to get control of transportation spend data is the end-goal, however its more important to get visibility and organizational control across the entire organization and remove the silos. Only 24% of Laggards have data visibility at a global level, and only 6% can share that data with external partners. Combining data into a global view will greatly increase spend analysis value-add opportunities and sharing with external partners will drive better performance.Industry Average Steps to Success • Continue to leverage technology investments. The adoption of procurement and payment related solutions has increased by roughly 50% in the last 12 months for the Industry Average and there are new SaaS options out there. Continuing to rollout process automation to free up resources and decrease the cost of managing spend is the next crucial step for executives. • Data analysis: the next frontier. Less than a third of Industry Average companies are leveraging spend data visibility at a global level. Automating the processing of spend data is less than half the battle. Only 43% of Industry Average companies currently benchmark rates against community/peer data to track key trends. Leveraging transportation spend data and technology to automate the RFP process can greatly reduce year-over-year contract spend.© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  24. 24. Transportation Procurement and Payment: Gain Control over SpendPage 24 • Is outsourcing right for you? The argument continues as to whether or not outsourcing is the best process improvement when it comes to managing freight audit and payment. With more complexity being associated with compliance guidelines and the lack of time and resources available to manually audit and process thousands of bills per month, outsourcing should be considered a viable option. Only 35% of Industry Average companies are outsourcing today.Best-in-Class Steps to Success “A key reason for our success • Create closer partnerships with strategic carriers. Utilizing has been that senior data to improve collaboration with carriers can increase savings and management has allowed us to improve contract rates. Less than 10% of the Best-in-Class are select the right tools for the leveraging spend data visibility and sharing with external partners, job at hand.” especially carriers. Sharing critical data can increase the collaboration during the bidding process and provide carriers with ~ Ann Deming, Transportation Manager for Dry Truckload the opportunity to suggest alternative routes or negotiate rate options, lowering overall costs for both parties. Freight, Unilever • Implement scorecards to guide sourcing decisions. Once the true costs of freight spend are uncovered, score carding at a higher level can help drive further cost reductions. Rather than getting too lost in the individual charges, placing a score on each route and working to reduce the overall average cost per route can greatly improve savings and overall spend management. Currently less than 30% of the Best-in-Class are attempting to negotiate all-in rates for freight options. • Enforce compliance measures that benefit strategic goals. The Best-in-Class are utilizing more guidelines to measure carrier compliance, and also tracking their own compliance levels. With improved automation and data visibility there is an opportunity to put more strategic measures in place (on-top of common measures like on-time delivery or payment) to drive per-route scores and balance transportation spend across all routes in an effort to drive strategic business decisions. Currently, on-time delivery (92%) and invoice accuracy (88%) are the top measures in place - others can be advanced to these levels. Aberdeen Insights — Summary The volatility and complexity in the world of transportation will continue to grow exponentially and every company is looking for ways to sustain costs. With this the case companies are continuing to gain transportation spend control. continued© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  25. 25. Transportation Procurement and Payment: Gain Control over SpendPage 25 Aberdeen Insights — Summary Closed loop transportation spend management is no small undertaking, but it is an important concept that should be the end goal of any company struggling to contain logistics costs. In order to avoid tunnel- vision, and focusing on only one link in the loop, it is necessary to have an executive level sponsor to tie disparate departments and processes together. Two very viable technology approaches are available (best-of- breed and application suite) and companies should evaluate both routes before deciding on the solution that is the best fit for their needs. Additionally these capabilities are available through Logistics Service Providers (LSPs). The benefits to having a closed loop process range from reduced freight spend to lower administrative costs in the accounts payable department - key accomplishments for any supply chain executive. While their peers focus on cost cutting in more traditional areas of logistics like load planning and routing guide compliance, innovative companies can achieve Best-in-Class status by focusing on transportation procurement and payment and tying these processes together in an efficient closed-loop process. The grace-period were enjoying now will provide organizations around the world with the opportunity to step back and ask the critical questions about their own ability to fully understand supply chain costs and whether theyre still operating a fragmented or a strategic closed loop transportation spend model. Many organizations want to think their supply chain is strategic and that the cost of producing and / or delivering products to their customers is in control and operating as efficiently and cost-effectively as possible. Many of these same organizations were caught off guard during the economic downturn and were not prepared to answer the question on what was "actually" spent on transportation. Supply chain executives want to be strategic and drive value. Getting costs under control has always been a goal. Understanding and managing transportation costs will be a significant competitive advantage going forward; it will separate companies that survive from companies that cease to exist.© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  26. 26. Transportation Procurement and Payment: Gain Control over SpendPage 26 Appendix A: Research MethodologyBetween January and February 2010, Aberdeen examined the use, the Study Focusexperiences, and the intentions of more than 230 enterprises using Responding transportationtransportation procurement and payment solutions in a diverse set of management executivesenterprises completed an online survey that included questionsAberdeen supplemented this online survey effort with interviews with select designed to determine thesurvey respondents, gathering additional information on transportation following:procurement and freight audit and payment strategies, experiences, andresults. Responding enterprises included the following: √ The degree to which TPP solutions are deployed inResponding enterprises included the following: their operations and the financial implications of the • Job title: The research sample included respondents with the technology following job titles: CEO / President EVP / SVP (16%) √ The structure and • VP (8%); Director (20%); Manager (37%); Engineer/staff (6%); and effectiveness of existing TPP other (12%). implementations • Department / function: The research sample included respondents √ Current and planned use of from the following departments or functions: procurement, supply TPP to aid operational and chain, or logistics manager (70%); IT manager or staff (7%); sales and audit activities marketing staff other (12%); and senior management (7%). √ The benefits, if any, that have • Industry: The research sample included respondents from; been derived from TPP Consumer Packaged Goods (CPG) (24%); OEM Equipment initiatives Manufacturers (19%); Wholesale Distribution (18%); Retail (11%); The study aimed to identify Services (5%); and other (5%). emerging best practices for • Geography: The majority of respondents (68%) were from North TPP, and to provide a America; Europe (16%) Asia-Pacific region (12%) and others (3%). framework by which readers could assess their own • Company size: Twenty-two percent (22%) of respondents were from management capabilities. very large enterprises (annual revenues above US $5 billion); 25% of respondents were from large enterprises (annual revenues above US $1 billion); 34% were from midsize enterprises (annual revenues between $50 million and $1 billion); and 19% of respondents were from small businesses (annual revenues of $50 million or less). • Headcount: Twenty-six percent (26%) of respondents were from very large enterprises (headcount greater than 10,001 employees); 25% of respondents were from large enterprises (headcount between 2,501-10,000 employees); 35% were from midsize enterprises (headcount between 101 and 1001 employees); and 14% of respondents were from small businesses (headcount between 1 and 100 employees).© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  27. 27. Transportation Procurement and Payment: Gain Control over SpendPage 27Table 5: The PACE Framework Key Overview Aberdeen applies a methodology to benchmark research that evaluates the business pressures, actions, capabilities, and enablers (PACE) that indicate corporate behavior in specific business processes. These terms are defined as follows: Pressures — external forces that impact an organization’s market position, competitiveness, or business operations (e.g., economic, political and regulatory, technology, changing customer preferences, competitive) Actions — the strategic approaches that an organization takes in response to industry pressures (e.g., align the corporate business model to leverage industry opportunities, such as product / service strategy, target markets, financial strategy, go-to-market, and sales strategy) Capabilities — the business process competencies required to execute corporate strategy (e.g., skilled people, brand, market positioning, viable products / services, ecosystem partners, financing) Enablers — the key functionality of technology solutions required to support the organization’s enabling business practices (e.g., development platform, applications, network connectivity, user interface, training and support, partner interfaces, data cleansing, and management) Source: Aberdeen Group, February 2010Table 6: The Competitive Framework Key OverviewThe Aberdeen Competitive Framework defines enterprises In the following categories:as falling into one of the following three levels of practices Process — What is the scope of processand performance: standardization? What is the efficiency andBest-in-Class (20%) — Practices that are the best effectiveness of this process?currently being employed and are significantly superior to Organization — How is your company currentlythe Industry Average, and result in the top industry organized to manage and optimize this particularperformance. process?Industry Average (50%) — Practices that represent the Knowledge — What visibility do you have into keyaverage or norm, and result in average industry data and intelligence required to manage this process?performance. Technology — What level of automation have youLaggards (30%) — Practices that are significantly behind used to support this process? How is this automationthe average of the industry, and result in below average integrated and aligned?performance. Performance — What do you measure? How frequently? What’s your actual performance? Source: Aberdeen Group, February 2010Table 7: The Relationship Between PACE and the Competitive Framework PACE and the Competitive Framework – How They InteractAberdeen research indicates that companies that identify the most influential pressures and take the mosttransformational and effective actions are most likely to achieve superior performance. The level of competitiveperformance that a company achieves is strongly determined by the PACE choices that they make and how well theyexecute those decisions. Source: Aberdeen Group, February 2010© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  28. 28. Transportation Procurement and Payment: Gain Control over SpendPage 28 Appendix B: Related Aberdeen ResearchRelated Aberdeen research that forms a companion or reference to thisreport includes: • Integrated Transportation Management: Improve Responsiveness with Real-Time Control of Execution,October 2009 • No Excuses! Why Optimizing Transportation Management is Within the Reach of Every Company, July 2008 • Achieving Closed-Loop Transportation Spend Management, January 2008 • The International Transportation Management Benchmark Report, October 2007 • Integrated Transportation Management—How Best-in-Class Companies View the World Differently, June 2007 • Winning Strategies for Transportation Procurement & Payment, February 2007Information on these and any other Aberdeen publications can be found atwww.aberdeen.com. Author: Bob Heaney, Senior Research Analyst , Supply Chain Management (bob.heaney@aberdeen.com)Since 1988, Aberdeens research has been helping corporations worldwide become Best-in-Class. Havingbenchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provideorganizations with the facts that matter — the facts that enable companies to get ahead and drive results. Thats whyour research is relied on by more than 2.2 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% ofthe Technology 500.As a Harte-Hanks Company, Aberdeen plays a key role of putting content in context for the global direct and targetedmarketing company. Aberdeens analytical and independent view of the "customer optimization" process of Harte-Hanks (Information – Opportunity – Insight – Engagement – Interaction) extends the client value and accentuates thestrategic role Harte-Hanks brings to the market. For additional information, visit Aberdeen http://www.aberdeen.comor call (617) 723-7890, or to learn more about Harte-Hanks, call (800) 456-9748 or go to http://www.harte-hanks.com.This document is the result of primary research performed by Aberdeen Group. Aberdeen Groups methodologiesprovide for objective fact-based research and represent the best analysis available at the time of publication. Unlessotherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not bereproduced, distributed, archived, or transmitted in any form or by any means without prior written consent byAberdeen Group, Inc. (071309b)© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  29. 29. Transportation Procurement and Payment: Gain Control over SpendPage 29 Featured UnderwritersThis research report was made possible, in part, with the financial supportof our underwriters. These individuals and organizations share Aberdeen’svision of bringing fact based research to corporations worldwide at little orno cost. Underwriters have no editorial or research rights, and the facts andanalysis of this report remain an exclusive production and product ofAberdeen Group. Solution providers recognized as underwriters weresolicited after the fact and had no substantive influence on the direction ofthis report. Their sponsorship has made it possible for Aberdeen Group tomake these findings available to readers at no charge.TMW Systems offers a uniquely capable and cost-effective platform for thedelivery of tailored TMS solutions to shippers and 3PLs that want to controltheir costs and improve visibility to their domestic surface transportationexecution. TMW Enterprise Transportation Software (ETS) andOptimization Software are designed to address the detailed planning andexecution processes for shippers primarily concerned with domestic surfacetransportation activities—especially in combination with private fleets—andfor 3PLs managing commercial carriers and assets of their own.For additional information on TMW Systems:TMW Systems21111 Chagrin Blvd.Beachwood, OH 44122Toll Phone: (216) 831-6606Toll-free Phone: (800) 401-6682Fax Number: (216) 831-3606Company URL: www.tmwsystems.comEmail: Marketing@tmwsystems.com© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  30. 30. Transportation Procurement and Payment: Gain Control over SpendPage 30U.S. Bank, a leader in corporate payments, is the world’s leading freightpayment provider. Through Syncada by Visa (formerly PowerTrack), abusiness-to-business payment network offered by U.S. Bank, clients benefitfrom a comprehensive global invoice processing and payment solution.Integrated supply chain finance allows carriers to get paid sooner, whileshippers pay later. Robust pre-pay audits on 100% of invoices ensureaccuracy. On-line, real-time, collaborative exception resolution furtherreduces cost and waste. The resulting data provides unmatched visibility tocost and performance to optimize your supply chain. Improve cash flow,eliminate paper invoices and checks, and streamline your process today.For additional information on U.S. Bank Transportation Solutions:U.S. Bank Transportation Solutions200 South Sixth StreetMailstop: EP-MN-L26CMinneapolis, MN 55402Toll-free Phone: (866) 274-5898Company URL: www.powertrackglobal.comEmail: info@powertrack.com© 2010 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897

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