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Don’t Get Left Behind: Move Beyond Force-Fitting Transportation Costs with Long-Term Contracts
Some organizations believe that entering long-term transportation rate contracts will keep costs consistent, but many are discovering that this is not true.
Here comes Data science to the rescue of logistics managers in such situation.
- paying that extra amount due to non-availability of vehicles or
- go for a bigger vehicle at additional cost or further-more,
- hedging the cost initially to take care of these inconsistencies.
We’ve heard of logistics managers who claim they debit transporters for extra costs when they hire vehicles during peak seasons. However, transporters usually factor in these debits when setting contract rates.
Sometimes, management may not monitor these costs because they believe they are insignificant. But if we manage these costs efficiently, it could benefit our end customers.
How Modern Supply Chain Managers Manage Transportation Costs
Supply Chain Technology solutions builder, Caliper Business Solutions is helping large and medium organizations to automate the negotiation process through their cutting-edge tools.
These technological tools cut the Price negotiation process time drastically, making it simpler to negotiate rates more frequently giving flexibility to tackle unforseen situations arising due to seasonal demands and peak times.
Logistics managers know that regardless of the contract period, transporters hire vehicles on a daily basis to meet customer demand. Thus, transporters include a buffer in their long-term contract rates to cover market fluctuations. It’s common sense.
Tools such as transportEG provide flexibility to both service seekers and providers, allowing them to enter into smaller contract periods such as daily, weekly, or monthly. This eliminates the need for rate hedging and results in more realistic rates, benefitting everyone involved in the system.
By using automation tools such as Data Science, transportation purchases can be transformed into a more scientific process. Predictive analysis of rates can be used to reduce manual dependency and improve efficiency.