The term freight purchasing or transport procurement describes a process in which companies award transport services to logistics service providers after they have evaluated them. These are usually industrial and commercial companies that want to transport their goods to their customers or from their suppliers by air freight, sea freight, rail freight or truck. In order to transport goods from one place to another, companies use logistics service providers, shipping companies or airlines to do this work for them. The selection of logistics partners and the transport purchase from these partners is called transport procurement or freight procurement. If this step is carried out using software, this is “digital freight purchasing with e-procurement”.
What does transport procurement with e-Procurement systems include
When purchasing transport or procuring freight, it is important for companies to get an overview of which logistics partners they want to work with in the short and long term. Criteria are set, such as size and the type of service that the logistics partners must provide. Companies should also decide how important certain aspects are to them, such as transport quality and transport costs. Transport quality in particular is often an underestimated point, as it must be guaranteed that there is available freight space at the price offered. Based on the specific criteria, shippers and importers can then align their freight purchases using the e-procurement system and award transport contracts.
Transport purchasing in low transport volumes
Smaller shippers and importers have a small transport volume. These companies often buy or sell their products including transport services, so that they do not have to purchase the freight themselves. If they do carry out the transport procurement process themselves, it is usually quite manageable due to the low volume. The transports are then carried out with a few or even just a single logistics partner.
Freight purchasing or freight procurement in medium-sized companies
Medium-sized companies usually need their own freight purchasing department due to a significantly higher shipment volume. The shipment volume of these companies is often concentrated on several locations or routes. For regular volumes, price validity of one quarter to one or two years is agreed. For special transports or routes that are served less frequently, daily price inquiries or spot inquiries are made to the logistics partners with whom the companies work. In principle, companies organize their transport procurement so that they work with a few logistics partners. It does not matter whether these are long-term conditions or ad hoc inquiries. If the conditions in transport procurement are constant and there are no operational irregularities, the cooperation is usually permanent.
Transport purchasing in corporations is more extensive
Larger companies and corporations have an even greater transport volume, which is distributed across various locations, customers and suppliers. In addition, the amount of transport costs is a more significant cost block, which is therefore the focus. As a result, these companies organize their transport purchasing or freight procurement somewhat differently and rely on benchmarks and transport tenders even more than smaller companies. The entire process of freight purchasing or freight procurement is usually carried out by their own departments or teams. As a result, their requirements for e-procurement systems are also different than those of small and medium-sized companies.
E-procurement providers help with transport procurement and supply chain control
Regardless of their size, it is important for companies not to become dependent on individual logistics partners. Even smaller companies that carry out their transports with a partner usually maintain contact with several logistics service providers. Medium-sized companies and corporations usually rely on a larger pool of logistics service providers. These companies must ensure that their transports are handled reliably when purchasing freight or procuring freight. Therefore, several logistics service providers are always used at the same time in order to be able to handle the transport volume differently at short notice if there are loading problems. E-procurement providers use their systems to help companies maintain an overview and full control of transport procurement.
e-Procurement systems and e-logistics applications on the rise
When it comes to transport procurement, companies are increasingly turning to e-procurement systems and e-procurement providers. Manual processes using email and Excel are too time-consuming and prone to errors, especially when it comes to freight purchasing. However, tendering tools only cover part of freight procurement. Platforms and digital freight forwarders offer good technical solutions, but they are also just one logistics service provider among many. If companies have to register on several portals, however, this is inefficient and does not offer a decisive advantage over existing processes.
e-Procurement system as a digital solution with high process control and process efficiency
For these reasons, Software-as-a-Service (SaaS) services are increasingly establishing themselves as the standard in the logistics industry. These e-procurement systems are easy-to-use tools that enable companies to quickly digitize manual processes in transport purchasing while maintaining full control over their own supply chain. These services are provided by e-procurement providers and can be easily integrated into existing processes without the need for complex conversion or system implementation. E-procurement systems are available on a monthly and annual subscription basis and do not incur any investment costs. In addition, the usual collaboration with existing logistics partners can be continued. Due to lower costs, higher process efficiency and control over your own supply chain, SaaS services are a must-have and form the foundation of future-proof transport procurement.