Intelligent Automation in Transportation Sourcing

We’re entering a time of transition from manual control of sourcing processes to machine-enabled sourcing. However, if you’re involved in sourcing complex transportation or MRO categories, you know that most bid tools haven’t been able to handle a process with hundreds of suppliers, thousands of lines or items, each with multiple bid components, without significant human expertise and intervention. But the pace of innovation is picking up speed. Procurement automation is taking swift and giant strides forward thanks to developments in artificial intelligence (AI) and machine learning – even in the most complex transportation categories.

With rising rates, tighter capacity, and a huge increase in demand due to the pandemic (see more here on our recent Webinar: Optimize Your Logistics), sophisticated shippers are adopting procurement technologies to optimize carrier relationships, capture cost savings, and reduce risk. Procurement tools with bid optimization capability first appeared in the early 2000’s and these tools have been informing decision making with detailed trade-off analyses of multiple scenarios with various criteria and constraints. Tools using AI and machine learning are emerging to address more complex procurement processes and further automate workflows. The combination of AI and automation, referred to as intelligent automation, describes a range of technology which reduces human input and improves over time: developing the capability to make decisions based on previously used data.

Bid tools enjoy high adoption among Procurement organizations, but most of these tools offer no more than spreadsheet-like capabilities for complex categories. Often, companies turn to consultants with specialized skillsets and tools to support their team on a complex bid optimization event. Companies like Keelvar and Evos Logistics have developed procurement software tools that address even the largest and most complex transportation RFPs and are “learning” to address market volatility. Increased capabilities, leveraging AI and automation, offers these key benefits:

Process Automation

Computerized identification of opportunities triggers sourcing events, from simple spot bids to complex long-term contracts as needed, with little to no configuration. AI technology allows multiple bids to be conducted with scenario management. Shippers can now consider more factors – varying routes, service levels, and modes to decide the optimal contract award combinations.

Increased Visibility

Supplier and rate data allows for increased transparency through the entire supply chain. The compilation of data, captured from multiple sources, for a single source of truth will increase spend visibility and provide insights into a company’s supply chain. Automation eliminates manual data management and tracks all bids, leading to increased traceability and compliance with policy.

Data Driven Decisions

Leverage real-time data to validate freight rates to stay one step ahead of market trends and competitors. Intelligent automation offers the ability to digitize decision-making, which is a crucial step in making positive impacts in an organization. Additionally, available rate data can help quickly pinpoint risks to transform towards a more resilient supply chain.

As always, companies must start with an assessment of your internal capabilities and clear goals for your department. For many companies, transportation sourcing has become the critical function for delivering to customers. The successful automation of sourcing strategies with alerts based on market conditions, tied to a robust sourcing technology, may soon be the competitive advantage that defines winners and losers in an unpredictable supply market.