Skip to main content Skip to Footer

LATEST THINKING


Building strategic advantage through integrated logistics management

Shippers must act quickly to develop an integrated logistics management program.

Overview

The freight market is changing and shippers no longer hold the upper hand. Those companies that gain an insight into the hidden transportation costs in their supply chains will be able to consolidate their gains and achieve significant cost savings.

Background
In the last couple of years, shippers gained an unprecedented influence over the international transportation market, with carriers vying for scarce business. Now, as commercial activity picks up, that position is weakening. Why is this?

However, shippers still have opportunities to capitalize their recent gains by forging new and innovative arrangements with carriers who remain eager to capture new business and re-establish their top-line growth.

To maneuver effectively within this unique set of conditions, shippers must view the situation through the lens of risk management.

Key Findings

Many companies have limited control over their total logistics management spend because so many expenses are hidden within the supply chain. This is a growing concern, given that transportation can account for upwards of $30 million to $60 million for every $1 billion in materials cost for product-based industries.

By contrast, companies that can control freight spend stand to unlock a 5–10 percent improvement in operating income, and a 10–20 percent improvement in stock price—an opportunity to enhance shareholder value.

To capture these gains companies must become what Accenture calls “supply chain masters”—organizations that know how much they spend on transportation and understand where the hidden costs lurk.

Recommendations

Shippers must act now to seize control of their transportation spend and position themselves for stability and growth—especially as increased movement of freight and burgeoning fuel costs drive up freight costs.

Accenture’s research shows that the only way an organization can stay ahead of the pack is to establish an integrated transportation management program, a cohesive strategy aligned with the company’s overall business objectives.

To lay the groundwork, executives must ask questions about the operational factors driving their transportation needs and overall strategy. Thereafter they must define their integrated transportation management program by following these three steps:

  • Assess your overall transportation spend, then score quick wins in transportation activities. Quick wins generate immediate savings that can be used to fund strategic investments and build momentum for further change.

  • Establish an enterprise-wide logistics management program to synchronize transportation services, enable greater network visibility and manage freight spend.

  • Integrate and automate planning and execution functions to optimize your transportation network and drive ongoing efficiencies. 

Analysis

Business conditions are in more flux than ever. As a result, shippers face a moving target in striving to get products to customers without overspending on transportation services.

Hitting the target will never be easy. But by taking an integrated approach to their transportation management, shippers can sweeten the odds of success.

We’ve outlined a three-step process—assessing transportation spend and scoring quick wins, establishing an enterprise-wide transportation management program, and integrating and automating transportation systems.

But just as speed is critical to getting products to market, it’s also essential for surmounting the challenges and capturing the opportunities presented by today’s uniquely complex and fast-changing transportation services scene.

Shippers must act now to establish integrated transportation management as a key competitive weapon—or risk being left behind by nimbler rivals.

                                    
Download PDFRead the full report. [PDF, 1MB]