Frequently asked questions about optimising freight procurement
Freight procurement encompasses the entire process of sourcing, negotiating and managing external transport services throughout the global supply chain. Its strategic importance lies in the fact that, for most companies, freight costs represent one of the largest and most sensitive components of their overall logistics costs. Optimised procurement not only secures significantly lower rates but, above all, guarantees reliable loading capacity in volatile, unpredictable markets. Companies that neglect this area risk significant budget overruns and ultimately jeopardise their ability to deliver to their own customers.
A systematic analysis and optimisation of transport procurement generally pays off from an annual freight volume of around one to two million euros. At these scales, the realistic potential savings of 5 to 15 per cent on average more than justify the use of internal resources or the involvement of specialist consultancy such as ebp consulting. The return on investment (ROI) for such a project is extremely attractive, as the project costs are often fully recouped within a few months through direct freight cost savings. The project duration is also highly efficient, as we move very quickly into the negotiation phase thanks to tried-and-tested benchmarking tools.
Outsourcing transport procurement to external specialists or 4PL service providers is a far-reaching strategic decision that can free up internal resources significantly and immediately. It is particularly worthwhile if the organisation lacks the specific market knowledge, the expensive IT systems or simply the negotiating power required to secure best-in-class rates. However, companies must bear in mind that outsourcing involves relinquishing some control over processes, and that operational interfaces must be defined with the utmost clarity. We therefore always recommend carrying out a preliminary quick check to assess, on the basis of data, whether empowering the internal team might not, in the long term, be the more profitable and secure option.
A key promise of ebp consulting is to relieve your internal specialist departments as much as possible throughout the entire, often gruelling tendering process. Your company’s internal resource commitment is essentially limited to the initial provision of transport data, the approval of the procurement strategy and the final award decisions. Our experts take full responsibility for the extremely time-consuming data cleansing, the preparation of detailed tender specifications, the protracted communication with carriers and the complex scenario analysis. This allows your staff to concentrate on their day-to-day business without distraction, whilst the project is driven forward without any friction.
In most cases, the quickest and most cash-flow-positive savings can be achieved by immediately introducing a rigorous, systematic freight cost audit, in which unjustified surcharges are consistently reclaimed. Another highly effective and rapid lever is the targeted consolidation of the service provider portfolio: bundling transport volumes from many small carriers into a few high-performing core freight forwarders creates immediate economies of scale and significantly better discount tiers. Similarly, the intelligent shift from expensive express shipments to standard freight brings about drastic cost reductions, provided that supply chain processes allow for these lead times. Through professional benchmarking, we identify precisely these operational weaknesses within a matter of weeks.