Why sourcing logistics with Excel is a bad idea
As a Pre-Sales Engineer it is my job to educate prospects on our products and to show the value associated with them. Many come to us to solve their logistics sourcing challenges and many see their in-house data gurus using Excel, Access, and/or SQL as “good enough”. Unfortunately, deciding not to use a solution like JAGGAER’s Advanced Sourcing Optimizer (ASO) is almost always a very costly decision. Here are some of the benefits of ASO that consistently and conservatively yields 5-10% more savings vs. Excel or basic e-sourcing tools:
Are you inviting 300-500 carriers to participate in your logistics bids? Are you putting out your entire network of 10,000 lanes? Can you collect three million bids? These numbers are no sweat for ASO and trimming down these number to fit your technology is a bad idea for many reasons.
2. Alternate bids
For a given lane, a carrier might be able to offer savings you were not aware of by adjusting non-price bid fields such as transit time, mode, equipment type, asset/broker and more.
Carriers often want to bid all most lanes in an RFP and express their capacity commitment at the lane level. But what if you awarded them all of those lanes? Carriers need a way to bid on all lanes, but then express their capacity limits at multiple geographic levels, for example, Origin city to three digits, entire network, state to state.
4. Volume tier offers
Carriers don’t know what you will award to them and often want to express discounts based upon defined award volume or $ awarded to them.
5. Bundled offers
Carriers often want to create their own bundle of lanes and offer an “all or nothing” price for that defined bundle.
6. Real-time bid feedback
Buyers can turn on real-time bid feedback for carriers to see on any price field. Feedback can be based on buyer defined formulas such as the minimum of the lowest bid currently in the system less 10% or the baseline price minus 15%. This functionality consistently yields amazing price compression especially when you invite many carriers.
How do I make sense of all of this?
Now that you have millions of bids, alternate bids, volume offers, bundled offers, and capacity limits at varying geographic levels, analyzing this in Excel would be a nightmare if not impossible. You are never going to simply award the business to the lowest bid per lane as you have many other non-price factors that are important in your award decision, factors such as sustainability, insurance levels, diversity, asset/broker ratio, transit time and OTD. You can point and click to add as many scenario rules and quantify the cost of these rules in near real-time. Rules around any data element in your sourcing event are available to factor into your analysis. ASO has proprietary optimization capabilities.