Dynamic rating promises increased transparency and profitability
The logistics industry has experienced an undeniable technological revolution in recent years. Companies across the supply chain are embracing technology to improve their businesses, automate tedious tasks, and improve bottom lines. Yet the industry as a whole is relatively new to high-tech solutions, and in many companies, employees continue to take on some of the more time-consuming manual tasks, such as evaluating shipments and correcting invoices.
In the logistics industry, up to half of all shipments are still rated manually, according to research from IT experts at Sciant, an IT solutions company specializing in providing assessment solutions for the industry. logistic. The team found that it takes two to four minutes to manually rate a single shipment. If a company makes 1 million shipments per year and 30% is manually assessed, taking two minutes each, that comes down to six hundred thousand minutes, or over 10,000 hours of work.
If businesses can reduce the number of shipments or services assessed manually, they can expect significant gains in efficiency and accuracy. While humans will always be needed to handle special or unusual cases, using technology to perform simple tasks has been proven to reduce errors and increase profitability. This is where Sciant’s services related to dynamic rating solutions come in.
“There is a lot of activity going on in freight. Several parties are involved in a package reaching your house. There could be around 6-10 activities per shipment on average, and to create a complete end-to-end picture, including customer charges, vendor charges, and internal charges, you could end up with around 20-30. charge for a shipment, ”said CEO Angel Mitev. “Depending on how the individual tariffs are managed, you could end up with hundreds of thousands of different tariffs maintained in a TMS. All these price lists will have to be maintained and regularly updated and this must be done dynamically. This is the business problem we solve for our customers.
Dynamic scoring is particularly useful for companies facing opaque rate changes or struggling with transparency related to profitability at the shipping level. In an industry as complex as logistics, it is common to lack visibility. This is especially true for rates, which are influenced by various factors, as well as expert advice and differences within the companies themselves. Logistics companies must meet ever-increasing customer expectations while continuing to generate profits and growth. By improving their rate management processes, they can simplify the customer experience, while remaining competitive and profitable.
“When we think of dynamic scoring, we need to understand the sources of these rates. The pricing organization and sales teams will study capacity and demand and set prices based on their knowledge of the market. In reality, companies also need to look at the cost to make sure they are competitive in the market and also profitable, ”Mitev said. “One source of pricing will be the pricing teams, others will be suppliers or internal company departments. Ensuring the correct rates are dynamically applied on each shipment is a must. It is also extremely important to update regularly and provide users with visibility into how the different rates were calculated. For example, the fare calculation might be subject to certain discounts or block space agreements with carriers and these must also be taken into account by the dynamic calculation logic.
Market leading TMS solutions such as Oracle Transportation Management and CargoWise One as well as new entering TMS systems have some built-in functionality for dynamic rating and fare maintenance, however, business complexity, process Custom sales and the complex logistics IT landscape require customizations and integrations with a number of external systems such as third party pricing, inventory and equipment management, WMS, OMS, etc. Developing such customization in TMS is in many cases difficult, expensive and time consuming. In many cases, TMS vendors would not agree to implement a change in their traditional products to cover special cases and custom processes. External rate management solutions that are tightly integrated with TMS can deliver the desired custom functionality faster, cheaper, and more efficiently. Mitev stressed that dynamic rating solutions like the ones Sciant helps customers develop must be flexible enough to meet the specific needs and issues that may arise in various businesses.
Supply chains face capacity shortages and particularly acute challenges in the maritime transport of freight containers. With the availability of containers becoming increasingly limited, the costs of renting containers and equipment have increased dramatically, driving the overall cost of shipping. The infrequently updated tariffs and rates for containerized goods (both FCL and LCL) are no longer sufficient to ensure competitive pricing and correct assessment of the costs of shipments. Delivery times and routing options also play a critical role in shipping planning and pricing. Dynamic pricing solutions could address these challenges and provide frequent pricing updates to reflect changing market conditions.
The availability of modern APIs to query buy and sell rates, estimated transfer time, and ETAs directly into e-commerce and order fulfillment systems is also becoming an expectation of most service customers. logistics. In addition to improving the user experience by providing a personalized user interface that can consolidate rate cards under a single entity (e.g. a specific brand name), manage mass rate updates, dynamic scoring should provide API gateways and middleware platform functionality enabling support for multiple adapters that transform real-time data rate directly into the formats desired by client systems. According to Quincus, a Singapore-based SaaS platform provider that aims to solve daily supply chain challenges by leveraging OpenAPIs and advanced data analytics to automate manual tasks and increase efficiency, “The data needed to make real-time decisions flows through existing points. system connections millions of times a day, ”said Jae Lee, Quincus vice president of engineering. “The challenge for the industry is that all of this data is isolated and not always accessible to the people, processes and systems that need it. ”
Dynamic rating solutions should also include detailed reports and BI functionality to help companies analyze and understand the impact of rate changes and also easily play with what-if scenarios. These solutions also adopt machine learning and AI techniques to automatically predict the factors that drive rates and rate changes, including general increases, seasonality, and changing conditions.
As DHL Global Forwarding has experienced, it is important to rely on an IT company such as Sciant to find a personalized scoring solution; systems must meet complex needs without downtime or undue interference. “DHL Global Forwarding has engaged with Sciant to provide a dynamic scoring solution that is tightly integrated with CargoWise One and that meets the specific needs and business requirements of our global airfreight product,” said Fernando Teixeira, VP Airfreight IT, Solutions Design, Operations & Compliance at DHL Global Forwarding. “The solution has helped us optimize scoring across our global air cargo business, dramatically improving efficiency,” added Teixeira.
With dynamic scoring, businesses can dramatically reduce the number of invoices that need to be graded manually. Sciant found that this technology can reduce the number of manually assessed invoices to just 10-15%, which is a three to four-fold improvement over previous methods for a given company. Regular price updates, the correct application of all tariffs and transparency in the calculation of tariffs offer a competitive advantage to companies that have such solutions over their competitors who do not.
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