Freight provisioning

Freight provisioning

How can you estimate the exact freight cost for one month?

Background

Market growth has made storage and production more centralized, which in turn has made transport costs a bigger part of production costs. This is why it is important to our customers to have control over their transport economy.

If we also add what we’ve learned from the pandemic we can also see that consumers chose to their shopping online rather than in the stores. This in turn has made “last mile” a concept and an additional cost factor. Transport costs have also become a competitive parameter just as “free shipping” is a factor to maintain customer loyalty.

The transport sector have lately had a big increase in cost and freight costs have increased and become an unpredictable part of cost of goods and cost to serve. Thus it is more important now than ever that companies have precise measurements for their freight costs.

Problem statement

In many branches there is great competition, small margins create the need for high quality service. Therefore it is important to maintain control of both income and expenditures,  hence accounting should close and report 3-5 days into the coming month.

Freight cost is a big part of the variable costs and can have a big impact on overall expenditure, therefore an important part is being able to see freight cost in close relation to income, which are often measured in % of revenue. This KPI is called freight quota.

When freight quota is measured monthly, you will see the total revenue against the total freight cost. Thus it is important that with greatest accuracy possible, being able to relate monthly freight cost, to the correct period. Carriers often do not invoice early enough to being able to measure this correctly.

Freight provisioning with Softlogs

We have created a function in our FIM – Freight Invoice Management where we, with assistance from invoices, booking data and AI, based on trends and earlier periods, can periodize freight costs with good precision and full automatization. This saves our customers large amounts of manual labour and provides security because of our freight economy being properly cared for.