2018 was a challenging year for the transport industry. A report by Transport Intelligence estimated that there were 150,000 unfilled driver jobs across Europe. The UK and Germany were particularly hard hit, with a shortage of 52,000 and 45,000 drivers. These conditions have contributed to creating a seller’s market, with carriers taking advantage of high demand to increase costs.
On the other hand, businesses are under pressure to reduce expenditure and increase margins – nothing new there, but particularly tricky given the circumstances. This need to drive down costs has to be weighed against the risks of doing so in non-sustainable ways. Remember the horsemeat scandal? A great example of what happens when complex, opaque supply chains are put under too much pressure…
What does that mean for transport procurement in 2019? In this post we consider which trends will dominate the coming months.
Digital transformation will continue
AI, Blockchain, the Internet of Things (IoT), robots, self-driving trucks… there is plenty to get excited about, but are we ready? Well, we’re certainly better prepared than we were 12 months ago, but there’s still some way to go before end-to-end procurement process are automated. According to Gartner, by 2023, half of the globe’s largest companies will be using AI, advanced analytics and IoT in their supply chains.
In coming months we will see more procurement solutions integrate AI and take over administrative tasks, such as invoice processing, freeing up professionals to focus on strategic decisions. We will also see more and more companies turn to digital freight platforms to take advantage of carrier pools and ensure they select the best option available. We also expect procurement platforms to access more expansive data sets and better spot opportunities for added value.
2019 won’t be the year Alexa and Siri team up to run your procurement department and there’s a very good reason for that…
Problem solving and soft skills
Procurement has come into its own as a career choice. While Tim Cook remains the poster boy for the sector, Apple’s former Chief Procurement Officer is not the only one leading the line. Mary Teresa Barra, the Chairwoman and CEO of General Motors, for example, earned her title after excelling in her role as Executive Vice President of Global Product Development, Purchasing and Supply Chain.
These two examples are part of a wider trend and highlight the growing importance of procurement and supply chain in the boardroom. This shift should come as no surprise and illustrates procurement’s ability to improve margins against a challenging economic backdrop. Gone are the days of the function being seen as a ‘bean counter’.
However, with this newfound prominence comes the need for a new skillset. Procurement and supply chain roles require problem solvers, able to analyse data, pinpoint opportunities and evaluate them holistically. There is also a growing need for soft skills as supplier relationship management becomes increasingly important. Stretched supply chains mean collaboration and innovation are essential – there is less room for hard-nosed negotiation (although this remains an important quality).
Specialised procurement tools for transport and logistics
As supply chains become more and more complex and the difference between success and failure increasingly hinges on a business’ agility, generic procurement tools won’t cut it anymore. There is no one size fits all solution that can handle the changing transport needs of a modern, global business. Specialised freight solutions can deliver where standard procurement tools can’t and we expect the market to embrace them.
Take Brexit, for example, the situation is still unclear and multiple scenarios are on the table. However, the deadline for securing a deal is fast approaching and shippers need to make contingency plans for each possible outcome. Some have taken to stock piling goods, others are looking for carriers able to guarantee capacity with little or no notice… It’s a complicated situation that highlights the uncertainty facing many in the transport sector.
Transport procurement poses other unique challenges. For example, you might need to consider break point calculations, freight weight conversions and other metrics that don’t factor in elsewhere. In addition, sector specific software typically offers experienced customer support – again, not something you’d get with a standardised product. This year we expect more companies reap the benefits of a tool, tailor-made for the sector.
