Any procurement professional will tell you that it’s expected for suppliers and GPOs to form alliances which are mutually beneficial and benefit the end buyer. That’s just part of doing what we do. And it’s pretty much the same wherever you look in the world, whether you’re talking politics, world affairs, or about trading shifts with someone so you and another employee can cash in on one-time opportunities.
But it’s important to know about the fundamental role transportation plays in purchasing and to give it it’s rightful place in the supply chain as the grease in the wheels. While we all know we need it, we don’t often reflect on logistics alliances and how beneficial they can be to everyone in the chain.
Clearly, purchasing and transportation need one another. But working together, it’s possible to create Centers of Excellence which are enduring and which trickle down all the good stuff.
It was originally regulatory reform which led to the increasing tendency of purchasing and transportation functions to be more closely and strategically aligned.
But as time went by, procurement professionals saw the multiple benefits of placing both functions under the same rubric. Coupled with the effect of de-regulation (more aggressive price competition and more carriers in the market, placing further downward pressure on pricing), the advantages of taking an integrated approach became clear.
Procurement teams were offered greater control over carriers selected and were able to negotiate rates directly. Freight cost could also be segmented from the price of cargo, as well as allowing for the same controls used on outbound shipments to be applied to inbound shipments.
And increased competition among carriers allowed procurement to treat freight charges like any other category they were purchasing. In effect, transportation falling under the rubric of procurement led to the ability to cut costs.
A better supply chain
Creating a carrier rating system is crucial to transportation’s ability to help purchasing create a better supply chain. Only the most reliable and consistent carriers receive the desired ratings, which enhances competition further and allows the best to rise to the top.
That means reliable delivery that honors agreements, with procurement setting the standard in collaboration with transportation carriers.
Purchasing and transportation may have been forced into an arranged marriage by de-regulation. Sometimes things are just a natural fit, though and this was one of those notable occasions which rendered a happy ending.
At CenterPoint Group, we’re analytical. We like data and we know how to use it. We’re a trusted procurement advisor with 21st Century solutions to your every day office needs, bringing you category expertise and continual account management that gets you best-in-class pricing.
We know that purchasing and transportation are a natural fit and we thought you might like to know why that is and how we deploy that information to provide our members with superior pricing.
We believe in the power of numbers at CenterPoint. With a collective indirect spend of $850 million dollars, you get buying clout.
Contact us. There’s power in numbers.