January 16, 2024

How to increase back office efficiency in transportation companies

The growing volumes of shipments and the increase in international trade make document management incredibly complex for logistics and transportation companies.

Particularly in the freight quotation market, the supply-demand equation is under constant pressure, and companies need to be able to conduct processes and operations at a significantly accelerated pace.
The shipping rates of many operators are not always clear and complete, with the result that some operations are a source of time loss disproportionate to the values involved.

From the cargo quoting process to bill of lading and customs clearance management, operations and coordination with external parties are not always optimized: much of the information needed to perform critical operations is manually extracted from such data sources (e-mail, spreadsheets) or from existing systems (ERP, TMS, WMS). These types of operations are usually prone to errors during the data entry process, causing inefficiency for companies.

Automating the management of back-office and document activities to reduce customer response time and increase revenue by using a single digital tool to communicate with customers and partners proves to be a great competitive advantage and saves logisticians the cost of the personnel they would have employed in the process.



Transportation management, the rules for not making mistakes

The management of quotation requests is one of the most crucial activities for companies offering transportation services. These companies usually have to devote resources exclusively to generating quotes.
But because the market has a high rate of saturation and there is a need to implement some differentiation from competitors, a crucial objective is to make strategic decisions about the resources to be used in processing shipping rates and transportation terms and conditions.
Therefore, some ground rules must be taken into consideration before deciding on the course of action and leaning toward increasing the number of human resources or employing digital technologies that enable automation of repetitive back-office tasks to support human resources.

In shipment management, the level of service provided by the carrier is increasingly important in order to ensure full customer satisfaction.
The lack of accurate and correct information affects the quality and outcome of its performance: promptly formulating the contents of transport documents such as quotations or bills of lading allows for service and cost containment benefits for both parties – customer and carrier. Automating the reading and extraction of information from transport documents could improve problems caused by lack of accurate and correct information.

The shipper can help optimize the transporter's time by having the documentation of the loads to be transported always ready, indicating the correct destination: in fact, it happens that the customer provides the billing address and not the actual delivery and unloading address with the clear need – on the part of the transporter – to have to provide a second delivery.
Also of paramount importance is the inclusion of the telephone number for the various unloadings and also the official responsible for accepting the goods. Both the customer and the transporter should always ensure that they provide correct information with a low margin of error



The types of costs in transportation rates

Today, in order to manage quotation activities, a transportation company should take several factors into consideration. Despite the fact that shipping rates are tailored according to the services required, there are criteria according to which it is possible to list what the content of any quotation should be, regardless of the nature of the services offered.That is, it is possible to draw the list of fixed points of any quotation, i.e., the basic standard content, which is divided into:

  • Transportation services: these are the operations offered by a shipper or shipper-carrier to carry out the physical transfer of goods from the point indicated as the start of the service to the point of destination (or to where the service of interest to the customer ceases)
  • Specific supplementary services: these are those operations that cannot be strictly related to the physical transport of goods, but which must go alongside it either because so requested by the customer, or because they are imposed by the regulations in force, or because they are necessary to ensure that the service goes smoothly. These services may include insurance, COD, issuance of transport documents, issuance of customs and consular invoices, certificates of origin, issuance of non-transport documents (carrier's declarations, black list exemption declaration, ...).
  • Generic supplementary services: these are the operations that, although often listed in the quotations, are not specifically required for the performance of the service or, in some cases, do not involve equally specific costs. An objective assessment of these costs cannot be made because their magnitude is not related to the weight or value of the goods shipped. It is therefore preferable to choose those operators who clearly provide their quotations, making both the services offered and their costs fully understandable.

The types of standard rates are weight rate, defined unit rate (parcel rate, pallet rate, etc.), volume rate, special rate (quantity rate and value rate).
Usually terms and conditions of express couriers refer to the first two categories, while traditional couriers often adopt volume tariffs. Quantity and value rates, on the other hand, are now extremely rare and generally adopted only when there are characteristics of the goods that make them usable.
These quotation operations are usually conducted by one or more human resources whose tasks include manually extracting information from the quotation request emails received from customers, issuing the quotation with the management system, confirming it, and finally sending it to the requestor.

Automations in the supply chainFigure 1: Difference between manual and automated processes

But if a transportation company intends to make strategic decisions about the resources to be allocated to the quoting activity for the shipping service, it should consider complementing its human resources with digital technologies that enable it to automate quoting operations and speed up procedures.
In fact, there are specific software programs that enable the process of creating quotations for transportation services to be automated, which we are now going to analyze.



How to optimize transportation costs with specific software

One of the elements that logistics companies should take into account when they want to optimize the processing of transportation quotes is the speed with which they can complete the transaction following the customer's request: after all, this is an extremely competitive market, and streamlining operations and speeding up processes can create a real advantage in this environment.
State-of-the-art specific software allows for the automation and standardization of the extraction of the information needed to create quotes with Artificial Intelligence technology. This technological solution allows for addressing what is now a huge volume of communication between customers, suppliers, shippers and carriers, and which hinges on manual methods based on paper, spreadsheets, e-mails or phone calls.

In addition to creating a competitive advantage, digitalizing and automating manual and paper-based processes can help companies increase efficiency, reduce costs and the amount of paper used. According to the National Research Council in Turin, Italy's companies consume 1.2 million tons of paper each year. This number rises dramatically in the United States, where there are more than 30 billion paper documents that are copied and printed each year1

A McKinsey analysis indicates that the bill of lading accounts for between 10% and 30% of total trade documentation costs. Digitalizing bill of lading management could save $6.5 billion in direct costs and enable between $30 billion and $40 billion in new global trade, while improving supply chain resilience2.

And thus, automating document back-office management, including quotation requests, with AI algorithms, aided by a collaborative platform communicating with the company's ERP, can make the difference between normal service and excellent service.
Digitalizing and streamlining the process of managing back-office activities by orchestrating external parties (i.e., customers, customs, agents, shippers, consignees), and automatically managing shipping quotes (communicating with ERP) in response to specific quote requests received from customers via email allows transportation companies to increase the amount of quotes delivered, and back-office staff to be able to devote themselves to performing value-added activities

The time has come for the transportation world to enter the digital age as well!



Notes

  1. Omdia, Market Landscape: Intelligent Document Processing
  2. See the report by McKinsey titled The multi-billion-dollar paper jam