From justifying last year's spend, to identifying where to allocate future costs, budgeting season brings a whole host of challenges for Shippers. It can be difficult to keep to a reliable schedule, the, market is constantly moving, and no one has a crystal ball for the future — meaning it’s difficult to accurately know the true value that any spend is bringing in.
In a multi-billion-dollar industry like supply chain, the financial risk of not understanding the budget landscape is astronomical. But financial success doesn’t happen by accident, either.
There’s one clear common thread between accurate budgets, aligned stakeholders, and healthy bottom lines: a data-driven approach.
Justifying Last Year's Budget
Many Shippers grapple with the question: Is last year's budget sufficient for the upcoming fiscal period?
They know that if they aim too high with their budget, they’ll have poor allocation, are wasting money, and lose the trust of their management. However, if they aim too low, they put themselves at risk of not being able to catch up once it inevitably rises.
For Shippers who aren’t proactive in their budgeting and wait to follow the market, unsustainable conditions lead to unsustainable budgets.
Real-time freight data allows Shippers to confidently move away from their reliance on historic budgets. With the volatility of today’s market, not looking forward is a recipe for disaster. By having one, neutral source of market truth, all stakeholders can make decisions based on the same understanding, allowing their expertise to shine when supported by data they trust.
Data-driven insights serve as a powerful tool to justify budget decisions to internal teams and stakeholders, fostering alignment and informed discussions.
Identifying Cost Avoidance Opportunities
No matter which way the market swings, there’s always room for cost avoidance. In a strong market, it’s simple: avoid high costs by avoiding high rates. However, in a weaker market where rates are already low, spotting these opportunities can be harder: where else is cost avoidance possible?
Shippers need to be able to identify areas for optimization to make sure they have efficient resource allocation. Without a true picture of the market, it's difficult to pinpoint areas where potential strategic improvements can be made.
Even if their performance and service levels seems strong, Shippers need to consistently aim to do better — whether that’s in their lane choice, carrier choice, choice of box etc. Margins can always be improved, but not every Shipper has the ability and drive to do so.
Shippers can gain visibility into market fluctuations by using a data-driven procurement approach, enabling them to proactively identify these areas for improvement. By analyzing market conditions and comparing rates, it’s possible to uncover areas for potential savings, ensuring that budgets are optimized to its fullest potential.
Timing for Tender Submissions
Choosing the right time to go to market for tender submissions is crucial for securing favorable contracts. Many Shippers are locked into a tender cycle or follow the traditional ‘tender season’, which doesn’t always bring them the most optimal rates.
Many stick to these strict schedules because it’s comfortable and predictable — but comfortable and predictable don’t go together with growth. Being flexible enough to tender when the market is right versus when the calendar says so is key to optimizing budgets and stimulating growth.
Even though this shift in mindset isn’t easy, the cost is changing now is far less than the cost of changing in the future – once it’s too late.
Real-time data equips Shippers with the information needed to identify the best time to go to market for tenders. By staying updated on market dynamics, rate trends, and supply and demand fluctuations, Shippers can make informed decisions on when to initiate the tender process. This strategic approach maximizes their chances of securing cost-effective contracts and allows them to break the restrictive cycle of Tender Season.
Xeneta: Your Source of Data-Driven Insights
Xeneta understands the unique challenges faced by Shippers during budgeting season. Our platform provides real-time, accurate, and neutral freight rate data, allowing Shippers to:
- Justify Budgets: Use up-to-the-minute data to evaluate and justify budget decisions, facilitating productive discussions with stakeholders.
- Identify Savings: Leverage data-driven insights to uncover cost avoidance opportunities and optimize your budget.
- Optimize Tender Timing: Stay ahead of market fluctuations to identify the ideal time to go to market for tender submissions.
Budgeting season can be a daunting for Shippers, but real-time, accurate, and neutral freight rate data serves as a powerful ally. It empowers Shippers to identify and address pain points they may not even realize they have.
With Xeneta, you can navigate budgeting season confidently, armed with data-driven insights that ensure your logistics operations are primed for success. Don't let uncertainty hold you back – make data your strategic advantage with Xeneta today.