Supply chain managers face tremendous pressure these days. After years of pandemic-induced shortages and record-high shipping costs, the #1 priority over the next 12 months amongst respondents to the 2022 State of Supply Chain Management survey is reducing supply risk for their materials, and to do so they are looking to enhance agility and cost control. However, poor data quality, outdated technology, and disparate data silos continue to hold many back. At the same time, increased demand for rapid service contends with “record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices, and difficulties in transporting products across industries,” (2023 ISM survey) making it all the more difficult to establish a pricing strategy that can meet expectations.
And so, despite their best efforts, many providers miss the mark. Whether they pay too much, go in too low, miss out on rate drops, or end up taking too long to submit, an effective pricing strategy requires a complex balance of constantly shifting variables to work effectively.
If this has happened to you, there’s a good chance you may simply have outgrown the tools used to establish your strategy.
There are a wide range of methods that most supply chain managers utilize in establishing their pricing strategy — some more effective than others. Below we’ll examine two of the most common methods, and outline the signs that it might be time to look beyond them.
As the go-to application for more than two-thirds of supply chain managers, spreadsheet software like Excel and Google Sheets is a common sight in supply chain and logistics management departments at companies both large and small. And it’s not hard to understand why. It’s low cost, easy to use, versatile, and universally available, and can accomplish quite a bit.
How do you know if it’s time to move on?
- Your customer list is growing, and it’s becoming difficult to manage change
As volatility increases and your customer list grows, it becomes increasingly vital to be able to track key data in real time in order to maintain that proactive strategy.
- When faced with uncertainties, you are forced to guess
With the siloed access to data provided by a spreadsheet, supply chain managers are left making assumptions on market trends with the limited evidence available.
- You’ve encountered errors in your models
Various studies over the years have shown that nearly 90% of all spreadsheets contain errors that can cause disruptions. And with the compounding nature of these kinds of error, it often doesn’t matter how small they appear. Over time, these disruptions can cause financial losses as high as 62% — not to mention the hit that reputation takes when they occur.
The Auction Strategy
More sophisticated than spreadsheets, we see many shippers adopting the auction approach in their pricing strategy. In this strategy, the shipping manager doesn’t need to set their own prices — the market does it for them. By putting the question of price to the carriers of their choice, the shipper is able to simply examine the prices provided and select the best fit.
How do you know it’s time to move on?
- You are unable to confidently determine what prices are competitive
Without access to prices from those outside of your selected carriers, it can be difficult to determine whether prices provided are competitive with the general market.
- Bringing new carriers on board has been a challenge
No matter how thorough your research is, without insights into pricing history, there is little to no way to gauge how a new carrier will react to shifts in the market.
- You have been unable to push for lower prices when they were called for
Due to the inherently passive nature of an auction strategy, it doesn’t allow for much nuance in pricing, and you typically receive little to no guidance or interaction with the requesting shipper.
How can you improve?
The methods outlined above certainly have their time and place, but for companies that are beginning to encounter those red flags, it may be time to modernize your operations with a more advanced solution.
With Shipwell’s data-driven Pricing Intelligence tools, supply chain managers are provided with access to the information needed to develop a winning strategy by analyzing both internal company data and external market information to provide tailored, scenario-specific guidance.
Whether you’re a shipper looking to stay informed about current market trends or a broker operating in the spot market, Shipwell Pricing Intelligence caters to your needs. Our solution not only provides real-time spot rates through your choice of subscription services but also enables benchmarking of contract rates against industry standards and your own historic rate performance.
All of these capabilities come together to empower you to optimize your pricing strategies, stay competitive, and drive success in your transportation operations by enabling you to:
|Achieve greater pricing accuracy||Find the best rates for your shipments||Gain unparalleled visibility into your shipping rates|
|View intelligence gathered from a diverse range of data sources to provide you with highly accurate estimates.||Simplify the process of finding the best rates and carriers with a centralized, highly intuitive, and user-friendly interface.||Track your historical rates and spot market trends to make informed decisions about your future shipping plans.|
The world of the supply chain manager is complex, dynamic, and competitive. Weather, politics, consumer trends, and global events can, will, and have had significant effects on nearly every supply chain. But data-driven tools like Shipwell’s Pricing Intelligence can allow shippers to not only predict and prevent problems, but turn them into business opportunities.
Get a full view into the types of tools, models, and functionalities that are essential to an effective pricing strategy — and how Shipwell allows you to put them to work in yours with Pricing Intelligence.