Data Analytics in Procurement: Value through optimisation

From the standpoint of augmented effectiveness, procurement and data analytics are now inseparable; any procurement organisation that has their finger on the pulse of global events will be utilising data analytics throughout their entire ecosystem.

Tai Software’s TMS (Transportation Management System) uses historical data and third-party tools to bring together multiple sources of information and display them in a single place that’s easy for users to consume.

This single location becomes the centre of the procurement process.

Within this process, the system performs data analytics against historical information to present both summarised ‘lane data’, as well as comprehensive and detailed carrier and shipment data.

Tai’s truckload quoting page, for example, provides the user with a single location where all background analytics are surfaced to empower their decision making.

“We've got analytics implemented from outside sources, like DAT, Parade.ai, and Greenscreens.ai – all tools that are involved in the analytics work,” says Walter Mitchell, Tai Software’s CEO.

Mitchell has more than 17 years experience in architecting software applications and leading entire teams that build software applications for businesses.

His prolific career has been focused on translating complex business needs into practical software applications, emphasising efficiency and usability, while delivering solutions that solve business problems and help customers.

He tells us that Tai’s TMS (Transportation Management System) is focused primarily on freight brokers moving North American domestic freight. They specialise in FTL (Full-Truckload) and LTL (Less-than Truckload) freight processes.

Concerning Tai’s TMS, which drives freight into the modern world, he says: “We're searching all that data in one place, providing a summarised view of where all the analytics are displaying results, including our own – most notably showing data relating to lane history.”

Making an important distinction he says: “It's one thing to run data analytics – which is, of course – extremely important, but making sure you have the tools that run effective analytics and putting their results within the context of how the users actually need them? That’s going the extra mile to provide far better results. And that’s what Tai’s TMS is all about.”

Informing procurement decisions through data analytics

Tai’s TMS is designed to be the source of data driven decisions. Recently, they transitioned a brokerage to their TMS to give them end-to-end automation – from posting to booking, dispatching to tracking – using Tai’s data integration to help provide both predictive, as well as historical analytics.

Bringing these data points together along with various other valuable sources allows their clients to make decisions based on all the data that’s available, rather than just having to rely on a single source.

Mitchell says: “These reps can now interact with carriers more smoothly than ever before, as carrier profiling used to involve pen and paper, and the strength (or lack thereof) of the broker’s memory. With the capacity insights, reps have access to a much broader view of capacity, and this allows them to cover loads much earlier, and to keep more off the spot market.

Now they can easily see rates in their TMS, being provided with data analytics that can compare between systems to identify any issues early on and ensure that each load is rated accurately.”

How Tai ensures procurement data is accurate, complete, and of high quality

By leveraging multiple sources of data, Tai are able to use each data source as a verification against all others. 

“This allows you to evaluate the accuracy of the data simply, because the market shifts very quickly at times,” says Mitchell. “And when it shifts, some of the analytics – especially if you’re looking in the rearview mirror – won't always be as up-to-date as you want.

“However, using multiple data sources allows an overview that, of course, adds confidence, because our clients are able to see all of these different sources in a single snapshot.

"By looking across the whole set of available data points, users are able to evaluate which ones are the most accurate.”

Fraught freight: addressing key procurement challenges with data analytics

Mitchell says that making sure there is enough data available for a specific lane is a critical part of the process. When the amount of data is scarce, it’s much more difficult to use data alone to improve confidence. 

“We end up having to widen the range to get more data and, sometimes, that will reduce the accuracy of the specific request.”

For the more experienced pros, however, having data analytics for common lanes adds trust. “When you get into an area that's less familiar, that's where data provides even more value,” he says.

“That's why we focus on data analytics in the first place: it helps make sure that we're making good decisions, that we're making smart decisions, and that we know where we can generate revenue off of the shipment or margin.”

According to Mitchell, for uncommon lanes in the world of freight, “you really need the analytics to support your decision-making process”. 

“For the less experienced brokers, they're not going to have all the experience to know that, on certain days, a particular lane is actually going to provide more value.”

He continues: “For brokers, the data provides such a tremendous step forward since they can negotiate the terms of the shipment without having to doubt themselves or take a loss.

“It allows them to leapfrog forward by years of experience.”

The road to success

Using data analytics for procurement is an essential part of the process. “It’s important to use as many tools as are available to ensure that you have the confidence to accurately negotiate.

“When we are working in a world where we're transactional and we're running a high volume of transactions; one of the things that I think we would all be really happy with is knowing we're going to make mistakes.

“There will be times when we make a bad call – we can't cover a load, we can't pull the margin that we’re looking for out of this run. But what we can do with these tools is allow you to reduce the number of mistakes, even if it's just 10%. If we can eliminate some of the mistakes or their severity, it allows for brokers to win so much more.”

Mitchell concludes: “It's pretty easy for all of us to say: ‘If I could just eliminate a couple of the mistakes I make along this road, life could be so much better’.”