If your company still manually calculates rates and inputs unstructured data into the computer, it costs you more than you think.
There are apparent costs like time and effort spent manually quoting, entering orders, recording everything, updating them, and tracking them.
However, there are more implicit costs stopping you from getting more business.
In this article, we will cover:
- What manual rate management is
- How much is it costing you
- What a rate management system is
- And how you should upgrade to a rate management software (RMS
What is Manual Rate Management?
It means having a human manually enter and compare all the data from the shipment and carrier’s offers to choose the best rate.
Manual rate management requires a lot of time and resources since it is usually done using only an excel sheet or nonupdated system and involves many factors to make a good decision.
To be able to visualize, compare and then choose the best rate, a freight forwarder or shipper needs to take into account the type of cargo, end-to-end shipment distance, transportation method (if LTL or FTL), if uni- or intermodal, fuel and carrier service prices, to name a few.
This takes up valuable time that could be spent on other tasks that would help the business, like customer service and sales. But that’s not all. Let’s understand the additional risks involved when doing a manual rate management.
Risks of Manual Rate Management
43% of a sales executive’s time is spent on quotes and pricing; now, combine this with the volatile transport industry; what’s the result?
Even after timely updates to compare quotes and try to avoid an outdated or risky offer to the shipper, a freight forwarder still have to put in the effort to be the communication bridge between all other stakeholders involved. This results in delayed quotes and, sometimes, unregulated prices and delayed quotes. Instead of using transport expertise to make the best choices and offer good services, freight forwarding professionals spend time and money on basic operations.
While manually entering third-party billing data, there are chances of errors with every shipment. A single number being incorrectly inputted can change the person and the amount billed. While manually dealing with a large number of invoices leads to lost invoices or double billings. Unnecessary delays and losses happen because of it.
In fact, 90% of the world's 550 billion invoices were on paper even back in 2019. That's a lot of invoices.
One of the most significant risks freight forwarders face in a volatile market is turnaround rate. This causes quotations to become even slower, increasing the risk of errors. And manually managing them in short periods causes many errors.
Both quoting and billing make use of data. And they have to be repeatedly calculated and inputted. These are sectors prone to errors. Any place that requires inputting can have the following:
- Delays between carriers
- Inconsistency in quote prices
- Problems with documents management
- Budget flaws
- Inaccurate inventory numbers, etc
According to the IDC, human errors cost US and UK firms $435 per employee or $18 billion per country every year. The implicitly lost time could’ve been used on more attentive and urgent tasks like acquiring more work.
Lack of Shipping History
This can make it difficult to predict shipping costs, leading to overcharges or undercharges accurately. Plus, it can be difficult to identify trends and optimize shipping routes without a complete shipping history. This can ultimately lead to higher shipping costs and inefficiency.
Lack of Data Visibility
There are always various bottlenecks and shortages that can halt your shipping. Without access to real-time data, freight forwarders can’t accurately track their costs or predict trends. This can lead to overspending on shipping rates and, ultimately, lower profits.
For instance, you can't centralize or automate processes without supply chain data visibility.
Dig deeper into this and more implications of the lack of supply chain data visibility.
Rate Management Software
In logistics, a Rate Management Software is a platform that shippers and freight forwarders use to help automate the process of comparing and choosing the best rates for their shipments.
It’s designed to help transportation managers optimize their pricing strategies by considering several factors, including market demand, competitor pricing, type of shipment, routes, and the cost of goods and services. The software can also help businesses quote, track, and monitor their pricing over time, allowing them to make adjustments as needed.
Digital Rate Management: how to start?
The digitalization of transportation logistics processes is no longer a question - and this is not different for freight forwarding companies.
Although moving to digital rate management may seem complex, plenty of platforms specialize in taking the manual process from excel spreadsheets to online automated software. The first and most important step to going digital is choosing the best one for you and your shipments.
Map your and your client's needs to understand what needs to be taken into account to select the best carriers and rates and compare the tools in the market. You can go from simple data input software to an all-in-one solution for transport planning and procurement, like rouvia, centralizing your process and reducing time spent between manual and different platforms.
Our platform is built for your logistics team because we understand how complex shipping workflows can be. With rouvia, your staff no longer has to do labor-intensive manual quoting and data entry with high error margins. Instead, they can lay back and put more time into parts of the freight forwarding work that can differentiate your company, like customer relationships – adding more value to your company.
To get started, contact us here, and one of our transportation experts will get in touch with you.