Leveraging Artificial Intelligence Technology for Transportation Spend Management
Take a snapshot of the evolution of transportation spend management technologies, and you will quickly realize that most of the progress in recent years has been directly related to the influx of artificial intelligence (AI).
A few years ago, what would have been considered a trend, is now simply the way that technology is leaning due to AI’s ability to streamline complex processes and make it easier for global organizations to improve how they manage their businesses.
The goal of any transportation spend management system is to aggregate data and provide clear – and accurate – information that can be leveraged to improve operational efficiency, ultimately driving down costs.
Trax is dedicated to helping global companies streamline their internal processes with cutting-edge technology. Improved visibility and accurate data are at the heart of everything we do, and with AI providing the power, simplifying the complex is a walk in the park.
Understanding the Complexity of Transportation Spend
Like anything else in logistics, understanding transportation spend isn’t as simple as A+B=C. Several independent factors go into calculating transportation spend, such as freight costs, fuel expenses, logistics fees, and more.
When scaled across multiple verticals and global regions, the data can quickly become overwhelming. This leads to information gaps, inaccurate forecasting, and a cumbersome decision-making process.
In other industries, read-and-react strategies work just fine, but in an industry where lost minutes or hours can cost millions of dollars, it simply isn’t an option. Thus the importance of having tools in place, like a freight audit and payment (FAP) system, that can help parse through the endless data and provide insights that can drive action.
The Role of AI in Transportation Spend Management
We might be talking about all things digital, but let's talk analog for a moment to put things into simpler terms. Imagine that your transportation spend is a large pallet, with all of the data serving as weight. The goal is to get the pallet to the second floor of a barn.
Pieces can certainly be broken down and physically hauled up the stairs, but what if you had a pulley that could be used to do the bulk of the heavy lifting? This is the role of AI.
Manpower is replaced with an efficient way to garner results. Results that are not only quicker, but also there is no chance that something is forgotten or dropped along the way.
Data Aggregation and Integration
For years, managing transportation spend has been a manual process where large departments collect and analyze data. The drawback is that people make errors, and it takes time.
The goal with any transportation spend management software is to aggregate data and disperse it in a consumable format to improve the decision-making process – but not all platforms are created equal.
AI-powered systems expedite the collection process from a multitude of sources. Information from invoices, carriers, shippers, and more are brought together in real time. Integration is a key component that cannot be overlooked. As more business systems are introduced, data that is not integrated with one another will make it more difficult to gain a comprehensive view of your organization’s transportation expenses.
Reports that once took days, weeks, or even months to aggregate are available in an instant, opening the door for real-time spend visibility. As visibility improves, identifying cost-saving opportunities and potential inefficiencies becomes much easier. The end result is a decision-making process that is backed by reliable data.
Predictive Cost Modeling
As you dip your toes in the proverbial AI waters, the focus will naturally be on finding areas of improvement. Over time, the next step is to leverage AI algorithms for predictive modeling of your organization's transportation costs.
Spend a few minutes in the logistics industry, and you quickly realize that there are ebbs and flows that need to be accounted for, such as peak seasons. With predictive analytics, anticipating cost fluctuations and planning for budget adjustments is simplified.
For decades, forecasting has revolved around the painstaking process of aggregating mountains of data from previous years. Introducing AI into the equation breaks down the complex and delivers accurate forecasts with the click of a few buttons.
Optimizing Freight Invoice Auditing and Payment
Whether you are growing new verticals, expanding into new markets, or simply looking to sure up your internal processes, having your finger on the pulse of your freight invoicing and payment process is essential. FAP tools are a great starting point, especially when they are fueled by AI.
Invoice matching and validation is a core piece of the puzzle that can be entirely automated. Allowing AI to take the reigns reduces the likelihood of errors or discrepancies, ensures on-time payment, and helps improve vendor relationships over time.
Implementing Smart Contract Management
So much of AI is focused on the data and analytics side of the equation, and rightfully so, yet its applications can also be seen in contract management. By nature, blockchain networks are fragmented or decentralized, meaning there is no single control point. While this provides increased security, it creates an inefficient process that can be difficult to overcome.
Smart contracts provide a secure and immutable bridge between networks that help ensure compliance and minimize disputes. This is accomplished by two key components: Natural Language Processing (NLP) and machine learning. NLP converts contracts into lines of code that can be translated by the AI system. From there, machine learning is able to accurately identify errors, bugs, or vulnerabilities.
The result – better risk mitigation in a fraction of the time.
Enhancing Vendor and Carrier Management
How are you currently evaluating vendor and carrier performance? For many organizations, the process is muddled at best. Gaining visibility on how reliable a specific partner is, or how their service agreement stacks up against the market, is incredibly valuable information that can easily be lost with a manual process.
AI’s ability to analyze billions of points of data means that it has the bandwidth to also provide deep insight into these core components. Rate benchmarking and real-time information give your organization more power at the negotiation table and ensure that are working with reliable and cost-effective transportation partners.
Mitigating Risk
Risk mitigation and AI go hand in hand. Modern systems are rules-based engines that have a very clearly defined set of parameters. Any deviation and alerts are triggered.
Think of it this way – AI operates in a very black-and-white world, and anything perceived as “grey” is automatically detected. Unlike a manual process, where suspicion is needed to investigate, AI flags anything that looks out of the ordinary, helping to mitigate risk and prevent financial losses.
This includes instances that might be outside of regulatory compliance. For global organizations operating in multiple markets, keeping tabs on the ever-changing regulatory requirements is no small task. AI provides instant visibility to new regulations so that precautions can be taken to avoid penalties and fines.
Implementing AI Into Your Transportation Spend Management Process
Improving how you manage transportation spend starts with having the right tools in place. AI has moved from trend to necessity over the last few years, and its reach will only continue to grow as technology improves. Today’s AI-powered transportation spend management systems allow you to aggregate rich data and convert that into powerful insights to help improve efficiency and reduce costs.
At Trax, we believe that helping our partners improve their systems and processes revolves around real-time data and analytics. We understand the role that AI plays in helping global organizations mitigate risk and improve operational efficiency. For our team, AI is the future, and we are fully invested.
Learn more about Trax, our solutions, and get started with a consultation with one of our team members today.