27 November 2008 | Jake Kanter
Paying suppliers promptly and keeping track of invoices can drive efficiencies in logistics spend, according to financial services firm JP Morgan in a study on maximising the efficiency of freight operations.
The report said suppliers are "less likely" to offer competitive rates or excellent service to buyers who do not pay bills promptly. It urged purchasers to build strong relationships with vendors to help minimise the risk of essential supplies not being delivered.
Freight operations should be managed centrally in an organisation, it said, to increase buying power and enable companies to flag up problems and service issues quickly. In addition, buyers must have accurate invoicing information to avoid duplicate bills and or being overcharged. Quality data was the "gold vein" of a supply chain, it stated, and companies that continued to purchase logistics using manual, paper-intensive processes could incur higher costs.
The report listed six steps buyers should take to create value from freight information. The actions included:
• Standardising data, including specifications for vendors
• Centralising information to manage the logistics process
• Streamlining supplier payments
• Offering financial support to critical vendors to ensure security of supply
• Eliminating waste
• Selecting the right providers