The freight transportation industry seems to be lacking in procurement technology adoption. In fact, the recent American Shipper Transportation Procurement Benchmark report shows shippers relied more on manual processes for transportation procurement in 2016 than in 2015. Many in the industry also do not have immediate plans to adopt technology or change their manual processes in the near future.
However, there are other reasons for this beyond a resistance to change within the industry. The report, which was created in partnership with the National Retail Federal, the Retail Industry Leaders Association and the Transportation Intermediaries Association, cites a lack of available technology solutions on the market today that are geared specifically for transportation procurement. Some shippers also say the solutions their organization has in place do not meet their specific needs.
Nearly 250 transportation buyers were surveyed for the report, with findings indicating while shippers understand the benefits procurement technology could bring to their processes, the majority still have not adopted such tools.
According to the survey, 8% percent used freight-specific procurement technology for all transportation buying activity. Less than that, 6%, use the procurement module of their existing transportation management system. And 7% are using an automated general purpose procurement system, according to the report.
The majority, however, are using manual or spreadsheet-based systems. This year, 44% of transportation buyers said they were using manual systems, up from 39% in 2015. Sixteen percent of third-party logistics providers (3PLs) also indicated they relied on manual processes.
Few Plan to Change Their Ways
More than two-thirds of shippers surveyed either have no plans to adopt transportation procurement technology or are uncertain if their organization has such plans. Just 8% said their organization budgeted for automation in the next year. Eleven percent said they planned to adopt technology in the next 12-24 months while another 11% said the investment was in the company’s 5-year plan.
While an organization’s resistant to change was identified as a major barrier to technology adoption among the shippers surveyed, a lack of return on investment and lack of confidence in available solutions are also some top concerns. Nearly 50% said a lack of ROI was an inhibitor to technology adoption — up 10% from last year.
Eighteen percent said available systems do not provide functionality their organization requires, roughly the same number of shippers who cited this as a barrier in last year’s survey. Additionally, only 5% of shippers surveyed believe existing procurement tools are “very good” at helping organizations with sourcing efforts. Twenty-eight percent said procurement tools were “good” and 27% said they were neutral on the subject.
Another barrier to technology adoption was the belief current systems or processes were already meeting the needs of their organization’s, identified by 27% of shippers. This was down, however, from 45% who had faith in their organization’s current processes last year. Organizational resistance to change was cited by 27% of shippers as a reason for not automating procurement processes, and 7% pointed to a lack of technical expertise needed to make a shift to an automated system as another barrier.