Logistics Technology: GTM seeks higher ground
February 01, 2012
As global trade numbers continue to grow, the complexities that go along with its expansion are also on the rise. Inefficient shipping routes, changeable rates and hidden surcharges, capacity constraints, size and weight factors, along with safety and security issues are just a few of the key challenges that shippers are dealing with right now according to a recent research study from Peerless Research Group (PRG) on behalf of Amber Road (formerly Management Dynamics).
The research study, titled Current Trends and the Potential for Automation in International Transportation Management, highlights an international freight shipping environment that’s plagued by challenges that potentially expose shippers to “risky and costly misfortunes.” To circumvent these challenges, some domestic firms are turning to global trade management (GTM) solutions that help them better understand, negotiate, and adhere to contract provisions.
According to the report authors, “better informed decision-making on freight route planning, carrier selection, shipping scheduling and costing, load planning, guidelines compliance and auditing, invoicing, and reporting results in greater logistics operational efficiencies and yields significant cost savings.”
But while GTM’s value in the supply chain has been proven over the last few years, these solutions have yet to gain widespread traction among the vast majority of shippers. In fact, the report found that just one out of four shippers currently uses automated applications for calculating rates and for selecting routes and carriers. Surprisingly, freight auditing, invoicing, logistics execution, and contract management functions are also still largely manual functions.
One of the reasons shippers may not be warming up to GTM is the fact that it can be difficult to associate the solution with a return on investment (ROI). “GTM isn’t an ROI play in the sense that most supply chain software is,” says Steve Banker, service director for supply chain management at the ARC Advisory Group.
Rather, GTM is more about compliance and about not breaking the laws set forth by governments. “You could argue that GTM can save money on potential fines, but that’s not a very strong argument,” says Banker. “That makes GTM a harder sell than applications that truly do have a strong ROI.”
Over thee next few pages we’ll look more closely at current GTM adoption rates, discuss the solutions’ value in the global supply chain, and put the spotlight on how global shippers are benefitting from their GTM implementations.
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