Top US Propulsion Manufacturer Achieves 5% Freight Savings with AI

Fragmented processes led to costly procurement inefficiencies

The company's freight procurement process was plagued by manual workflows and disconnected systems that had evolved over decades of operations. Their global procurement team spent countless hours compiling and validating rates from multiple spreadsheets with no single source of truth, making it impossible to track rate changes effectively and leading to frequent rate leakages. 

The complexity of their rate cards was staggering. For a single freight forwarder, they managed over 250 FCL base freight combinations, 12 included accessorials, 9 non-included accessorials, and numerous other charges. Another forwarder's rate card contained 194 FCL base freight combinations and 13 different accessorials. Managing this complexity through spreadsheets created significant operational challenges. 

The RFP process was particularly cumbersome, requiring the manual creation of RFQs for TL, LTL, Ocean, and Air lanes. Coordination with carriers and freight forwarders relied heavily on emails and calls, with procurement specialists spending hours following up on bid submissions and clarifications. This resulted in a lengthy procurement cycle that couldn't capitalize on market opportunities, especially in volatile Ocean and Air markets where rates fluctuate rapidly. 

Without proper tools for carrier comparison, the team struggled to optimize awards based on multiple parameters like service level adherence, volume allocation, and carrier performance. This led to higher freight rates and lower service levels across their transportation network, with inconsistent decision-making processes that varied by region and transportation mode. 

The company also faced challenges in allocating contracts optimally. Their spreadsheet-based analysis had limited capabilities to assess carriers thoroughly, and they couldn't conduct scenario analysis to arrive at an optimal set of contracts. This resulted in a suboptimal procurement strategy that failed to leverage their significant freight volume for better rates and service commitments.

Before implementing Pando, we had no way to efficiently manage our complex freight rates and accessorials. Our team was drowning in spreadsheets, with limited visibility into what was actually driving our costs. The manual process meant we couldn't respond quickly to market changes, and we were losing opportunities to optimize our transportation spend.

- Supply Chain Manager

These challenges were compounded by the company's global presence and diverse transportation requirements. With operations in over 100 countries and a need to move products efficiently through a complex supply chain, the lack of standardized processes and systems created significant inefficiencies and cost overruns.

Delivering $4.5 million in freight cost savings

Implementing structured digital rate management

Pando's solution created a centralized platform for managing all rate components, from base rates to complex accessorials across every transportation mode. The system allowed easy access and retrieval of freight rates, streamlining the quoting process and reducing manual errors that had previously led to incorrect rates being applied. Changes to base and accessorial charges were automatically monitored, minimizing leakages and identifying anomalies across the rate structure. The platform's ability to handle complex rate structures was particularly valuable for the marine propulsion manufacturer. It could manage FCL and LCL base freight combinations, numerous accessorial charges, and special handling requirements in a structured digital environment. This eliminated the need for multiple spreadsheets and created a single source of truth for all freight rates. 

Having all our rates digitized and in one place has been transformational. We can now easily spot rate outliers and optimize our contracts in ways that were impossible before. The system alerts us when rates are expiring or when carriers are implementing changes, giving us time to respond proactively.

- Procurement Director

Automating complex procurement events efficiently 

The platform introduced automated event orchestration to cater to the company's seasonal demand patterns, which was critical for a manufacturer whose products have significant seasonal variations in demand. This allowed them to conduct rapid procurement events electronically and leverage rate changes in volatile Air & Ocean markets. The system automated tasks like quote gathering, comparisons, and communication, while identifying bid anomalies to optimize landed costs. Pando's solution simplified the creation of RFQs for TL, LTL, Ocean, and Air lanes, enabling the company to launch procurement events in days rather than weeks. The automated system managed carrier communications, bid submissions, and clarifications, freeing up procurement specialists to focus on strategic activities rather than administrative tasks. 

Optimizing carrier selection through analytics 

Post-bid scenario analytics enabled the team to simulate cost and service performance for optimal carrier allocation decisions. The platform analyzed bids to identify trade-offs between cost and service performance while factoring in potential hidden costs like fuel surcharges and documentation fees to find truly cost-effective solutions. The analytics capabilities went beyond simple cost comparisons. The system could incorporate historical carrier performance data, service level adherence, and capacity reliability to make more holistic allocation decisions. This multifaceted approach ensured that the company wasn't sacrificing service quality for marginal cost savings, leading to more balanced and effective transportation operations. 

Creating strategic lane bundles 

The solution implemented intelligent pre-bid analysis to facilitate lane bundling, FAK finalization, and accessorial inclusion. By creating lane and lot clusters, the company could now negotiate volume discounts with carriers and optimize their overall transportation network for both cost and service. This capability was particularly valuable for their global operations, where they previously struggled to identify opportunities for consolidation across regions. Pando's solution provided visibility into all lanes and volumes, enabling strategic bundling that leveraged their total transportation spend for better negotiating positions with carriers. 

Benchmarking rates against market standards 

Pando's platform integrated with freight rate analytics tools to enable spot-checking of freight rates against market benchmarks. This created opportunities for opportunistic spot procurement on high-volume lanes and allowed for proactive adjustments to rate fluctuations through alternative routes or shipment consolidation. The benchmarking capability was especially valuable in the volatile ocean freight market, where rates can fluctuate significantly based on global events, capacity constraints, and seasonal factors. By having access to real-time market rates, the company could make informed decisions about when to use contract rates versus spot market rates, optimizing their freight spend in response to market conditions. 

Streamlining bid evaluation workflows 

The solution enabled the company to process vendor bids in their natural format, providing agility in accepting various vendor formats across geographical granularities. This eliminated a significant pain point in their previous process, where procurement specialists had to manually normalize bids from different carriers using different formats and terminologies. Intelligent post-bid analysis facilitated optimal lane-vendor allocation, while flexible approval workflows managed anomalies efficiently. The system could flag unusual bid components or significant deviations from expected rates, ensuring that the procurement team could investigate and address potential issues before finalizing contracts. 

The ability to accept bids in carriers' native formats and have the system normalize them automatically has been a game-changer. What used to take days of manual work now happens instantaneously, giving us more time for actual negotiation and strategic decision-making.

- Logistics Procurement Manager

Digitalizing contract and rate management 

Pando implemented a fully digitalized, integrated, and configurable Contract & Rate Management module. This provided the company with a single source of truth for all freight rates and contracts, with exception alerts and notifications for rate expirations and changes, ensuring compliance and eliminating rate leakage. The digital contract repository maintained all transportation agreements, amendments, and rate sheets in a structured format, making them easily accessible to authorized users across the organization. Automated workflows ensured that contracts were reviewed and renewed on schedule, eliminating the risk of operating with expired rates or missing opportunities for renegotiation.

By implementing Pando's AI-Powered Freight Procurement solution, the leading marine propulsion manufacturer transformed their fragmented, manual freight sourcing process into a streamlined, data-driven operation. The digital transformation delivered 5% direct cost savings on their $90 million freight spend, equivalent to approximately $4.5 million in annual savings. Additionally, they achieved 60% productivity enhancement through automation and 100% digitalization of their rate management process. 

The implementation process was remarkably efficient, with the solution going live in just 3-5 weeks compared to the industry standard of 3-5 months for similar transformations. This rapid deployment allowed the company to realize value quickly and begin capturing savings almost immediately after implementation. 

The company now enjoys complete control and transparency in their procurement events, with the ability to make data-driven decisions that optimize both cost and service. Their procurement team has shifted from tactical, administrative work to more strategic activities, focusing on carrier relationship management, network optimization, and continuous improvement initiatives. 

The success of this implementation has led the company to explore additional Pando modules to further enhance its logistics operations, demonstrating the scalable nature of the platform and its ability to grow with evolving business needs. The digital transformation of their freight procurement process has not only delivered immediate financial benefits but has also positioned the company for long-term supply chain excellence in an increasingly complex global transportation environment.