We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • ::COVID-19 COVERAGE::
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC.
    • Podcast
    • Blogs
      • Analytics & Big Data
      • Best Practices
      • Dispatches
      • Empowering Your Performance Edge
      • Logistics Problem Solving
      • One-Off Sound Off
      • Public Sector Logistics
      • Two Sides of the Logistics Coin
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2020
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC.
    • Podcast
    • Blogs
      • Analytics & Big Data
      • Best Practices
      • Dispatches
      • Empowering Your Performance Edge
      • Logistics Problem Solving
      • One-Off Sound Off
      • Public Sector Logistics
      • Two Sides of the Logistics Coin
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2020
    • Upload Your Video
Home » Software that finds the fat (so you can cut it)
techwatch

Software that finds the fat (so you can cut it)

September 20, 2010
James A. Cooke
No Comments

The cliché "a penny saved is a penny earned" still has relevance for companies looking to cut costs in these lean times. That's why more businesses are weighing the use of "spend analysis" or "spend management" software to sift through their expense data for opportunities to save a few pennies. As the name implies, this type of software is designed to collect and classify data that companies can use to compare prices and drill down into the details of their expenditures.

Spend analysis software has been around for at least a decade, but up to now, it's been used mainly in the procurement area. For the most part, businesses have used these apps to analyze the cost of supplies, specifically bills of material, as well as services.

But that's starting to change. Companies have recently begun using these apps to analyze their distribution- and transportation-related expenditures. One of the areas being targeted is distribution center spending. For example, Jason Hekl, vice president of marketing at software developer Coupa Software Inc., says one of Coupa's retailer clients is using the software to track "non-merchandise" DC expenditures like cleaning supplies, plastic bags, lighting fixtures, and window-washing services. Software vendor Ketera reports that its customers are using its spend analysis program to scrutinize DC capital equipment expenses.

But it's not just DC expenditures that are coming under the microscope. Transportation spending is being examined as well. For example, Ketera says several of its clients are using the software to look at what they're spending on cargo movements and logistics services as well as on customs and port fees.

Another vendor of spend management software, Ariba, reports that customers are using that company's app to manage their transportation costs. The software developer says its clients typically use its tools to make "apples to oranges" comparisons—meaning they're comparing different carriers and modes on the basis of both price and non-price criteria.

Other companies are using spend analysis software to help answer the age-old question of whether a retailer could save money by taking control of its inbound transportation. (Typically, manufacturers roll the cost of freight into their prices, but retailers sometimes find it's cheaper to make their own arrangements.) BravoSolution says several of its retail and consumer packaged goods (CPG) clients are using its spend analysis applications to build a business case for taking over the management of their inbound transportation—for instance, using the app to quantify their aggregate freight volume to use as leverage when negotiating with carriers.

But not everyone's sold on the idea of using this type of software to analyze transportation spending. Analysts caution that software designed for procurement may not be the best choice for evaluating freight expenditures. In most cases, they say, shippers would fare better with a transportation management system (TMS) with built-in analytic features.

The problem with using spend analysis programs is that they're generally not designed to pull the requisite transportation data from other software systems. To perform a transportation analysis, you need shipping cost information by carrier, lane, and mode of transit, explains Gartner analyst Dwight Klappich. "Spend tools don't understand this concept of lane," he says.

That means that before it could start its analysis, a shipper would probably first have to extract the necessary shipping data from a TMS and feed it into a spend analysis program, Klappich says. And the task would become all the more complicated if the shipper wasn't already using a transportation system, Klappich warns. "It will be much more difficult to capture the data to feed the spend analysis tool without the TMS."

That's not to suggest that analysts frown on the practice of spend analysis. Quite the opposite, in fact. "Spend analysis has become even more important as we move through a difficult economic environment," Klappich says. "Spend analysis needs to exist in logistics or transportation departments these days, whether they're using spreadsheets or software tools. It's important to understand what's driving your spending."

Technology
KEYWORDS Ariba BravoSolution Coupa Software Inc. Ketera
  • Related Articles

    Software that tracks your carbon (so you can cut it)

    it's in the way that you use it

    Software that can help you make smarter moves

Jamescooke
James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP?s Supply Chain Quarterly and a staff writer for DC Velocity.

Recent Articles by James Cooke

Getting smart about using software intelligence

Where's the payback in software?

R is for "robot": interview with Tom Bonkenburg

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • Cold chain giant Lineage Logistics buys its own rail operator

  • Outlook 2021: What’s in store for logistics supply chain?

  • Cushman & Wakefield Brokers Sale of 170 Acres plus Lease for 1MSF Build-to-Suit for Home Improvement Retailer in Commerce City, CO.

  • Thriving in the long haul: interview with Colin Yankee

  • Biden names dozens of senior leaders to DOT, including FMCSA and FRA

Now Playing on DCV-TV

2mw 01 18 21 thumb

LTL Carriers Using Yield Management Techniques to Identify New Accessorial Charges

DCV-TV 4: Viewer Contributed
As we head into 2021, shippers are not too optimistic about negotiating rates with their carriers. The reason for this, as highlighted in the three CODE RED Webcasts we've hosted with our friends from CSCMP and NASSTRAC, is that in today's transportation marketplace, shippers are operating in uncharted waters. With...

FEATURED WHITE PAPERS

  • Proven Benefits: A Compendium of Slotting Optimization Success Snapshots

  • Bridging Information Gaps in Dock and Yard Operations

  • How Intelligent Sensor Solutions Turn Data Into Action

  • Order picking Solutions: Understanding Your Options

View More

Subscribe to DC Velocity Magazine

GET YOUR FREE SUBSCRIPTION
  • SUBSCRIBE
  • NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2021. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing