Strategic procurement has been successfully established in most companies for nearly all purchasing categories. It makes a significant contribution to overall business performance. Over time, it has proven that it can apply highly effective methods to reduce costs and create value for the entire organization.
And yet, in many companies there is still no strategic freight procurement.
Why is that? And how can a strategic freight procurement function be successfully implemented?
Let us first look at some of the reasons why procurement is often not actively involved in transport sourcing.
Procurement Is Not Operationally Responsible
If the structure of strategic procurement is mainly based on ordered materials and services, transport services are often overlooked.
Transport providers are usually contracted directly by the dispatch teams at production sites. Freight invoices are then checked and approved within the logistics department.
Transport services therefore behave similarly to other indirect costs such as consulting services or insurance. They often remain below the radar and are not considered when building a strategic procurement organization.
Different Responsibilities at the Executive Level
Transport procurement, as part of operational logistics, is often assigned to the executive responsible for production or operations. Strategic procurement, on the other hand, is frequently managed by the CFO.
If you are thinking “so what?”, you may either be fortunate to work in a management team that operates as a true partnership—or you may not yet have experienced how sensitive internal dynamics can become when procurement aims to manage the entire purchasing volume.
Because of these internal dynamics, transport procurement is often pushed far down the priority list.
Lack of Subject - Matter Expertise in Procurement
Anyone who wants to purchase transport services must understand the basics of transport logistics.
However, as mentioned earlier, procurement is usually not involved in day-to-day logistics operations. This means there are few natural points of contact with the topic. As a result, logistics knowledge does not develop automatically within procurement.
The list of reasons could certainly be expanded—for example, with historically grown structures or decentralized organizational models. In most cases, the situation is simply the result of historical developments.
Given these circumstances, how can companies successfully implement strategic freight procurement?
Add Value — Do Not Compete
When procurement moves into unfamiliar territory, tensions can arise quickly.
Avoid approaching the logistics team with statements like: “From now on, we will negotiate freight rates and select the service providers.” What this actually communicates is: “You are buying transport services too expensively. Let the professionals take over.”
This is the fastest way to undermine the initiative before it even starts.
Instead, highlight what procurement can contribute and how it can support the logistics team. Strategic buyers bring expertise in supplier research, tender management, communication, negotiations, and contract management.
They also provide strong analytical skills for evaluating offers. Preparing specifications and service level agreements is part of their daily work.
The goal is to show that freight procurement can be improved when both functions combine their strengths.
Build Logistics Expertise
Procurement will only be accepted by operational logistics if it develops at least a basic level of expertise in transport logistics. The best source for this knowledge is often the colleagues within operational logistics.
Spend a few days in the shipping department and work alongside the team. This allows you to experience their daily challenges firsthand. It also helps build trust and develop a professional network.
Ask questions and listen carefully. Do not immediately challenge existing processes. First take the time to understand the current situation. There will be opportunities later to propose improvements.
Another useful step is visiting service providers together. For example, join your logistics colleagues for an evening visit to the cross-dock facility of one of your transport providers. Observe how shipments are sorted and distributed onto outbound linehaul trucks.
Anyone who has seen this “forklift ballet” understands very quickly how well organized a logistics network must be to deliver large volumes of groupage shipments on time.
Define Roles and Responsibilities
Before starting, procurement and operational logistics must agree on how they will work together in the future. Do not focus too much on formal responsibilities. Instead, ensure that everyone involved can contribute their strengths.
Communication with service providers is particularly important. Clarify who communicates with which provider, when, and about what topics. Make sure your company presents a professional and coordinated appearance to the outside world—not a chaotic one.
Align on Logistics Requirements
Operational logistics traditionally faces very high expectations. It is taken for granted that products are delivered to customers on time and in perfect condition. However, the many operational details involved in working with transport providers are rarely visible outside the logistics department.
As a freight buyer, you must understand these details. In many cases, they directly affect the service providers’ cost calculations. Clarify the operational requirements in advance. Document them in a structured way and communicate them clearly to potential providers.
This will result in more relevant offers and ensure that the pricing remains valid during later reviews.
Move Forward Together
Once the groundwork is complete, you can begin. Define a joint roadmap for the coming months. This ensures that everyone in the team knows which transport services will be tendered and when.
Start small in order to gain initial experience and establish effective collaboration. Based on these experiences, you can gradually increase the scope and complexity of your activities until the entire transport spend is strategically optimized.
It is also helpful to establish a regular communication routine. Meet as a team on a regular basis to discuss current topics and developments. This helps identify problems with service providers early and allows you to react quickly.
And finally—do not forget to celebrate shared successes together.
