Are rising freight costs eating into your margins? As supply chain efficiency becomes more important, CPG companies need smarter ways to manage rising costs and customer demands. In today’s complex market, freight cost optimisation is key to finding hidden savings. With better freight and freight spend optimisation, companies can cut expenses, improve service, and stay resilient in a changing market. This article explains how organisations can transform logistics from a cost burden into a powerful competitive advantage.
Why freight cost optimisation matters
Freight cost optimisation strategically reduces transportation expenses while maintaining or enhancing service quality. For operations leaders, cost efficiency is crucial as it directly impacts profitability and customer satisfaction.
Supply chain inefficiencies create hidden costs like excess inventory, delayed shipments, and high transportation fees. That’s why freight cost optimisation requires more than surface-level savings. It demands a restructured logistics approach that increases agility and strengthens resilience. In the CPG industry, where margins are tight and operations complex, even minor improvements in freight efficiency can yield meaningful financial returns.
Technology as a freight optimisation enabler
Emerging technologies like AI, machine learning, and blockchain are transforming freight optimisation, driving new efficiencies, streamlining operations, and enabling more informed, responsive supply‑chain decisions. These tools support automated freight procurement, real-time performance tracking, and anomaly detection. Predictive analytics helps reduce empty miles and optimise routes, while AI-driven tools enhance forecasting and exception management. The outcome is a quicker, more responsive supply chain.
When enhanced by GenAI capabilities, such as intelligent automation and real-time insights, CPG companies can make smarter, faster decisions across the value chain. GenAI strengthens forecasting, boosts supply chain agility, and improves resilience, making logistics a catalyst for growth rather than a constraint.
Companies that actively optimise their freight spend enjoy benefits such as lower total landed costs, better cash flow, and heightened customer satisfaction. Conversely, inaction leads to higher transportation costs, excess inventory, and lost revenue opportunities.
Three pillars of effective freight optimisation
More than an operational measure, freight optimisation is a competitive differentiator for forward-thinking companies, driving profitability and differentiation. To unlock the potential of freight savings, CPG companies must build strategies around three foundational areas.
Data-driven decision making
Advanced analytics and digital tools are reshaping how CPG companies manage freight. Leveraging real-time data on shipment volumes, routes, and carrier performance enables organisations to pinpoint inefficiencies and identify cost-saving opportunities. Companies embracing automation and analytics achieve better visibility and control across their supply chains.
Network and route optimisation
Analysing historical shipment data and applying predictive analytics allows companies to design more efficient routes, consolidate loads, and choose the most cost-effective carriers. Smart routing and load consolidation can significantly reduce freight expenditure while ensuring service reliability.
Collaborative carrier management
Strong relationships with logistics providers, paired with routine reviews of carrier contracts, are essential to optimising freight spend. Strategic collaboration can improve pricing, enhance service levels, and offer flexibility in responding to shifting market conditions. Ongoing benchmarking and negotiation help maintain competitiveness in a volatile freight environment.
Overcoming common roadblocks
Addressing the hurdles to freight optimisation is critical to unlocking long-term value. Despite the clear upside, many CPG businesses encounter roadblocks when implementing freight cost optimisation strategies:
- Data silos and disconnected systems: Fragmented data limits visibility and slows decision-making.
- Complexity of global operations: Managing freight across regions and transport modes requires advanced tools and skilled oversight.
- Market volatility: Fuel price fluctuations, capacity constraints, and evolving regulations make freight planning increasingly complex.
To address these challenges, companies should invest in integrated logistics platforms, digital transformation initiatives, and a culture of continuous improvement. Organisations with clear digital strategies and aligned teams consistently outperform peers in freight spend optimisation.
Proven practices from industry leaders
A data and analytics leader in Asia used AI-driven forecasting tools to optimise procurement in the consumer goods sector. Faced with managing vast raw material inventories, AI revealed that a 3% supplier discount for bulk orders actually led to a 4% increase in storage costs during slow demand periods, resulting in a net 1% cost rise. By adopting a smarter ordering system based on AI-powered demand forecasts, the company improved efficiency, reduced costs, and enhanced decision-making accuracy. Industry leaders offer a playbook of proven strategies for driving freight savings and resilience.
Successful CPG companies are already leveraging digital freight platforms to match shippers with carriers in real time, enabling dynamic inventory management and optimised capacity allocation. Others use predictive analytics to adjust transportation strategies in anticipation of demand surges.
How can Infosys BPM unlock the power of freight cost optimisation in CPG supply chains?
In a sector where every margin point matters, Infosys BPM offers comprehensive freight optimisation services that encompass logistics network design, load building, mode selection, routing, and scheduling. By harnessing digital analytics and AI-driven insights, CPG companies can reduce cost-to-serve by 40% to 65%, while simultaneously enhancing operational efficiency, safety, compliance, and customer satisfaction.
