At its best, a transportation management system (TMS) enables businesses to plan, execute, manage, and optimize the movement of goods in a supply chain. At its worst, it can be underutilized, turning what sounded like a good idea into a costly mistake.
David Branson is vice-president of managed transportation operations, TA Services
The digital age has inflamed business owners’ DIY impulses. This leads manufacturers and retailers, with the best of intentions, to enter the complex world of transportation management.
Businesses seeking a smarter supply chain are presented with a dizzying array of TMS options, ranging from piecemeal solutions, to end-to-end, enterprise level systems. If they select one, they then need to either train existing employees to run this complex software or hire new employees with specialized skills.
However, for many companies, outsourcing transportation management functions to a third-party logistics provider may be the right solution. This allows businesses to stick to their core competencies and leave transportation management to the experts. These experts will not only know the best TMS solutions, but their highly trained teams will also know how to use them, applying their full power for the unique needs of any given business from day one.
Practical benefits
When properly used, a TMS can give businesses greater supply chain visibility and improved decision making. When supply chain bottlenecks occur, businesses can know exactly where their products are and identify alternatives to ensure timely delivery. No more wondering where your products are and hoping they make it to their final destination.
A TMS provides multiple avenues for carrier capacity and dynamic rating. In a fluid market, companies with a clear carrier solution and technology strategy are best equipped to adapt and win. A TMS takes into consideration shipment characteristics to determine the best routing, and can update if things like weight, freight class, or services change. This allows your company to quickly factor these changes into prices.
A TMS offers continuous route optimization. If using a GPS to route around traffic on a 30-minute commute saves five to 10 minutes, imagine the time saved by implementing advanced route optimization across an international supply chain.
Short and long-term ROI
Companies using a TMS can begin seeing positive ROI both right away and continuously. In the short term, they can cut costs through rate shopping and automate previously manual tasks such as tracking and customer billing.
Accessing an up-to-date database of carriers and capacity sourcing tools allows businesses to become more vendor agnostic, choosing to work with the carrier that offers the best prices.
Over time, transportation management software allows for continuous improvement. Rather than maintaining data in silos, the centralized data and analytics of a TMS, paired with industry expertise, can lead to a finely tuned, custom supply chain strategy that will save time and money in the long term.
By optimizing routes and allowing for quick, data-driven solutions to evolving problems, businesses can keep customers happy with increased reliability. Carrier partners will also appreciate this. Maintaining positive relationships will ensure that your company is a shipper of choice for carriers.
Selecting a managed TMS provider
If you’re a large company with the capital for an in-house team of IT and transportation experts, purchasing a TMS solution and hosting it on site could be the right solution for you. However, for many companies, the question should not be “which TMS solution should I purchase?” but rather, “which managed transportation provider should I partner with?”
When selecting a 3PL to outsource your transportation management needs to, keep these tips in mind:
1. Pick a partner you trust and enjoy working with
Make sure this provider is someone you trust and is continuing to evolve their product offering. The ideal third-party logistics (3PL) partnership is for the long term. Picking a partner that you can trust for years to come will allow you to gain maximum value from their expertise, helping your processes get better with age.
2. Make sure your partner offers a truly customized solution
To do this, they’ll need to take the time to understand your business and its unique needs. Ask, “are they more focused on selling themselves or understanding my business?” If it’s the former, move on. If it’s the latter, they’re worth considering.
3. Ensure the TMS offers an end-to-end solution and can integrate with your existing ERP
Fragmented solutions result in inefficient processes, incomplete data, and ultimately cost your business money. With an end-to-end solution, you’ll gain visibility over your entire supply chain.