January 17, 2017
Often times I read or hear in a meeting that the return on investment (ROI) derived from a transportation management system (TMS) is from load optimization.
The heuristics of these powerful tools can indeed assist the less-than-truckload (LTL) shipper in building multi-stop routes for consolidated loads or prioritizing and tendering to truckload and carriers in a price-ranked priority.
However, shippers buy or subscribe to a TMS for a number of other reasons.
The TMS product or service offering today continues to evolve, with ROI being found in an increasing number of functions.
For shippers seeking intelligent technology to help discover, plan and execute transportation cost and service opportunities, exploring the range of TMS functional options are a must.
With that goal in mind, I’ve listed seven of the more popular functional options with a thought on how the ROI can be determined:
1. As an ERP interface. TMS is able to capture and translate the 12 to 40 various data fields of a complex shipment to the simple needs of the ERP - typically less than 10 fields. This saves on the re-entry of data and enables the use of standards in xml and EDI with carriers.
2. As a freight payment/settlement application. From the traditional match-pay to the more sophisticated dynamic settlement processes, the TMS has earned a reputation for double digit savings and staff cost reductions. Whether in-house or through a service provider, these tools serve as systems of record, electronic auditors, communicators and bank interfaces.
3. As a complex route builder. The TMS functionality in international multi-modal has made great strides in the past decade. The use domestically to build multi-leg trips, thus minimizing empty miles on a day/hour basis, can make this tool indispensable to both carriers and shippers with a regular need to execute elaborate orders.
4. As a backhaul planner. Today’s TMS tools incorporate GPS, arrival time calculators and automated communications to discover, plan and execute opportunistic runs. Factors such as hours-of-service (HOS) regulations and equipment maintenance can be incorporated as well, thus making an impact on cost and service metrics.
5. As a customized bill of lading (BoL) generator. A TMS can edit and transmit a shipper-designed BoL that includes contract provisions tied to a shipper approved carrier contract. A new BoL is printed/transmitted with the latest contract provisions to the shipping location on an as-needed basis, thus avoiding the use of a carrier document with possible hidden rules and limitations.
6. As a performance tracking tool. A TMS is uniquely positioned to match an order with a bill of lading and then the many status messages that indicate how the carrier performed. Today, this tool is also being used to illuminate the shipper’s “performance to promise” as well, with data captured on ready-to-ship times verses carrier requested pickup times and other delays that may make an impact on driver HOS, fuel and equipment utilization.
Of course, there are more functional options in a TMS, and leading shippers and 3PLs that take full advantage of the power of the application beyond load consolidation will often mention the reasons above as to why they’re seeing such terrific ROI.
7. Let me leave you with one tip for acquiring TMS functions: Any implementer or service provider worth their salt will provide detailed demonstrations of functionality using scenarios unique to your specific circumstance.
Insist on real, working applications so you can gain maximum benefit from your investment in this technology.
Related Article: 2017 Transportation Management Systems Trends
About the author
Peter Moore is Adjunct Professor of Supply Chain at Georgia College EMBA Program, Program Faculty at the Center for Executive Education at the University of Tennessee, and Adjunct Professor at the University of South Carolina Beaufort. Peter writes from his home in Hilton Head Island, S.C., and can be reached at [email protected]