Using TMS to Extract More Productivity Out of Transportation

Transportation is Expensive

Consuming anywhere from 10% to 12% of the typical company’s revenues, it’s a big line item that’s still often managed and orchestrated through a combination of Excel spreadsheets, emails, and phone calls.

Modern Material Handling’s “2019 Materials Handling Technology Study” supports this assumption, noting that even though 50% of companies saw an ROI from their transportation management systems (TMS) within 18 months or less, just 26% of firms have implemented TMS.

Blame at least some of that low adoption on the fact that many small- to mid-sized companies (SMBs) think a TMS is only for large shippers that have multimillion-dollar transportation expenditures. This couldn’t be further from the truth.

Where the on-premise software may have been expensive to install and maintain just 5 years ago, today’s cloud-based and managed service options have put the power of TMS into the hands of a broader swath of users.

“These new solutions are so easy to implement and use that companies are very attracted to them, and particularly those shippers that are dealing with challenges around capacity and freight rates,” Bart De Muynck, Gartner’s research director, transportation technology, recently told Logistics Management.

“They see TMS as a way to get more productivity out of transportation.”

Companies are also extracting real ROI out of their TMS investments.

According to an ARC Advisory Group survey, 43.5% of the respondents indicated freight savings of approximately 5% - 10% with the use of a TMS application.

Of these savings, nearly 60% of users indicated that less than 25% of the net savings were absorbed by the software.

These are pretty significant “wins” in a transportation environment that continues to become more expensive, complex, and confusing every year.

Credit the ongoing truck driver shortage, overall labor market challenges, rising fuel costs, and fluctuating capacity with driving the need for TMS across all sizes of companies, regardless of what industry they’re in.

For the small, single-location electrical distributor to the garment manufacturer which has locations worldwide - and all points in between - transportation can eat up a significant amount of money and human capital when all customers really want to know is: “Where’s my stuff?”

“SMBs that want to reduce costs, improve customer service, and deal effectively with capacity-related issues within their supply chains,” says Ross Spanier, GlobalTranz’s SVP of sales and solutions, “are looking at TMS as a transportation solution that can hit on all of those points, and more.”

Blindsided by a trucking capacity crunch in 2018, for example, many companies learned that transportation and logistics simply weren’t their core competencies and that they needed help navigating the volatile environment.

Closing last-mile gaps, positioning products closer to their end-users, and ensuring that they had the right mix of capacity (e.g., spot freight, dedicated freight, etc.), used up valuable internal resources that the typical SMB simply doesn’t have.

Turning to Technology

For help, those companies began turning to technology, and right at the time that more cloud-based and managed transportation service options were coming on the market.

In search of control towers that would provide end-to-end visibility while also putting them in a strong negotiating position when working with transportation providers, these SMBs began tapping into the power of TMS.

With GlobalTranz as their managed transportation service (MTS) provider, these SMBs suddenly gained access to data that wasn’t previously being captured or shared.

This, in turn, gave them high levels of visibility from a tracking and tracing standpoint; enabled better decision-making when working with carriers or other providers; and helped companies execute based on customers’ needs (plus their own cost and service capabilities).

“This is all pulled together on a single TMS platform,” says Spanier, “that fully leverages people, processes, and technology to deliver a complete transportation solution.”

Kevin Foster, GlobalTranz’s VP of product development, says companies can also use the logistics provider’s TMS and managed services to gain collective bargaining power and economies of scale that they wouldn’t have independently.

“An SMB that works directly with a carrier probably isn’t going to get the same freight discounts that a company with $5 million to $10 million in annual freight spend would. We negotiate for them and leverage our network’s bargaining power.”

From a managed TMS, SMBs also gain access to valuable data and decision-making tools that didn’t exist in their previously manual transportation management approaches.

For example, once a load is tendered and a carrier bills for that shipment, GlobalTranz runs an audit against those negotiated rates to ensure accuracy. “We’re able to show the SMB the real, audited savings,” Foster says.

“We’re also tracking activity history and sharing the pertinent points with the shippers - all in the name of helping them improve and become more efficient.”

These are just a few of the foundational “wins” that SMBs get when they implement TMS and work with managed transportation providers like GlobalTranz.

In this Making the Case report, we look closely at the value that TMS provides for companies of all sizes and across all industries, hear how managed transportation services can be blended into the mix for even bigger benefits, and learn how a cloud-based TMS provides high levels of ROI for logistics managers, supply chain VPs, and the entire C-suite.

Download Making the Case for TMS for the Small to Mid-Sized (SMB) Shipper

• Measuring the Benefits: TMS in action
• Making The Case For TMS for SMBs
• Do You Need a Transportation Management System?
• Don’t Get Left Behind

Related Paper

Transportation Management Systems for the Small to Mid-Sized Shipper
No longer just for the big guys, transportation management systems are a must-have for companies that are feeling the squeeze of rising transportation costs, driver shortages, capacity crunches, and ever-changing customer demands. Download Now!

---

More from GlobalTranz