July 2017 | Commentary | The Lean Supply Chain

Stay Competitive with a Flexible TMS

Tags: Transportation Management Systems (TMS), Lean, Transportation, Logistics, Supply Chain

Paul A. Myerson is Professor of Practice in Supply Chain Management at Lehigh University and author of books on Lean for McGraw-Hill, and supply chain for Pearson, 610-758-1576

Lean principles, when used in conjunction with a transportation management system (TMS), can deliver lower transportation costs, reduced inventory levels, and progress toward business goals. New technology is emerging to further improve the efficiency of transportation systems.

You must manage and properly control—with complete visibility and great communication between partners—the transportation systems that connect your supply chain. The cost of transportation and logistics, primarily warehouse operations, can account for as much as 7 to 14 percent of sales, depending on industry.

Leveraging Your TMS

Focus on total logistics costs, not just individual transportation, warehousing, and inventory carrying costs. Non-cost-related advantages of using a TMS include:

  • Improved understanding of the cost to serve customers.
  • Reductions in transportation department size.
  • Lower carbon footprint through optimized vehicle routing.
  • Access to more carriers and increased ability to utilize capacity.
  • Fewer warehouses required.
  • Better tracking and compliance to transportation-related health, safety, and environmental regulations.

Other technologies that are here today or coming soon can improve the cost and efficiency of your transportation system and remove waste from your supply chain. These technologies help improve transportation efficiency:

  • Visibility tools. Radio frequency identification, automatic identification and data capture, and the Internet of Things help improve end-to-end visibility and efficiency by detecting and solving problems, which can lead to greater customer satisfaction.
  • Telematics, which is the technology of sending, receiving, and storing information relating to remote vehicles via telecommunication devices, can increase productivity, reduce labor costs, control fuel costs, improve customer service, increase fleet safety and security, and reduce operating expenses.
  • The Uberization of trucking. A variety of emerging companies— Cargo Chief, Convoy, Fleet, Haulme, Transfix, and TruckerPath—compete with freight hauling apps that will allow shippers to contract directly with freight-hauling trucking firms.
  • Safety technology, including lane departure warnings, collision avoidance systems, interior cameras, rear view cameras, and sensors. Many of these technologies provide significant return on investment by reducing property damage and injury costs.
  • Autonomous vehicles. Autopilot technology could end up replacing the traditional role of the long-haul truck driver. While someone may still need to be in the cab, a self-driving computer never needs a rest stop.
  • New forms of transportation. Amazon and other companies are testing air and land drones for final delivery to customers. Drones can save an estimated 80 percent on last-mile shipping costs.

Get an Edge

Volatile demand, shrinking lead times, new consumption patterns, the digital age of commerce, and global trade treaties have impacted transportation systems in a variety of ways. That makes it ever more important to maintain an agile, flexible supply chain to gain a competitive advantage.

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