July 2015 | Commentary | IT Matters

Benchmarking Transportation Processes With TMS Data

Tags: Logistics I.T., Transportation Management Systems (TMS), Supply Chain Management, Transportation, Logistics

Mike Challman is Vice President, North American Operations, ChemLogix LLC, 215-461-3800

Many businesses that ship products use transportation management systems (TMS) for visibility and control within their supply chain operations. The introduction of cloud-based TMS has also opened the door to many small and mid-sized companies to find great tools that fit their budgets.

While using TMS capabilities to support everything from carrier rate management, shipment planning and tracking, and mode selection to carrier assignment and invoicing, shippers sometimes overlook the value of using data from a TMS to benchmark and gain insight into transportation performance.

Transport benchmarking is essential to attain a thorough understanding of how your supply chain performs versus your competitors. The most common benchmarked area is carrier rates, but savvy shippers also evaluate a variety of processes and key performance indicators (KPIs).

KPIs help businesses determine if shipments are delivered on time, complete, and without defect. The benchmark analysis can also help identify the root cause of delays and other defects, as well as measure how performance compares to best-in-class practices.

Benchmarking can also help determine if KPIs used to evaluate supply chain performance are appropriate and informative. If not, benchmark findings can be helpful in developing new measurements and strategies.

Benchmarking is particularly useful in providing leverage to negotiate more competitive rates and contract terms with existing carriers. Transport benchmarking not only provides a comparison of current transport costs against competitive market rates, but also insight into wider market issues such as payment terms, price validity, and contract duration.

The analysis may also identify why your freight may not be attractive to carriers. Plant delays that impact loading times, cancelled or re-booked loads, and slow or inaccurate payment may be reasons why shippers cannot find sufficient capacity with existing carriers.

Additional long-term benefits to benchmarking include:

  • Strategically planned continuous improvements. Insights derived from benchmarking supply chain activities and gathering market information can help strategically manage performance for continuous improvement.
  • Enhanced service levels. By benchmarking different customer service-related activities, companies can determine how they compare to others and make appropriate changes.
  • Identified performance gaps. Assessments conducted as part of benchmarking help identify potential gaps in supply chain operations, as well as areas for improvement in supplier relationships, so shippers can focus continuous improvements.
  • Competitive advantage. By understanding how your current market position compares to best-in-class standards, you can improve practices to gain the competitive edge.
  • Change culture. Benchmarking is not a one-time activity, but rather an ongoing learning process that can help generate new ideas for you to share and implement. Benchmarking efforts can stimulate organizational learning, and enhance business performance and industry competitiveness.

When used in conjunction with TMS capabilities, transportation benchmarking offers a valuable way for shippers to gain a competitive edge within their logistics operations in today's challenging landscape. Ask your current or prospective transport partners and providers what they can offer in the area of benchmarking.