The Case for Transportation Management Software
Q: What innovative technology initiatives help increase supply chain efficiencies?
A: The number one return on investment (ROI) that will provide continuous process improvement, and at the same time keep freight costs under control, is integrating a transportation management system (TMS) with a shipper’s existing systems, such as an ERP solution, warehouse or order management system, or even another TMS. The integration can be real time or batch driven, and is influenced by several factors, such as freight volume, lead times, customer-specific routing requirements, and system capabilities.
Numerous case studies demonstrate how integrating with a TMS can reduce freight costs five to 10 percent using the shipper’s existing group of carriers and rates. There is no need to change who they do business with, and they maintain complete control of the final routing decisions. Leveraging TMS capabilities—such as the rate engine, bill of lading generator, electronic shipment tendering, shipment status retrieval, carrier invoice auditing, and reporting—helps shippers make better real-time decisions, then take immediate action based on them.
A modern, Web-based TMS supports a wide variety of flexible, scalable connection points. In today’s on-demand Software-as-a-Service (SaaS) environment, integrating with a TMS has never been easier. SaaS reduces the level of effort and expense required by IT departments to implement and maintain the integration, ultimately providing a faster ROI.
Q: What is the most common obstacle to TMS implementation?
A: Most businesses that ship frequently have established contracted rates with less-than-truckload carriers, either directly or through a third party. Yet even with all of the third-party research available today outlining the benefits of using a technology solution to manage contracted rates, many shippers have not adopted a TMS.
Decision makers typically have a list of excuses not to implement a TMS: their current process works fine; TMS solutions are too expensive; the company tried using a TMS before and it didn’t work well with their processes; they have a million-dollar freight spend budget, but can’t spend a penny on logistics software; or freight management software is too difficult to deploy.
But on-demand TMS have largely eliminated the cost and resource constraints companies have traditionally faced in implementing new technology and continuous improvement initiatives. By eliminating these constraints, companies can break free from the status quo and implement best practices that result in significant cost savings and productivity improvements.
Shippers adapting to the ever-changing transportation environment are seeing improved productivity and significant cost savings coming out of their transportation department by implementing transportation management solutions.