On Second Thought: Are you maximizing your TMS value?

   Transportation Management Software (TMS) is not new. TMS has been around for several decades. However, the interest in TMS is resurging as large and small shippers are finding new ways to access state-of-the-art software or to harvest additional benefits from their existing TMS.
   Once reserved for the largest of shippers, TMS has come down in price as cloud-based models become more viable and third party logistics services providers offer TMS-driven services to shippers of all sizes. However, even though TMS has become more commonplace, many companies fail to maximize the value that it can create.

Traditional TMS. Sure, most shippers with a TMS and most TMS providers will talk about well-known benefits of automated carrier and mode selection, invoice reconciliation, and service performance reporting features. But, more sophisticated TMS add more features such as dynamic optimization and consolidation capabilities. All of which translate into the benefit of saving time and money.
   However, businesses are facing more challenges than ever and that often means more than just “saving time and money.”

Moving TMS forward. Avoid tunnel vision of daily, tactical logistics-related tasks. Step back and ensure you are optimizing the capabilities of your TMS to do work more efficiently, lower your costs and improve service to your customers. Here are examples of how to maximize the value of your TMS.
   Carrier Selection: Automate decision-making and consider multiple parameters beyond looking for the lowest cost carrier. A robust TMS provides carrier selection decision drivers such as variance in shipment profiles, mode and route options, dimensional and weight constraints, and customer preference such as white glove delivery or special time in transit and equipment requirements.
   Enterprise-wide visibility: Deploying a single TMS platform across the enterprise or integrating multiple TMS platforms properly, organizations can begin to derive benefits from cross-enterprise visibility. A good TMS will enable freight optimization through coordinated shipments regardless of the cost-center and dock door from which it is departing.
   Routing guide compliance: This is the area where we see many companies struggling. Formal multi-round bidding processes precede carefully constructed routing guides for precision upload to the TMS, then forgotten. Few companies monitor branches and vendors for compliance to the established routing guides. On-going data capture of actual shipment volume managed and volume commitment compliance by and to each carrier enables monitoring of predetermined volume commitments and ensures receipt of hard-fought discounts.
   Freight audit and settlement: A well-executed TMS will ensure that invoices submitted by the carrier match pre-established contract rates. Non-compliant invoices 
are resolved quickly, based on facts. Compliant invoices flow through without intervention.

New economy; new challenges. Today, businesses must be agile to react to changes in the market. A more advanced TMS can improve data visibility, which will enhance agility by reducing reaction time to market demand changes and cost volatility. By using systematic carrier and alternative modal selections that include past performance metrics, not just rate comparisons, allows businesses flexibility while reducing risk.
   We also live in the era of big data. Integrating customer and supplier data, business objectives and past carrier and modal performance enables collaborative transportation efficiencies.
   Companies are achieving continuous improvement through data analysis. Data analytics and reporting capabilities of a quality TMS provide visibility into repetitive negative behavior. Knowledge of the patterns, and data to support the whys, enable quick implementation of corrective behavior for improved metrics.

Build, buy, or ally. Shippers with no TMS or an outdated system have three choices—build their own, buy an off-the-shelf system and customize it to the specific needs of the business, or ally with a 3PL who provides system capabilities, integration and management expertise.
   Building can be daunting, time consuming, and requires a substantial budget. Buying has become more viable in recent years, but is not like running office software and requires trained, in-house experts to support the system. Aligning with a 3PL provides several benefits. First, 3PLs have a view of best practices across multiple customers and industries. They provide not only access to a Tier 1 software at a more viable price point, but the expert staff required to support the system and provide ongoing insights on how to maximize the system’s capabilities for the customer.

Maximize your TMS value. Whether you have an outdated TMS, a TMS that you could extract more value from, or have never had a TMS, it’s time to think about strategic benefits to build a TMS, buy a TMS, or ally with a 3PL to ensure you are getting the most from transportation as a critical component in your value chain.
   Nightingale is vice president of transportation logistics at GENCO, a FedEx company. He can be reached by email at thomas.nightingale@fedex.com.