Over the summer, American Shipper spent two days shadowing the transportation teams of two major shippers in an endeavor to better understand how shippers actually use a transportation management system.
For the past decade, American Shipper has chronicled the way technology intersects with the transportation and logistics industry. It’s no longer accurate, however, to call this an intersection. The reality is that modern transportation departments rely on technology the way we all rely on email and the Internet. That is to say, it’s often impossible to distinguish between a shipper and its system usage. These days, they are one and the same.
To that end, American Shipper’s understanding of how transportation systems work has largely been confined to descriptions of features and functions from software providers and their customers. But listening to people talk about systems isn’t nearly the same as watching those systems being used. Not to mention that those we speak with about technology are often the executive- or director-level decision makers, not necessarily the operations folks that interact with these systems on a day-to-day basis.
Over the summer, we spent two days shadowing the transportation teams of two major shippers in an endeavor to better understand how shippers actually use a transportation management system (TMS).
It’s 10 am on a Friday morning and Jeremy Kunde is working through his list of usual tasks – planning truckloads and resolving issues with his company’s network of domestic carriers and customers.
Kunde is a transportation analyst with a major food manufacturer in the upper Midwest. The company makes and distributes cheese, yogurt, and other dairy products and ingredients from 30 locations globally.
Like many people with the designation of transportation planner, Kunde’s day-to-day tasks are confined largely to two systems: his company’s TMS, which is provided by LeanLogistics, and email.
In the TMS, Kunde manages a couple types of loads for the company – movements of goods between his company’s distribution centers, of which there are nine in the United States, and shipments from DCs to customers.
Kunde’s primarily responsible for the region spreading west from two of those DCs, one based in Missouri and the other in Utah. From a planning perspective, Kunde spends around an hour on Friday building loads to customers and so-called interplant loads between DCs.
That load-building activity all takes place in LeanTMS, which Kunde has been using for several years. And for the most part, those loads are built in an automated, templated fashion. In more specific terms, Kunde selects loads that are ready to roll from a list of orders that have flowed in to the LeanTMS from the company’s enterprise resource planning (ERP) system and moves them to an auto-build screen within LeanTMS, where the loads are automatically tendered to contracted carriers on that lane.
Almost all loads are tendered to contract carriers – the spot market is used sparingly – and around 80 percent of its volume moves on reefer trucks.
When there are no curveballs, Kunde’s load planning exercise literally takes only a few minutes. In the meantime, he tackles other tasks while waiting for carriers to confirm acceptance of the loads within the system. His company has more than 120 carriers on-boarded with LeanTMS and around 60 that the company expects to do significant business with in the coming year. All those carriers access LeanTMS to update the company on critical milestones like tender acceptance and load closing.
As he waits to see if LeanTMS spits out any exceptions in the tendering process, Kunde moves to the “issue-resolving” part of his day: sorting through his email inbox or the load notes function in LeanTMS to diagnose any problems with the hundreds of loads he manages weekly. Load notes attached to each movement provide carriers and the shipper a chance to communicate any complications around a particular shipment.
Sometimes, it’s a customer (the manufacturer ships mostly to retailers and food production companies) wondering why a truck hasn’t scheduled a delivery appointment. Other times, it’s a customer wondering why the truck hasn’t showed up on time.
And sometimes it’s a carrier dispatcher wondering why the customer isn’t there to receive the driver, or to inform the manufacturer that the load has been rejected.
It’s here where the nirvana of automated transportation execution ends, and the real management begins. Kunde patiently sorts through that laundry list of problems, which may differ from week to week, but will always need resolving when managing a transportation network in the dynamic physical world.
A few broad takeaways from spending two full days with two different transportation teams (we’ll get to the other team in a moment) managing domestic freight movement within LeanTMS: first, no matter how sophisticated they are, systems can only provide a platform for transportation teams. It is specific expertise and experience around carrier and customer behavior that drives the most effective use of those systems.
Second, a modern TMS allows so many processes to be automated and systems to be intrinsically linked that it’s easy to forget how manual these processes can be, and how disconnected departments are, for a shipper not using a TMS. This should not be taken for granted.
And lastly, different organizations, and even different people within the same company, use systems in very different ways to accomplish similar tasks. Modern TMSs are more malleable than one might imagine in that they allow users to express their personality preferences via different workflows.
Different Paths, Same Goals. Kyleigh Locke is similarly a transportation planner building loads for Hostess Brands, maker of the famed snack food Twinkies. But Locke doesn’t sit in Hostess’ Kansas City headquarters. She works from a desk in LeanLogistics’ home base in Holland, Mich.
Locke is part of a team that handles managed transportation services for Hostess using the same LeanTMS software upon which Kunde relies. LeanTMS is a multi-tenant, cloud-deployed, browser-based TMS, meaning every customer uses the same version of the system and everyone benefits from refinements and updates LeanLogistics releases three times a year.
Getting back to the subject of workflow, whereas planners like Kunde typically build their loads using a list-oriented view of the LeanTMS interface, Locke uses the map-oriented view. This lets her visualize the best way to route Hostess’ multi-stop, full truckloads from its DCs to various parts of the U.S. Northeast and Southeast, the regions for which she is responsible.
Part of the difference in the way Locke build loads and the way the food manufacturer predominantly auto-builds its loads is in the patterns. Kunde said his company’s patterns are pretty consistent week-to-week, meaning a customer that orders on Wednesday and expects delivery 10 days later on Monday generally orders that way every week.
Hostess’ customers also have regular patterns, so much so that it raises a red flag for Locke when two deliveries that are normally paired aren’t. For her, it likely means one of the orders is late arriving, so she makes a mental note to come back to that load later and see if the order eventually comes in.
But depending on the delivery date, Locke has many modes at her disposal. That lets her get creative in the way she routes loads from DC to customer. The mapping interface initially presents her with an image that looks like a star shining only eastward, with lines connecting Hostess’ plants to all their various delivery locations.
From that view, Locke then drills into each individual load or set of loads that can be combined, using the engine to optimize and her own experience to tweak that optimization as needed.
Locke ticks off the shorter routes first, eventually moving on to loads destined for the more distant customers in New England and Florida. There’s no protocol that indicates the loads need to be handled in that sequence; it’s just how she best processes her list of tasks.
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The mapping function within LeanTMS allows a shipper to build loads visually
This underscores the human component of using a TMS. And sometimes that doesn’t come across in a demo or sales cycle. Different users are naturally wired differently, and the best systems are those that don’t shove a particular workflow down a user’s throat. Instead, they allow users to arrive at the same end point via different journeys.
Think of it in sporting terms. Good coaches build systems around the talent at their disposal. They don’t try to shoehorn that talent into a system that doesn’t maximize their talents.
Here’s another example of there being multiple ways for a company or user to get to the same result within the TMS: the food manufacturer’s planners focus on the maximum weight of its shipments when building full truckloads, while Hostess’ managed TM team focuses on the maximum number of pallets that can fit on a single truck.
In either case, planning those loads involves mathematical puzzle-solving mixed with the wisdom of experience. A planner often needs to squeeze two or three loads destined for the same or nearby locations with an optimal number of pallets. Not too many to be overweight, but enough to qualify the shipment as optimized.
Those human commonalities are, as much as similar data fields, what tie users of a multi-tenant system like LeanTMS together.
Just as Kunde knows that the best carrier for a particular interplant move for his company might lie outside of the company’s contract carriers, Locke knows that a certain Hostess retail customer prefers to be the first stop on a multi-stop load, even if the mapping function in the TMS prefers to route that load in a different pattern.
And just as Kunde knows that certain routes from his company’s Utah DC are more likely to be treacherous in winter months, Locke knows that certain modes are more expensive than others based on lane and quantities per order.
LeanTMS lets users build in those constraints – the food manufacturer, for example, seems laser-focused on auto-building loads as often as possible – but sometimes it’s better to let a planner make those decisions directly.
That blending of algorithmic optimization and hard-earned local knowledge is the reality of TMS usage. It’s often said that systems don’t make decisions, they enable people to make better decisions. And these two transportation teams exemplify that maxim.
It’s important to emphasize, however, that much of the tendering, load planning, optimization, and invoice resolution processes still take place within the system. It’s easy to lose sight of just how much is automated in LeanTMS because the planners using it are freed to resolve customer and carriers issues, or think strategically about how to better the use the system.
It’s also easy to take for granted the extent to which the food manufacturer’s or Hostess’ carriers are integrated into LeanTMS because the connections are embedded. Those integrations enable planners to more effectively look ahead, take actions, and resolve issues with carriers. Carriers accept loads and provide critical shipment milestones directly in the TMS, creating a level of distributed visibility that wouldn’t exist for a company not using a system.
The Case For Managed Services. The Hostess planners in Holland said customers inherently trust the MTS team as they would their own internal transportation departments. There are weekly calls to discuss metrics or changes to the network, like a new supplier or customer. Hostess can also access consoles and dashboards at any time to gauge the performance of its network.
The Hostess team at LeanLogistics is led by logistics manager Chase Hoffman, whose experience on a previous managed TM engagement provides another layer of expertise. Hoffman can take best practices from the other customer he worked for and apply them, where relevant, to Hostess.
What’s more, the longer a planner uses a TMS, the more productive he or she is in general, not just at using the system. It’s not just about normal system proficiency, it’s about the way a TMS makes a user a better transportation manager.
LeanLogistics’ managed TM teams also meet regularly with each other to share knowledge, innovations, and experiences, providing a type of peer benchmarking to which most internal transportation teams rarely have access.
Managed TM is a significant and growing part of the company’s business, and one of the core reasons it was acquired by Kewill in May. Part of the brutal reality of buying a TMS is that companies often don’t have the in-house expertise or, more likely, the resources to properly leverage that investment.
At the most basic level, TMS usage tends to reduce freight spend. It systematizes the tendering process so that loads go to a pre-determined list of ranked carriers. It optimizes routes to avoid wasted miles, and it plans deliveries in such a way as to mitigate accessorial charges. It also reduces the time staff needs to spend accomplishing all these tasks.
The logic of a managed TM approach is that the builder of a system is often best suited to operate that system. Relieving a shipper of the blocking and tackling of freight execution allows the shipper’s internal transportation team to focus on its carrier relationships, optimal network design, and any other backburner projects.
For Hostess, turning to LeanLogistics was part of a resurgence out of bankruptcy that began in 2013, when the company starting fulfilling from warehouses to customers instead of direct store deliveries. LeanLogistics also helps benchmark Hostess’ spend by lane and carrier.
Matt Kunz, senior vice president of supply chain at Hostess Brands, told Logistics Viewpoints earlier this year that when planners are promoted or leave, they are replaced with “top notch” new talent. Kunz indicated that a deep bench of experienced transportation planners is difficult to cultivate and maintain within the competitive 3PL industry.
How TMS Influences Other Business Areas. The MTS model is clearly not for every company, however. The food manufacturer’s use of LeanTMS, for example, has proved to be a source of strength within the company, bridging functions like inventory management and customer service.
For starters, Kunde and the other planners can look within the TMS to see if they can fulfill an order with existing inventory. That data flows into the TMS from an inventory management tool from another software provider, but is integrated with both the ERP and TMS.
Meanwhile, if a load arrives late to a retailer, suddenly that becomes a customer service issue. Kunde’s company can use metrics within the TMS to determine where the breakdown occurred – maybe it was a carrier issue, maybe the delay was caused at its own DC, or maybe it was actually the customer’s fault.
Properly identifying the party at fault has a bearing on the company’s relationships with its carriers and customers. In other words, having a systematized record accessible by multiple departments isn’t just about managing the transportation leg. It has knock-on effects to other parts of the chain as well.
LeanTMS can be accessed by a wide range of departments within a shipper, from a customer service team checking on the status of an order in transit to the finance department checking on accruals. It’s really about what the shippers want the TMS to do, not the limits of the technology.
And perhaps this is another takeaway from our experience seeing one of these systems in action: a TMS isn’t a magic potion. It won’t improve carrier relationships or drive down rates, at least not on its own. But it does provide breathing room. It gives a company the chance to take stock of its operations and spend more time managing relationships, but also to plan better for the future.
Both offices were almost whisper quiet too. There was a palpable lack of distress, even when problems cropped up. Despite the fact that both teams manage millions of dollars of freight spend, affecting hundreds of millions of dollars of product going to dozens of customers, there was an ease with which both teams went about their business.
It’s also striking just how different a load planner’s day is depending on which day of the week it is. One might think, going in, that most days resemble one another. But in practical terms, there are certain days when loads are planned, and other days primarily spent managing customers and carriers.
Broadly, days of heavy tendering and planning tend to be followed by a day or two resolving situations.
In Kunde’s world, those planning-light days (assuming there are no major issues to resolve) are often spent figuring out how to better leverage LeanTMS, or using the system’s business intelligence tools to identify patterns and trends. Those interplant runs, for instance, are currently tendered primarily to the food manufacturer’s dedicated fleet with a major truckload carrier.
The food manufacturer is, according to LeanLogistics’ LeanIQ aptitude benchmarking function, one of the more accomplished users of the software company’s system, meaning it is able to leverage the system in a way that few other shippers do.
And yet, company officials said the emphasis is on being a shipper of choice going forward, as it expects capacity to become tight once regulatory constraints like mandatory electronic logging devices come into force. The company’s transportation category manager spends much of his day building and maintaining carrier relationships, especially as the company has just completed a new procurement process focusing on concentrating its volumes with a group of core carriers.
If there’s a final takeaway from our experience looking at TMS usage from the inside out, it’s this: transportation execution automation is a value creator. There are certainly degrees to which a system helps a company reduce freight costs, become more valuable customers to carriers, serve their own customers better, and use data and business intelligence more effectively. Modern systems like LeanTMS afford many opportunities to build across multiple functions in a company.
In every case that American Shipper has come across, and certainly with the food manufacturer and Hostess, automation builds data structure and integrity, and allows people to work in a more efficient, value-providing manner.
But like many tools, a TMS is only as good as its user. Transportation management is ultimately a fine balance between automated processes and human intervention, both in terms of daily operations and forward-looking strategic initiatives.