An advanced transportation management system (TMS) offers cutting edge technology that can help you achieve and extend your strategic goals – but it’s important to make sure that your tactical house is in order before embarking on the journey.
Simply adopting a TMS and expecting to capture big savings immediately without raising your tactical game, is like NASA launching a mission to Mars before it has learned how to escape the Earth’s gravitational pull.
We touched on this mismatch in Ryan Pettit’s posts about developing the skills necessary to harness the analytical potential of an advanced TMS suite (see Getting the Most Out of a TMS and Turning Tacticians into Strategists).
In a broader sense, installing a TMS is the first step on an evolutionary path that can transform your freight network. The analytics capabilities that come with a TMS enable you to carry out an in-depth analysis of your logistics network, for example. By mapping every facility you can identify opportunities to consolidate loads, rationalize routes, and develop a core carrier program. Strategies like these can rack up substantial savings; but only if you are able to implement them.
If, for instance, you are not using a route guide and buy transportation mainly on the spot market, many of these strategies will simply be out of reach. Tactically you are behind the curve, and have to make up this ground before you can move to the higher operational level.
But the existence of a route guide is no guarantee that you are in a position to realize the big-league savings and network efficiencies made possible by today’s TMS technology. If the guide is only used sporadically or without rigor you might lack the tactical discipline to use it as a platform for achieving your strategic ambitions. In a lane where there are, say, 15 carriers, are there business rules in place to make sure that service provider selection is always optimized?
The problem may be cultural. Establishing clear guidelines for designating which carriers occupy the top spots in your route guide is sensible, but do members of staff actually adhere to this pecking order? Or do they stuff the guidelines in a virtual desk draw and persist in contracting with the carriers they prefer? This can be the case in large, fragmented organizations where there are lots of autonomous satellite facilities.
When cultural blocks like these are wide-ranging, it can be very difficult to deploy a TMS to its full potential. The managers responsible for adopting the system may be well versed in the strategic possibilities it opens up, but if the people who use the technology every day are not invested in it, there is a good chance that the returns will be disappointing. A familiar syndrome is where people only use the shiny new system when they absolutely have to.
Lack of buy-in can be an issue in the extended supply chain. If suppliers and customers are not brought up to speed the strategic impact of the TMS will be blunted. Some suppliers may have been trained on the system but for some reason – a change of personnel, for example – now shun it. Misaligned incentives can also be the root cause, where a service provider sees little gain in adopting best practices that are part of the new TMS-driven regime.
There is nothing wrong with being relatively unsophisticated from a tactical standpoint, as long as the shipper and all stakeholders are aware that there is work to do if they want to implement a leading TMS solution and derive maximum value from the investment.
The sky is the limit if your TMS mission takes off from a solid base.