Supply Chain Expertise and Technology Blog by TMC, a division of C.H. Robinson

4 Unexpected Benefits of a TMS

Less obvious positive impacts of transportation management systems
There are obvious reasons for adopting a transportation management system (TMS) such as tracking carrier performance, automating the tender process, and load consolidation and optimization to name a few.

However, there are some that may not be on your radar screen even though they could deliver substantial gains.
Here are four examples of less-than-obvious rewards:

Strengthening strategic relationships. A TMS can bolster your strategic partnerships.

Take, for example, a manufacturer that has entered into an agreement to make product for another company. The enterprises are in the same industry but are not direct competitors.

Company A offers a readymade production line in a location that serves an important market at a much lower cost than would be the case if Company B used its more distant facilities. At the same time, Company A is able to fully utilize its expensive plant.

The arrangement promises to deliver big paybacks for both companies – but what has a TMS got to do with it?

First, logistics costs represent a key component of the deal. The detailed analyses of these costs that Company A is able to provide courtesy of its advanced TMS helps to make the financial case for the partnership. Second, since Company B does not possess this analytical capability, having a partner that does is another incentive to ink the contract. Third, the TMS-driven analyses can be used by both partners to help keep the deal on track, and to find other logistics-related synergies as the partnership matures.

Avoiding awkward confrontations. Nobody likes fines for sub-par performances such as late deliveries. Shippers can do without these confrontations; fines are meant to encourage high service standards, not provide opportunities to punish providers. Carriers want to prevent penalties for obvious reasons.

A smart TMS can underpin a penalty avoidance strategy, by providing the data needed by carriers and shippers to pinpoint the root causes of service failures and develop solutions to these problems.

More mileage out of freight data. Logistics is not the only function that derives value from freight transportation statistics, and a TMS is an effective vehicle for generating and disseminating these facts and figures.

Consider setting up a data feed for sales tracking systems, for example, that shows what product is moving down to the unit level in near real time. Procurement is another function that utilizes data on freight movements, particularly related to the transportation costs that influence sourcing decisions. Reports that detail freight cost per unit by lane are valuable for procurers.

Hedging against driver shortages. It may seem like a stretch to suggest that TMS solutions can help address the trucking industry’s perennial problem of finding enough drivers. However, the technology can, at least, support efforts to retain these professionals.

TMS analytical tools are used to align freight networks, and hence the business goals of both carriers and shippers. Having identified the best providers that are in alignment with your objectives, more freight can be allocated to these players. This, in turn, increases acceptance rates.

The net result is more profitable, stable carriers that can offer their drivers more incentives to stay.

These applications might not be deal-breakers when it comes to evaluating the worth of a TMS, but they may help to sway your decision to invest in the technology.

Have you enjoyed returns from your TMS that you did not expect?

- Regional Sales Director
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Comments

Navdeep Sidhu

"Consider setting up a data feed for sales tracking systems, for example, that shows what product is moving down to the unit level in near real time"

Good advice. You have to remember that when product supplies dip you can't just wish them into inventory! There is going to be some kind of turnaround time so having a sales tracking system lets you know when it's time to order.

6.18.13

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