Transportation management is bringing cloud computing down to earth by deploying the technology to give users the kind of flexibility that was not possible in pre-cloud days. And we are only at the beginning of the cloud era in freight transportation, so get ready for the arrival of some head-turning applications over the next few years.
The pay-as-you-go software as a service model is something of a gift to transportation management systems (TMS), which traditionally are top-heavy with capital investment and implementation time. Also, in an industry that has to move quickly – both physically and figuratively – established TMS technology can be somewhat sluggish. Managing distribution networks “in the cloud” brings improvements on all these fronts.
The cloud, in combination with the right expertise, can also deliver significantly faster than anticipated, probably because the technology is inherently nimble. This is important since supply chain agility is very much in vogue right now.
This is the experience of packaging products and papers manufacturer Boise Inc. that signed up for a C. H. Robinson Managed TMS service – which is based on the software as a service model – primarily to improve on-time delivery performance. The company met this goal in short order, and was pleasantly surprised by the immediacy of the paybacks. Load consolidations and modal optimization alone accounted for six-figure savings each month, according to the company.
The cloud’s transparency offers a degree of supply chain visibility that is way superior to early TMS solutions. In many ways it is here where much of the technology’s future potential lies, because companies will gain access to management data that will shed new light on network efficiency.
The Boise application offers a glimpse of this information-rich world. The web-based tools that come with the software as a service model provided visibility to loads throughout the entire process, and allow the company to create customized intelligence reports on the fly. The manufacturer acknowledged that its former service providers did not offer the kind of information or supply chain visibility needed to benchmark its financial metrics and understand costs.
This is an important advance, because armed with this kind of information companies will gain new insights into how their distribution networks are working, and make adjustments that deliver further benefits. In Boise’s case the company was able to change some of its service program offerings to customers because it knew the real, activity-based costs for services such as rush orders.
Of course the cloud is not a perfect, readymade solution. Companies still have to decide which combination of in-house and outsourced TMS services is the most effective for them. Also, using a hosted software service – particularly one that will provide new sources of network intelligence – requires levels of in-house expertise and resources that some shippers might not be prepared to provide.
Nevertheless, cloud computing in the hands of transportation management experts offers opportunities for capturing efficiencies that were out of reach just a few years ago.
More information on the Boise TMS application is available from www.mytmc.com/resources/casestudies.