What capabilities does a transportation management system (TMS) need in order to meet the demands of a lean supply chain?
The concept of lean has been around for a long time. It may seem that we know all the wrinkles and don’t need to give much thought to which TMS applications are the most effective in these environments.
That view is a little shortsighted for a couple of reasons.
First, the definition of lean embraces a much wider range of supply chains than was the case when the concept first revolutionized manufacturing.
Reducing safety stock to a bare minimum has become the norm in many industries in the wake of the global economic meltdown. The ultimate in lean may be direct-to line-delivery, but now days a company that reduces its inventory levels from, say, 30 days to 15 days can call itself a “lean” operator.
Second, TMS technology has gone through some dramatic changes since the lean philosophy became widely adopted. And the pace of change has not slackened as TMS solutions adapt to recent developments such as the explosive growth of cloud computing.
So, how should a modern TMS solution support this type of operation?
Before we get into specific features, it is necessary to make some assumptions about the inbound supply chain.
One assumption is that the shipper is closely aligned with their suppliers, both operationally and technically. Respective IT systems that seamlessly exchange shipment information, for instance.
Another prerequisite is that suppliers are responsible for ensuring that product is ready for loading at the designated times. There is no room for error here. For example, if a load is not available at a supplier location, the shipper might instruct the carrier to move to the next location and put the aberrant supplier on the spot for expediting the late shipment.
Similarly, it is assumed that carriers are integrated into the lean operation, and that their equipment is reliable and available as needed.
With these requirements in place, it is possible to tailor a TMS solution that optimizes the lean supply chain, providing the system offers a number of key capabilities. Here are the critical ones.
Track and trace. In an operation where speed and the quality of data are critical, the ability to continuously monitor the status of every shipment with unerring accuracy is a must.
Timely exception management. This is another given. There is no tolerance for disrupted product flows in a supply chain that runs on, say, two hours of safety stock. Anticipating problems and fixing them before they become disruptions is key. The advent of cloud computing helps here, since the technology gives shippers a more holistic view of the supply chain.
Multiple integration points. The system has the capacity to receive inputs from many different information feeds, including calls via telephone and mobile devices to automatic electronic alerts. Moreover, these inputs are rapidly assimilated into decision-making processes.
Manage floods of SKU data. In a highly synchronized lean operation the TMS has to process huge amounts of data on the SKUs flowing through the system. The data is analyzed and translated into actionable information. For example, how do suppliers’ reports of what trucks are carrying compare to the SKUs that the shipper actually needs? A high level of automation is also needed; manual inputs are prone to error.
One platform. Advanced TMS solutions are built around single platforms rather than a collection of disparate systems stitched together, a huge plus in lean operations. TMS solutions that are based on a single operating platform are easier to scale across geographies and product flow types without creating too much risk. One-platform systems are also more robust in key areas such as event management.
Given these requirements, should a lean shipper invest in an in-house system or enter into a third-party relationship with a TMS provider?
This depends on the shipper. A large player with extensive freight management resources and an experienced team might opt to take the TMS in-house. But overseeing a lean network with the degree of control that is necessary represents a hefty managerial burden. Also, investing in non-core logistics capabilities can run counter to the cost-focused principles of lean.
The demands of lean operations are greater than ever. On the other hand, TMS technology has advanced in leaps and bounds over recent years. The challenge is to put the two together to develop the optimum solution.