Think back. When you implemented your transportation management system (TMS), it changed your logistics function and became an integral part of your business. Today, companies are beginning to realize that TMS technology can impact business beyond logistics; it can impact sales and contract management.
Your TMS technology contains important information on transportation rates. And those rates can play an important role in developing customer quotes or managing contracts. Companies within certain verticals are looking at their TMS technology to support these other functions, and doing so quite successfully.
Variable Pricing Practices
No two contracts are the same. Some contain mostly static rates—those which don’t change very much. Food retailers and redistributors typically enjoy these types of rates, while companies within other industries typically receive rates on an ad hoc basis. If your customers enjoy standardized costs of transportation, you likely don’t need to utilize your TMS to determine rates on a frequent basis. However, a best practice would be to validate your rates when markets change, and your TMS technology can assist you in that validation.
In other industries, rates can fluctuate depending on product configurations and delivery details. In these cases, sales departments tend to be more creative in the way they price these services. As a result, they make greater use of TMS services.
A Number of TMS Approaches
Your sales team can apply TMS solutions to their work and meet three key objectives:
- To support the business model. Models vary from customer to customer—some pay for transporting product to customers; others strive to make a profit on the transportation. Contract terms vary as well—some are flat price while others may be per-mile pricing, for instance. When creating quotes for customers, your sales department can use transportation data downloaded from your TMS to price this portion of the quote in line with your customer’s business model.
- To evaluate the options. Base transportation costs aren’t all inclusive; your sales team must account for additional charges. For example, costs are influenced by different delivery locations and transit times or the use of expedited services. By using the TMS technology, your sales team can select variables that are important to them, and the TMS will provide the relevant facts and figures. Your team can then assess the different transportation options available to them to meet your customer’s needs.
- To perform deep-dive analytics. Is your sales team hungry for more data? They can use your TMS technology to delve deeper into the efficiency and profitability of transportation services. They can use your TMS—maybe in collaboration with a service provider—to explore the cost and service implications of a variety of options such as changing delivery windows, selecting different combinations of modes, and optimizing the consolidation of cargo. These analytics can help your sales teams improve performance levels as well as real-time supply chain visibility. And these improvements enhance their ability to respond quickly to market changes.
Your sales department may not be on the front line of managing logistics networks, but similar to other corporate functions, they are under pressure to control costs and maximize profits. By providing data on transportation costs as well as analytical capabilities, your TMS technology can help sales teams meet their revenue targets, improve customer service, and avoid losses through customer misquotes.
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Editor’s note: This post originally ran in 2016. Since it’s a relevant topic, we wanted to share it with you again.