In response to rising costs and a sluggish economic recovery, a growing number of freight carriers are turning to Transportation Management Systems to move freight from origin to destination more quickly, reliably and cheaply.
TMS includes both planning and execution systems for freight moves involving carriers and fleet management solutions for freight moves involving company-owned transportation assets. More and more shippers are using the technology because it has a positive effect on the bottom line, according to Steve Banker, service director of supply chain management for ARC Advisory Group.
“The simple, bottom line is that TMS can save companies money by lowering their freight spend,” Banker told Logistics Management.
A recent survey asked carriers what would happen if they were forced to give up their TMS and go back to manually planning and executing their freight. More than 40% said their costs would increase between 5% and 10%.
“In fact, 23% felt their total freight costs under the control of the TMS would increase by over 10% if they were to stop using it,” Banker said.
The benefits of TMS is that it can create transportation efficiencies, including providing real-time dashboards, which enable better decision making, It also can handle all kinds of task that can’t be easily managed with phone calls, faxes and spreadsheets.
Logistics Management recently identified eight trends that were causing carriers to turn to TMS:
1. Increase in Omni-Channel Retailers — The retail landscape is changing, with businesses now interacting with customers in brick-and-mortar, online, mobile, catalogue and other sales channels. TMS helps streamline delivery for omni-channel retailers seeking last-mile delivery from their stores and distribution centers.
2.The Globalization of Transportation Management — The entire wholesale/retail dynamic is becoming more global. So carriers need more sophisticated systems to manage their cartage. TMS is especially becoming more common in Latin American and European markets.
3. Handing Over Tactical Planning to TMS — In today’s global market, it’s not enough to simply manage your shipping today. Carriers also have to look at forward-looking planning such a two weeks, six months or even a year from today. TMS can help develop tactical planning strategies that optimize efficiencies and reduce costs in both the long- and short-term.
4. Freight Forecasting — TMS are getting better at combining product-forecasting systems with transportation. This is helpful in managing market volatility by using demand sensing, inventory optimization and transportation forecasting.
5. Everyone Wants Embedded Analytics Now — Embedded analytics help carriers come up with useful key performance indicators that they can use to consume and analyze date in rapidly changing scenarios. As a result, TMS that effectively embed analytics are in high demand.
6. Managing Big Data — While there is more data available than ever before, carriers don’t always know what to do with it all. TMS helps clean it, harmonize it and standardize it so that it can be used to improve, rather than impair, decision making.
7. Helps Utilize Backhauls — Nobody makes money on an empty truck. So TMS can help utilize their transportation networks more efficiently by increasing backhauls and getting maximum value from a trip.
8. Planning and Execution — With TMS, shippers can more efficiently monitor manufacturing and production cycles as part of the distribution process.
Tools such as TMS help simplify complicated transportation operations and provide key information that can make decision making and planning easier, while simultaneously reducing costs.