The case for a TMS

Businesses shipping freight through less than truckload [LTL] carriers can improve efficiency, accuracy and accountability of their transportation department by employing an intelligent, automated and now an affordable Transportation Management System [TMS].

Shippers, like distributors and manufacturers with modest freight spends now have access to affordable and capable transportation management software via hosted solutions that bring efficiencies that were only available to the largest shippers less than a decade ago. Realistic savings from automated shipment management software typically exceed 10% of LTL spend simply by automating the quoting processes over the internet and displaying instantaneous results to the user. Sometimes staff just doesn’t have time to log into every carrier’s website to get every possible rate.

Soft costs in personnel staffing and accuracy can approach or exceed the hard savings. The days of logging in to carrier websites, copying down rates and putting them into spreadsheets should be a relic of the past if only due to the sheer monotony of the error prone task. Mistakes in keyboard entry costs time and money. Supervision is near impossible due to the lack of concise reporting and KPIs.

Shippers who have not done research on the TMS market in recent years, probably have missed the explosion cloud based shipment management software lately. Transportation Management Software used to be expensive and reserved for the biggest companies; not anymore. Integration into ERP systems has also become easier over the past few years due to new ways of interchanging shipment data emerging and being adopted.

Transportation management by acquiescence is a thief in time. Transportation Management is a fast moving, complex art played in a world demanding ever more attention as carrier rating, rules and delivery practices become ever more complex. Companies want to compare shipping rates and accessorial charges efficiently making the smart choice every time.

Preventing customer chargebacks (by not using customer specified carriers) with the use of an online automated address book. Improves customer satisfaction and increase profits. An automated address book that adheres to customer carrier choices will avoid the sometimes overlooked task of finding the customer’s routing guide and manually selecting their preferred carrier. Using a TMS ensures your loads are routed with the right carrier, to get the lowest possible rate.

Many shippers employ the use of outside parties to provide transportation management. These companies spread the cost of expensive legacy TMS applications across many customer and extract a management fee for their services. By insourcing 3PL functions, you bypass the management fee and send it to your bottom line.

A smart advanced and now affordable TMS will bring benefits far beyond the lower cost of shipping. Increased visibility through automation allows you to communicate with your customer before they know there is a problem. Providing tracking on your website gives your clients peace of mind especially if you provide alerting of exceptions.

Having customer service representative CSR portal into a TMS, eliminates the phone calls between the transportation department and customer service. Similarly portals can be configured for sales representatives allowing them, for instance to access carrier rating for their price quote thus sparing the transportation department even more time to effectively manage transportation.

Analytics through advanced reporting gives management oversight of the shipping function at any level of granularity desired. Information that was formerly subjective is now objective allowing management to gain efficiencies where formerly there was only gut feel to rely on.

Data entry into a TMS can be integrated to your ERP or Warehouse Management System [WMS] creating error free accuracy. Likewise, with carrier invoicing, invoices can now be retrieved electronically and compared with estimated costs before transmitting to accounting. Variances in freight costs can be automatically flagged for investigation.

Variance reporting can uncloak the actual costs of transportation and expose carriers that habitually quote you one rate but inevitably invoice you another. There is a difference in carrier practices when it comes down to weighing and inspection and using carriers who make a profit center out of reweighing your shipments (weights only got up, right?) can be a drag on profits and create frustrating management or clerical time, not to mention the lost opportunity of selecting a carrier who actual cost could have been less.

Tendering can be automated based on business rules or left manual by selection by an individual. Since arguably the biggest reason to implement a TMS is to provide for visibility and selection of the lowest cost carrier wouldn’t it be a good thing if an individual had to give a reason code for bypassing the lowest cost provider and selecting a more expensive option. There are good reasons not to choose the lowest cost carrier, transit time, customer request and etc. pizza is not a good reason to waste money.

With the cost of TMS dropping considerably in the last few years, a TMS System is now highly affordable only you won’t get an affordable system from legacy providers. New cloud based systems came of age a few years ago. Early adopters along with their providers have out of the box functionality that would have cost hundreds of thousands of dollars in 2010. Return on investment [ROI] can now be had within a few months. The key to gaining that ROI is to acknowledge that 1985 shipment management should be rightfully retired.

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TMS Buyers Guide TMS RFP