Having the right visibility into the supply chain not only requires having the right TMS system, but also the right design of your networks. ( Photo: Shutterstock )
History repeats itself, it is said, unless something is done to change its course. The freight world bears this out, and yet companies that move freight continually pay more to move that freight simply because they don’t have the visibility necessary to effectively analyze past events and make informed judgements about future events.
Call it the visibility problem. Shippers, especially, are affected by this, and it’s often not by design, although it is often the result of poor design. Brooks Bentz, a longtime transportation consultant that has worked for companies providing transportation management systems (TMS), explains:
“The client knows it needs a TMS,” he said. “We coach them on the steps they want to go through. You need to run a Request for Information and the purpose is to pick the right TMS provider. You need to have a design specification that says, ‘these are the things I want to do in my operation.’”
Bentz the first step in improving the bidding process – something he prefers to call the “sourcing event” because a “bid implies it is only about price” – is to identify what type of information you wish to gain from your TMS. Only after a company has a solid plan on the types of information it believes will be useful can it acquire the right TMS system.
The system should be flexible, he said, as different parts of the business may need different information. For instance, the CEO may not care about the information surrounding every load, but the distribution manager does. Can the TMS system provide these varying levels of data?” Bentz noted.
“You have to be able to look and see what is going on, so that is a key element in any TMS,” he said. “Do you have reporting capabilities, and do you have the sophisticated levels needed [to report that information]? Running reports at the end of the quarter to find out that Fleet A ran 10 loads that should have gone to Fleet B and it cost me $10,000 is too late.”
Bentz added that executive level professionals should have in place a way to review the financial performance of the entire supply chain, including the value the TMS is providing. “We are big advocates of compliance management and reporting to [show] this is what the plan says we should be doing, and this is what we are doing,” he added.
So, how does this all impact visibility into past events to lower costs for future events? The answer, Bentz said, is the process, and having the right TMS is just one step in that process. With transportation costs totaling about 64 percent of total supply chain cost in America, he said, it’s imperative that shippers have not only the data to make good decisions, but also the framework in place to allow that to happen.
“All the TMS is going to do is take an order down from a distribution center [and follow that load through the supply chain process],” he said. “There is no intelligence in there; it’s basically just transaction management. But, through transaction management, you get [understanding that you can follow up on].”
A great example of this is the historic flooding that took place this March in the Midwest. The cost to move loads through the Midwest during this time may be higher if trucks or trains have been diverted. But when building a transportation budget for March 2021, does that mean costs will also be high? Just looking at TMS data would suggest so since the TMS provides the rate data. But, a proper process that uses TMS, like one offered by nVision Global as its centerpiece and then inputs context as to why that data shows what it does allows for a more accurate March 2021 budget.
Another example would be a shipper that had 20 loads going out last week, but only 10 were picked up. Why?
“You have to dig into the 10 that weren’t picked up and find out why,” Bentz said. “There is analytic rigor that needs to be done, but this needs to be done pretty close to real time [to include that context]. How do we document anomalies in the system versus systemic issues? We look at shipper histories and we [usually] ask for a one-year of history, but a few years back maybe there was a port strike, so we need to [document] that.
“[TMS] is a process management tool, and if you have a crappy process and automate it, all you will have is a crappy automated process,” he added.
nVision Global works with shippers to assist them in providing that needed context around the data the TMS is providing and helping them identify best practices to ensure their goods are moving in the most efficient way possible.
The key to all of this is thoughtful analysis before you start the process. What do you hope to gain? What information do you really need? How do you integrate a TMS with other tools to provide context around that information?
“There is a wealth of data so how you collect it and mine that data [helps inform your decision making]. Not all of it is relevant,” Bentz said. “You have to think about the character of your TMS system and spec it accordingly. There’s a scale factor, there’s a cost factor, and there’s a functionality factor.”
He noted that many supply chain professionals can benefit from a TMS, but they fail to sell upper management on why it is needed, how it will be used, and how it will drive saving. That, too, is a critical step in the process and can help focus use cases for the TMS.
TMS are providing great value to enterprises, but without the right processes in place to instill analytic rigor and context around past events, their greatest potential is never achieved. Doing so requires initial thought and design of the process – a little extra work to get started but work that comes with a big payoff at the end.
Originally posted at:Freight Waves