Many shippers believe a transportation management system (TMS) will streamline their operations and lead to greater profit. And in some cases, it will. But a robust TMS should be just one part of the broader supply chain efficiency mission. Relying only on a TMS probably means you are leaving money on the table.
The TMS serves as an execution system — it controls the process of moving freight — but it can only deliver value based on the inputs it receives. Bad data and poor decision making will lead to more expense and less overall efficiency.
To prevent this, managers need access to accurate data and information, and it starts with a proper freight audit.
Inside the freight audit
What is a freight audit? Similar to a financial audit, a freight audit looks at a company’s invoices and assesses whether they are accurate. Typically a time-consuming manual process, freight audits can now be accomplished with automation. nVision Global has said its automated freight audit process can lead to a 10% to 15% reduction in transportation spend through applying automated business rules that identify exceptions.
nVision Global notes that 20% of customers pay incorrect invoices. Drilling down through the details and the thousands of data points accumulated in the invoicing process improves transparency of the process, while driving new insights and locating errors that manual processes will never uncover.
A proper freight audit must take into consideration a company’s specific processes. Are shipments by rule supposed to travel on the carrier that submits the lowest rate, or are other considerations such as service levels more important?
A good freight audit process will include exception management tools that identify incorrect or out-of-spec invoices and route them for a more thorough analysis. Automation of these steps is only possible through the use of business intelligence that integrates the company’s rules and policies into the systems themselves.
nVision Global says its freight audit process provides web-based exception management tools, dedicated regional implementation, customer service staff fluent in 25 languages, and complete transparency of invoices, contracts, rate cards, tariffs and agreements, and coding logic. Data capture based on defined customer data fields is also part of the process.
After the freight audit is complete, lessons learned and efficiencies gained can be applied to the benchmarking process. Benchmarking requires data; it requires information; and it requires a partner that can leverage anonymized datasets for a shipper’s performance to be measured against.
With over 150 million transactions conducted annually from over 19,500 transportation providers, nVision Global has the scale of data necessary to determine a shipper’s true level of competitiveness with the competition.
Benchmarking allows shippers to identify areas where they are not competitive or may be overpaying on their shipments. Whether it is by lane, geographic area, shipment type or some other metric, the ability to benchmark is the final crucial step in generating overall efficiency of the supply chain.
Data accumulation, effective TMS usage, and supply chain management processes like conducting automated freight audits and developing efficient freight procurement processes all play a role in a well-run supply chain that minimizes transportation spend and maximizes business success.
Procurement and the role of a TMS
A TMS can become the gatekeeper in control of the freight procurement process. The TMS automates the submission and receipt of bids and tracks shipments through the entire logistics process. This might include identifying the correct mode for the shipment, funneling the shipment through the routing guide, auto rating the shipment, and then tendering it based on the selected criteria.
Rejected tenders will funnel deeper into the routing guide until it is accepted. Once accepted, the TMS continues to track that load to ensure it is picked up, the load cost is analyzed by lane or other criteria set by the shipper, and it arrives at its destination, which triggers billing.
This process, when handled manually, costs more and introduces more opportunity for error. Even a one-day delay in agreeing to a rate could result in a 20% higher cost to move a shipment.
Today, a TMS from providers like nVision Global streamlines these processes and provides thousands of data points that shippers can use to improve operational performance. This includes the ability to find immediate capacity and rates in a timed event within nVision Global’s Spot Quote tool. With details included in the electronic submission, and analytics that offer more detailed information on each bid, shippers are able to easily and quickly accept bids and secure the needed capacity without the delays common in a manual process.
That speed also plays out when it comes to the request-for-proposal process. The TMS automates the tendering process and can provide cost-effective routing options and real-time visibility of the shipment. A TMS also adds shipment and bill-of-lading functionality.
nVision Global adds that its procurement solution offers the ability to create projects of all sizes — from single lanes to multilevel. Flexibility is also key to any procurement solution. Customization of bid parameters, bid analysis and provider rankings, bid acceptance visibility, and integrated document management are other important considerations.
Data accumulation, effective TMS usage, and supply chain management processes like conducting automated freight audits, developing efficient freight procurement processes, and performing benchmarking exercises all play a role in a well-run supply chain that minimizes transportation spend and maximizes business success.
Originally posted at Freight Waves