Editor’s Note: In 2011, Ryan Pettit contributed a blog post for TMC. We’re sharing his original post here because TMS discussions are always relevant topics. Please share your thoughts and read the blog post, Getting the Most out of TMS.
Shippers capture the most value from transportation management systems (TMS) when they exploit the technology’s unlimited strategic potential. And much of that potential resides in the analytical tools that come with each solution. How do shippers make sure that a TMS suite has the analytical horsepower they need to deliver on their high-level goals?
The first step is to map out the goals and incorporate them into the system’s design. That may seem obvious, but often times a TMS has capabilities that are never or seldom used because the features are unneeded or the user does not know how to apply them. This is not an unusual phenomenon. How many times have you bought an electronic gizmo or piece of household equipment only to find that you never use 30% of its functionality?
In the case of a TMS, allowing a significant proportion of the functionality to remain idle devalues the investment. Moreover, if many of the tools are not used, you may well be leaving sizeable savings and service improvements on the table.
The problem might be too little – not too much – functionality. An example can be found in the Council of Supply Chain Management Professional’s Explores … Report “Deriving Strategic Advantage from Truckload Procurement” authored by C. H. Robinson Worldwide. As the report points out, “selecting a TMS with a set of capabilities that does not match your truckload requirements can be costly.” The report describes how constraint-based bidding tools make it easier for shippers to allocate portions of a lane to multiple carriers. “However, if the TMS does not allow you to allocate a lane proportionally, the two processes are out of alignment,” the report says. This shortcoming also impairs the shipper’s ability to analyze bidding methods.
The TMC implementation team does a great job in mapping the client company’s needs to the system’s design. The team follows a comprehensive, systematic implementation plan. But the client is the ultimate expert on what capabilities should be built into the TMS design. If this aspect has not been thought through before the implementation phase, the chances are that the TMS will be out of synch with the shipper’s requirements.
Of particular importance is assessing how the system will be used to manage transportation network strategy, and not just the execution of tactical moves. We find that the most successful adopters of TMS technology are those that take a step back, review their goals for the program, translate these goals into a strategy, and identify the risks to that strategy. This latter step is critical but often missed. An effective transportation management plan does not only focus on quantitative gains, it also addresses the risks to the plan’s strategic goals.
Laying down these specifications at the outset helps to ensure that the right information is flowing into the TMS and out to the analysis tools. On the subject of tools, these should be approached with purpose. Supply chains are a very rich source of data, and sophisticated analyses multiply the reporting options open to users. The sheer range of possibilities can make it difficult to tease out meaningful insights if you are not clear on what you are looking for.
Also, keep in mind that transportation networks are dynamic. Perhaps you opted to acquire TMS technology to gain the expertise required to manage inbound freight or a consolidation program. But a year down the road your export business takes off and analytics that were not important initially now take on much more meaning.
A convenient way to assess TMS needs is to follow the sequence below.
Goal. Refer back to your network management strategy goals.
Strategy. Specify how the TMS will help you attain these goals.
Risks. Identify the risks that threaten the goals and introduce mitigation measures.
Progress Reporting and Troubleshooting. Establish routines for monitoring the goals as the network changes in response to changing business objectives.
Going through this decision-making sequence when you are mapping the scope of the TMS helps to bring clarity to the process. Repeat this exercise on a regular basis to make sure that the system is still aligned with your network strategy.
In future posts, we will look at other ways to get the biggest strategic bang for your TMS buck, such as creating management routines that help staff to make the transition from tactical to strategic applications of the technology.