Supply chain leaders recognize the value of a transportation management system (TMS). Unfortunately, adoption rates across the country continue to reflect the sub-standard use of a TMS to manage freight spend resulting from shippers that failed to realize the value of a TMS as few as 66% of US shippers take advantage of a transportation management system. The only way to drive TMS adoption rates lies within creating a successful business case for TMS implementation for those that are not necessarily involved in the supply chain process.
Current Barriers to TMS Adoption
A successful business case for TMS implementation must begin with understanding the barriers to TMS adoption. These barriers reveal why supply chain leaders fall short of obtaining shareholder and IT shareholder support for implementation. Recognizing these issues in today’s current supply chain processes is integral to the development of a business case itself. Key barriers include:
- The high cost of implementation.
- The need to upgrade existing hardware throughout the supply chain network.
- Inability to understand how TMS functions translate into productivity gains for non-logistics professionals.
- Inconsistent features and capabilities available through a TMS, and depending on the vendor, a TMS may not offer the diverse functions necessary.
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Benefits of TMS Implementation
Without focusing too much on the diversity of TMS solutions on the market, it is crucial to understand the primary benefits provided by a TMS. For example, a dedicated, modern TMS, reports Supply Chain 24/7, offers these advantages:
- Supply chain efficiency gains.
- Financial savings of between 5% and 15%.
- Lower-cost mode selection.
- Access to discounted rates and optimized carrier schedules.
- Improved dock management.
- Enhanced compliance with the inbound freight routing guide.
- Faster onboarding to unlock new carrier savings and specialized marketing campaigns.
- Improved financial reporting and management, including increased invoice accuracy, payment processing, and more.
- Automated capabilities through a modern TMS.
How to Build a Winning Business Case
After taking the time to recognize the limits of current operations, as well as the benefits of TMS implementation, it is time to begin building the business case for TMS selection criteria, implementation, and maintenance. As with any change to operations or system use, the business case must clearly define each action, how it will benefit an organization, recognize the value gained from implementation and provide a general timeline to return on investment. Although the exact business case will vary based on a shipper’s unique needs, the best business case must include these core characteristics:
- Conduct a comprehensive self-assessment of transportation and supply chain network. This self-assessment is a thorough review of all operations to identify your existing weaknesses and recognize your limitations.
- Know freight spend and staffing costs. Understanding your exact freight spend and shipping costs, as well as the costs of labor-management throughout logistics operations, is the next factor to building a successful business case for a TMS.
- Map existing business processes to understand the network. Today’s supply chains are incredibly complex, and shippers should map the existing business processes to understand their network functions and durations, which provides a baseline to judge current operations against the improvements following a new system implementation.
- Identify challenges within the network that occur on a day-to-day basis. Throughout the entire supply chain, problems will arise. The business case must contain all issues that occur on a day to day basis, it regardless of their level of impact.
- Note the risks of TMS implementation and how to overcome them. This step begins the phase of explaining what may happen with implementation, such as delays and operations, unexpected downtime, integration concerns, and more. The key to making this step work rests within identifying the best path to overcome each of these challenges.
- Ingrain the business case with how visibility, performance, and scalability derive from TMS use. Make sure every aspect of the business case continuously supports the key benefits of improved visibility, performance, and operational scalability after implementation.
- Revisit the current freight spend versus cost savings following implementation. The business case should also identify current freight spend and recognize the savings from implementation, providing a means of quantifying the cost of investment versus not implementing a TMS to reduce freight costs.
- Remember the value of increased customer service. It is essential to consider indirect benefits of TMS implementation too, including enhanced customer service and long-term system maintenance costs.
- Consider the unique view of the IT department. Gaining support from the IT department is another challenge in the business case. Supply chain leaders should focus the business case on how to avoid hiccups with IT integration and launch, reducing the stress of change and ensuring support.
- Think of the implementation timeline, including the time to implement, vendor-specific processes, average integration time, and means of integration. The final aspect of the business case should perform two functions—defining the timeline for implementation and recognizing a few vendors known for quality solutions, such as the Cerasis Rater.
Your Business Case Is the Key to the Logistics-Efficiency Kingdom
Building the business case for TMS implementation is a complicated process. However, the reward outweighs the risk. Supply chain professionals that suffer from the challenges of traditional, manual, and expensive methods need to start building the business case for an advanced TMS today. Every second delayed between now and implementation is a lost opportunity for savings.