That is the word being used to describe the state of the logistics industry in 2017, reports William B. Cassidy of the Journal of Commerce. While it may not describe everything in supply chains, it does accurately describe the overhead costs today’s shippers and carriers have enjoyed recently. Last year, the 2016 State of Logistics Report alluded to rising shipping volume, partially responsible for decreased overhead costs, as a driving force behind declining overhead costs across all modes of shipping. Unfortunately, that hopeful decline appears to have stalled.
Less-than-truckload (LTL) shipping has been amid a capacity crunch. More consumers are ordering products through e-commerce platforms, and the demand for no-cost shipping by consumers has become critical to the foundation of today’s omni-channel businesses. In addition, consumers want to know exactly where their products are, why they are taking so long to get there (even if it is only two days), and what shippers will do to fix it?
This sounds frightening to shippers faced with tough decisions in raising product prices or maintaining profitability. Rather than looking at it with only two options, shippers need a third solution; they need to take advantage of an LTL transportation management system (TMS), focusing on how leveraging today’s systems, like the Cerasis Rater, can maintain profitability and drive expenses down. Yet, nearly two in three shippers have not yet implemented an LTL Transportation Management System, reports Bridget McCrea of Logistics Management, so being able to select the right one with the right bells and whistles is essential.
What Modules Should an LTL Transportation Management System Offer?
Think about the benefits you want from your TMS. This may include reduced costs, load optimization, better carrier selection, flexibility, better levels of customer service, increased inventory management, accountability and transparency. To achieve these results, a quality LTL-based TMS must include the following modules:
- Reverse Logistics. Up to 30 percent of e-commerce sales come back as returns, reports Stacey Rudolph of Business2Community. Therefore, any LTL system must consider reverse logistics in every function.
- Vendor Management for Inbound Freight Management. Vendor compliance and management of inbound freight are also essential to positive returns on an LTL-based TMS.
- E-Commerce. Omni-channel sales are kind of the modern economy, so being able to handle increased volume and demand due to increased sales means your system must have wide scalability.
- A Mobile App. While a mobile app, like the app developed for the Cerasis Rater, may not seem essential, it reduces the workload and stress you experience when dealing with peak shipping periods, like the holidays.
- Reporting and Insights. Analytics systems and automated reporting help you make data-based decisions, so LTL selection and costs decrease.
- Integration Capability With Existing Systems. If you have an existing system, your new LTL Transportation Management System must have integration capabilities.
- Automated Carrier Selection. Finally, automated carrier selection must be an option to ensure scalability.
What Are the Key Capabilities of a TMS?
In addition to offering modules designed for enhancing LTL shipping options, a true, LTL-based TMS must also use four key capabilities throughout every module. These include the following:
- Shipment Consolidation. Shipment consolidation is the natural precursor, and by some definitions, the natural companion to LTL shipping. Shipment consolidation can lower costs across LTL shipments by combining existing LTL shipments for last-mile LTL delivery. In other words, shipment consolidation should be considered a fundamental aspect of leveraging LTL shipping to drive overall shipping costs down. Since consumers want their products yesterday, consolidation is key to moving more products, across bigger distances and at no cost to consumers.
- Route Optimization. Next, route optimization must be included in all LTL Transportation Management System solutions. Route optimization systems use maps, real-time data, like weather and traffic reports, and comprehensive analytics to find the most efficient and cost-effect route. As a result, products can get to consumers faster, and an optimized route will reduce fuel and labor costs per shipment.
- Freight Estimate Optimization. A perfect world would be just that, perfect, but shipping is not perfect. Consumers change their minds, and nature can throw a curve-ball. Freight estimate optimization is comparable to having an endless stream of “what if” scenarios in determining a route and best shipping mode. Pairing freight consolidation with this concept leads to better carrier selection and optimum cost reductions. Moreover, this information can be used to make better shipping selections in the future through reports and analytics.
- Money Matters. A shipper is only as good as the amount of money that comes in consistently. In other words, even the best products will eventually fail if consumers stop reordering and lose interest, but another thing that can drive away consumers is inflated costs and billing issues. The same holds true for shippers and carriers using LTL shipping. Payment and financial functions are critical to an LTL-based TMS and should include shipment reconciliation, generation of bills of lading, auditing of bills, automated match-pay systems and identification of inaccurate billing practices, like over-, under- and double-billing.
The Big Picture.
Demand for LTL is likely to increase in the coming months as more companies look to the new administration with hopes for decreasing barriers to domestic manufacturing and exports to other countries. Consequently, the rise in demand for capacity and subtle increases in LTL shipping costs will require shippers look for innovative ways to keep costs down and manage their LTL shipping strategy; more shippers will need an LTL Transportation Management System. However, not all TMS solutions are created equal, so knowing the core functions of quality systems encourages positive returns and further enhances your reputation and capacity as a shipper.