The notion of data-driven freight management is not a new concept. All shippers, carriers, freight brokers, 3PL’s, freight forwarders, and other parties are continuously looking for ways to apply and understand data in meaningful forms. Unfortunately, the idea of data-driven freight remains a topic that’s relatively un-explored and ripe for the picking. Those that wish to remain competitive need to understand the challenges of lackluster, if any, use of transportation management systems (TMS), how it contributes better outcomes, and a few tips for making data-driven decisions that will increase efficiency and productivity.
The Challenges of Lackluster, If Any, Use of a TMS in Your Operation.
As explained by 3rd Wave, the challenges of not using a TMS far outweigh its potential benefits. As the supply chain evolves, the complexities changed. Shippers face continuous demands for more freight invoice auditing, but terrible auditing practices in place. Limited insight and visibility into your operation will lead to poor accountability. Such factors have a compounding effect, contributing to limited quality and quoting capabilities. Loads are not built to proper standards, and space utilization goes out the door. A continuous lack of visibility means more poor management decisions, and problems begin to disrupt supply chain efficiency. Furthermore, poor compatibility between traditional systems results in an inability to make use of newer, more affordable solutions. Furthermore, Logistics Management goes on to also emphasize higher fuel costs, poor negotiations, inability to secure capacity, and limited compliance, to name a few, of the leading challenges that are pushing more companies toward better, more effective solutions.
Using Various Freight Tactics to Reduce Costs & Streamline Management
Using a TMS Yields Better Outcomes
Implementing a TMS can yield better outcomes. According to FreightWaves, the average shipper or user season 8.5% freight cost reduction following implementation. This is the result of the various ways in which a TMS improve supply chain management. Moreover, older TMS platforms may simply not meet the demands of today.
“The old-school TMS used to provide tracking information and some basic functions such as rate and customer information. Modern systems now incorporate all aspects of the supply chain, from the time the order is placed until invoicing, and every step in between. It is these incremental steps in the supply chain where so many shippers are now finding value.
‘The biggest differentiator for many buyers is the need for a proprietary algorithm for optimization. Without the optimization, many potential customers will look elsewhere,’ said a 2018 ARC Advisory Group brief on the subject pointed out.
The decision to adopt a TMS depends on the return on investment. While an 8.5 percent savings on freight spend is enough for some businesses, there are other expenses that can be reduced through use of an advanced TMS.”
Consider this; machine learning and artificial intelligence can automate and continuously improve, read optimize, existing operations. Moreover, multimodal functionality tap’s additional capacity and reduces delays associated with the driver shortage. Even on both ends of the spectrum’s, the savings of implementing a TMS still outweigh the potential costs of not doing anything. In fact, most companies see between five and 15% annual savings on total freight spend.
How to Apply a TMS to Make Data-Driven Freight Management Decisions
Those that wish to apply a TMS and make data-driven freight management, maximizing investment, need to do more than just simply implement a system. Implementation is a complex process, and the wrong system will do more harm than good. Instead of risking everything, follow these steps to improve your use and application of a TMS:
- Conduct a full return on investment analysis to understand how each TMS could benefit your organization. This step can be generally broad, but it is important to highlight your shortlist of potential vendors and determine how their costs would stack up against.
- Focus on the end goal. Remember the end goal is a cost-saving and improvements in efficiency and productivity. Focusing on the end goal also reduces the likelihood of choosing a system that does not rise to your needs.
- Obtain support for the investment in TMS. As a supply chain manager, obtaining shareholder and executive-level support will likely be your responsibility. Get the buy-in by using the first two steps in this numbered list to build the basic business case.
- Prepare for change. Change will be inevitable and harsh for some employees. However, proper training and explanation of what to expect will go a long way in building and maintaining rapport with your employees throughout the process.
- Choose solutions that reside within the cloud. The cloud is the latest technology and resource available and is essential to tapping the value of SaaS-based vendor solutions.
- Track the performance of the system, and measure quantifiable values, including driver performance, carrier compliance, and more. Measuring performance is your means of obtaining a snapshot of current returns at any time.
- Lastly, ensure your optimization continues. The data gathered in the above list of steps are only as valuable as their implementation, and the data gathered from your TMS can be used to make additional freight management, not to mention management of any other process, easier and more reliable.
Bolster Your Supply Chain Management With Data-Driven Freight Now
Supply chain management is a complex topic, and data-driven freight management needs the prowess and functionality of an advanced TMS. Evolve your logistics and transportation management strategy by choosing the right software vendor and partner. Choose Cerasis and request a TMS demo today.