Trucking transport, the critical piece of today's complex supply chains, is beset with far more challenges than ever, including higher fuel and maintenance costs, a shortage of qualified drivers and hours-of-service limitations.
Transportation management systems (TMS) aim to ease these pain points in helping companies determine the most efficient and cost-effective choice to move products to their destination while maintaining consistent levels of customer service.
Lorne Jones offers a snapshot of where TMS is now in the food and grocery industry. "We've seen a shift in the balance of power in the retail supply chain, with grocery retailers consolidating and with Wal-Mart in the business now," says Jones, logistics and distribution industry executive at Sterling Commerce (a division of AT&T) with global headquarters in Dublin, OH.
"Rising costs and driver shortages are raising the costs of goods sold at a time when those costs are getting beaten down. So optimizing equipment and operations is important just to maintain efficiency levels and delivery costs."
Industry manufacturers and distributors are turning to TMS solutions––many Web-hosted––to control costs through intelligent planning and optimization of loads and equipment. A report issued by ARC Advisory Group indicates "the transition from implementing a Transportation Management System (TMS) in-house to accessing it via an on demand service is well underway. The trend now is to bundle managed services as part of the outsourced solution."
Although TMS is a mature industry, the way the software is delivered is really what the game is all about, notes Jones at Sterling Commerce. "Being able to deliver in an on-demand environment is changing the way people think about TMS. Sterling Commerce legacy is based on connectivity with the network––and our acquisition of Nistevo really makes sense when you consider the data transmission piece."
Pete Stiles at Holland, MI-based Lean-Logistics Inc. reports one of the hottest issues in the industry is the ability to manage inbound shipments from suppliers, which he calls "the unconquered area" of the industry.
"Traditionally people have done a good job of managing their outbound," says Stiles, vice president of marketing. "But buyers require visibility and the timely transfer of information to manage shipments efficiently. And suppliers must have the ability to provide shipping information on a timely basis."
At Transplace, it's all about using technology whenever possible to reduce costs while increasing efficiencies. "In this way, we distance ourselves from the traditional way of doing things with people, phones, and faxes," notes George Abernathy, executive vice president and chief marketing officer for the Plano, TX-based company.
Peter Rappe at BGI International, Olathe, KS, adds: "Effective transportation management has always been about relationships, especially with carriers. Some TMS providers prefer general load posting to a large carrier group hoping this will create a bidding process to drive down rates," says Rappe, vice president of sales and marketing. "But this can result in inconsistent performance and higher cost. Our TMS helps customers find the right carrier based on service and cost."
As transportation costs spiral upward, TMS providers are finding bigger opportunities to help customers save money, adds Carl Melville, vice president of marketing at Total Logistic Control (TLC), Zeeland, MI. "Companies are looking for ways to ease the pain points of fuel costs and driver shortages," Melville says. "They also want to maintain their level of customer service with their chosen solution to lower costs and increase efficiencies in handling outbound shipments."
From a transportation optimization perspective, customers want a solution that ties into a company's host system allowing easy information flow, adds Brennan Haverstock, director of transportation solutions consulting at HK Systems with global headquarters in New Berlin, WI. "Customers want to tie into their inventory system and increase operational efficiencies. They also want a reconciliation function that analyzes costs and audits freight charges."