TMS Put to the Test
By providing visibility to items in transit, working to optimize transportation networks, and streamlining processes, transportation management systems (TMS) check off all the boxes.
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Altana Group, a developer of specialty chemical products, uses two transportation management systems (TMS). Both are helping during the COVID-19 pandemic in different ways.
One TMS for domestic shipments primarily helps Altana Group track costs by providing data on lanes, volumes, and shipments, among other information. This data has helped Altana secure lower rates when volumes dropped.
Altana uses the second international TMS mostly for route management. So, when the Port of Houston shut down for several days during the pandemic, Altana's TMS showed how lead times changed. Armed with this information, Bill Duty, global head of supply chain, decided to avoid Houston and reroute some outbound ocean shipments through Savannah, Georgia.
This shift cut travel time and was less expensive than shifting to air freight. "I could see where the delays were happening in real time and adjust," Duty says.
The economic upheaval created by the COVID-19 pandemic is significant. By providing visibility to items in transit, working to optimize transportation networks, and streamlining processes, TMS can help supply chain organizations make more insightful decisions and mitigate some challenges caused by shutdowns and other disruptions.
While multiple definitions of TMS exist, most experts point to several fundamental capabilities. "At its most basic, a TMS facilitates the movement of goods across all modes and geographies," says Joe Juliano, president and chief executive officer with MercuryGate International, a provider of TMS solutions.
Because transportation operations have multiple moving parts, they leave plenty of room for human error, notes Mark McArthur, managing director with Alpega North America, a TMS provider. By automating routine processes and functions, a TMS reduces the risk of mistakes and frees up resources to focus on exceptions. Some TMS solutions can apply data analytics to uncover opportunities for cost savings and operational efficiency.
During the past five to 10 years, many TMS solutions have shifted from on-premise to cloud-based systems. Not only does this allow for less expensive, faster installs, but it means a TMS is increasingly able to connect supply chain partners—including shippers, carriers, and others—and provide a common data set that allows all to collaborate in real time. When all parties work off the same, updated data, they can make more informed decisions.
Along with connecting supply chain partners, a TMS often links multiple information systems, including accounting, enterprise resource planning, telematic, and warehouse management systems. This enables the TMS to provide a comprehensive view of the transportation network, from the dispatcher through to last-mile delivery. With this visibility, shippers can allocate the proper resources to managing the shipments and handling exceptions.
As Duty's experience shows, many TMS solutions have proven their worth during the pandemic. While these systems have long been used to manage routine disruptions, such as weather delays, they're stepping up to help supply chain professionals navigate the ongoing global upheaval.
"The challenges have been numerous and complicated," says Juliano. Stores and airlines shut down, passenger planes had to quickly convert to cargo planes, and ports closed. Some truck drivers were leery of driving into COVID-19 hot spots. A TMS could help companies find alternate transportation modes.
When one large retailer had to shut its physical stores, management converted those locations to fulfillment centers, from which it could ship e-commerce orders, Juliano says. The company used its TMS to communicate with carriers, as well as its own employees working from home, to ensure orders would be filled and shipped.
"COVID-19 exposed weaknesses in supply chains," says Carl Fowler, chief commercial officer with Transportation Insight, a third-party logistics (3PL) provider. A TMS can help supply chain organizations address those weaknesses by enabling them to execute a design failure mode and effect analysis (DFMEA). This refers to a methodical series of steps taken to identify potential system or process failures.
For instance, an organization could leverage a TMS to address the question: What happens if my supplier in Germany shuts down? A TMS may be able to provide notification of disruption or delays, thus triggering the shift to a pre-builtcontingency scenario—say, to other suppliers that meet established criteria.
Some businesses, such as food and paper products companies, have had to manage massive fluctuations in shipping volumes. TMS solutions allowed these companies to be more dynamic, says J.P. Wiggins, co-founder and vice president of logistics at 3Gtms, a TMS supplier.
Aside from the operational benefits of electronically managing the execution of product deliveries, a TMS could assist companies in finding additional carriers when needed, and optimizing the selection of existing suppliers, to keep costs as low as possible while still delivering the needed freight.
What's Up Dock?
A TMS integrated with a dock appointment scheduling tool can be used to schedule pickup and delivery appointments, providing real-time visibility and predictability across logistics operations, McArthur says.
For example, such a system could let you restrict certain products to specified loading or unloading zones—say, assigning refrigerated packaged goods to temperature-controlled docks. Using this logic to build dynamic, intelligent schedules can alleviate dock congestion and carrier wait times.
When selecting a TMS, several features are key to obtain the benefits. Security, especially as a TMS connects to an increasing number of systems and entities, is a must.
Accessibility is similarly critical. During a pandemic or other disruption, users need to be able to retrieve the information contained within the TMS, says Dan Clark, founder and president of Kuebix, a TMS provider. Access to this data lets them make decisions on the fly—for instance, re-routing shipments to avoid COVID-19 hot spots.
Similarly, an effective TMS today needs to be able to connect to other systems, such as a warehouse management system or yard management system, to offer the end-to-end visibility that provides one version of the truth and enhances decision-making.
"A TMS connects the outside world to the inside world," Clark says. Microservice architecture can facilitate these connections as it helps systems written in different languages link together.
Modeling, or the ability to run "what-if" scenarios, is a relatively new capability that many users expect their TMS to assist with, and is critical during disruptions such as a pandemic, says Gregg Lanyard, director of product management with Manhattan Associates, a technology provider. The TMS should be able to provide options and show the impact to the bottom line if, for instance, a shipper has to quickly shift suppliers.
Shippers should also look for optimization capabilities, such as complex algorithms that can consolidate orders to create fewer shipments, and then identify the most efficient routes.
achieving long-term Success
After identifying the best TMS for your supply chain, several implementation and operational steps can boost the likelihood of its long-term success. The organization needs to understand why they need it, plan for its integration, understand how it will be used, and manage the deployment. Generally, a firm can choose from several deployment options.
Plug and play—as you might guess—generally means you get what you get. A consultant can help with the implementation, although that can get expensive.
Another option is staffing up internally, although it can be hard to secure the specific skill sets needed. A firm can also turn to a 3PL provider that is able to bring a configured TMS and the experience to run it.
Wiggins recommends starting with a small, well-defined project, such as a specific geographical area or operating unit. "Identify and solve gaps, capture a win, and then build on the momentum across your organization," he says.
As with any technology implementation, adept change management is critical. At times, it's also challenging. Shippers that currently lack TMS solutions may have delegated transportation decisions to employees at the local level, who often form longstanding relationships with service providers.
A TMS, by imposing discipline in choosing service providers, can threaten those relationships. Employees may balk at changing. "Senior management's support and understanding of the business case for the transition is a must," McArthur says.
To streamline the implementation and perhaps to avoid backlash from users who prefer not to change, it can be tempting to install the system in a way that essentially mimics current operations. That can mean ignoring opportunities to improve. "Don't just mimic the 'as is,'" Lanyard says. Instead, the goal should be to build it better.
The improvements seen in TMS capabilities during the past five to 10 years will likely continue, driven in part by the continued acceleration of delivery times, which will require even more interconnected logistics ecosystems. A TMS can help companies manage this shift. For instance, they may connect to sales data to identify popular SKUs and then position these products so they can meet tighter delivery deadlines.
The lines between TMS and other supply chain solutions, such as warehouse and yard management systems, will blur. "Consequently, we will see a lot more merger and acquisition activity," McArthur adds.
While it's impossible to predict how or when the COVID-19 pandemic will dissipate, it's likely that it won't be the last challenge confronting supply chain organizations. Meeting future challenges will require the right combination of technology and strategy.
The goal is "to achieve a more resilient supply chain, and one that allows you flexibility to proactively respond, and not just react, when the next disruption occurs," McArthur says.