MISSISSAUGA, Ont. – While there is no one magic transportation management system (TMS) that will work for every company in every circumstance, there are a number of common features and functions that shippers and carriers want to see.
During the technology in transportation panel at the 2014 Surface Transportation Summit, three executives and technology experts discussed what a TMS should offer.
For starters, it has to be good for the bottom line, said Ed Ryan, CEO of Descartes.
“Typically it’s to save money. A good transportation management system will save you in the 5%-20% range depending on the problems you have,” he said, adding that by having all of its carrier and rate information entered into a TMS, a business has more control over what it’s spending and with whom.
A TMS can also provide savings by handling loads more efficiently.
“There’s a big cost-saving opportunity when it comes to consolidation. If you have 100 moves tomorrow out of Vancouver, you move it as 100 moves because that’s what it came into you as. There are probably opportunities to consolidate those loads and turn those 100 shipments into 90 shipments before you even start figuring out other ways to save money, if you just take a look for backhauls and other consolidation opportunities where other customers are close to each other, there is a lot of money to be saved,” he said.
According to Ryan, a good TMS can offer a company the data to know whether it makes more sense to use its own fleet or to outsource a delivery to a third-party carrier.
The one critical feature than every TMS must have is the ability to connect with carriers.
“Carrier connectivity is crucial. I see so many people where they install the whole thing but they don’t have the connectivity to the transportation providers at the end of the install. It can take years to do that yourself, versus using a network that already has the carriers,” Ryan said.
He also warned that a good TMS implementation is one that is done in stages.
“A lot of failed projects started with the ‘boil the ocean’ concept that’s about solving a gigantic problem and not getting any value until they solve the whole problem. I encourage you to break the problem up into chunks. Find the ones with the more value and that are the easiest and start there. Boil the ocean projects tend to waste a lot of money and not deliver the value you need.”
Mark Sauve, senior manager of distribution operations at Hershey Canada also offered some insights about what he feels makes a good TMS. He said Hershey has an old TMS it relies upon to manage up to 1,000 moves per day during peak season, but the company intends to replace it in the near future.
Hershey’s TMS is able to “automate a lot of process and perform execution of shipments to plan—and when I say plan I mean budget,” said Sauve. “The only way to stick on budget and on plan is to have a framework that forces you to stick to that budget. It also sets up and automates some of the other functions around transportation management such as payables. When an invoice comes in from a carrier, we have a load we can match against it to verify that load was actually delivered. We have rates in the system to verify the charge we are being charged is correct.”
He also finds value in the information the TMS collects.
“One advantage is it collects large amounts of data. It captures costs and service metrics by carrier by client by service type. All those things are very important and useful. Mostly they are useful to negotiate and analyze carrier performance. When we go for an RFP we are able to provide detailed information to the carrier by lane—this is the volume in the lane, these are the typical loads you’ll see in the lanes. The better information we can provide the carrier, the better they can do giving us a rate appropriate to that.”
What he’s looking for in the future TMS is something that allows him a bit more flexibility to handle complex situations.
“Seasonality is one of the issues we deal with and our carriers deal with. Recently we had some challenges on our north-south transportation network into and out of Florida. It was produce season and a lot of carriers have capacity right up. We talked to some carriers who said they’d really like to be able to offer us different prices at different times of the year, so they can better service us during the peak times when there is a high demand for their service, which would be great, but we have a very rigid system but we’re not really able to accommodate seasonal rates. There are always exceptions to what you are doing. Generally we like to stick to plan, but things don’t always go according to plan.”
He also expects a TMS to provide not just historical data, but real-time information that will allow the company to head off upcoming problems.
“I want to know before we’re late we may have a particular issue. I think that’s a big change in how I view technology. The easy part is to tell me we were late. The difficult part and what I’m looking for in the future is to tell me something I need to know. I need to know when something has gone off plan so I can take some steps to address that.”
Not only does he want to know what’s happening, he wants that ability to run a variety of scenarios and come up with options ahead of time, based on differences in circumstances. As well, Sauve wants a system that will allow him to ask it a variety of questions.
“Give me information in various ways. We all want to datamine at times. We want to be able to look at not just normal reports that are produced ever week or every month. What I’m looking for is more ad hoc reporting. To be perfectly blunt, I may not know what I need to know two years from now. I may not even know what the question is going to be but I know I’ll have questions. I need to have some way to answer those questions quickly and easily, mostly to look for opportunities.
Patrick Ressa is the chief information officer at SCI Logistics, a business that offers both 3PL and transportation services. Like his colleagues on the panel, he is demanding in what his company wants to see from a TMS.
“The entire TMS ecosystem for us includes more things than just the TMS. To name some: network analysis, GPS monitoring and reporting from our equipment in the field, telematics, mobility options in the field for clients that need mobility, management reporting tool to do some things outside our main system. And we have some things we put on top of it to meet our clients’ needs.”
As an information technology (IT) professional, Ressa does have one particular demand of a TMS.
“We want standardization in our business. We want a system that allows us to create standard processes across our business,” he said.
He also wants something that is nimble and responsive, and that uses EDI.
“We can’t have something that takes too much time put on a partner or put on a carrier. Dynamic planning and optimization—specifically capacity and routes. If we get a last minute order, can we reassess the route in real time? And understand supply and demand and pricing associated with that.”
Overall, in working with so many clients, Ressa said there is one thing that is very obvious when it comes to TMS software.
“There isn’t one silver bullet. Every client has a different requirement, but we do have a core TMS we use for most all of our businesses.”