Technology advancements are revving up the maturation of transportation and logistics, especially those that improve and empower logistics companies by streamlining information flow and assisting in collaboration between partners. One prime example is the Transport Management System, otherwise known as TMS.
These days, the advent of TMS has provided logistic companies with resources to make advancements and modifications to every aspect in the supply chain. They ensure that the needs of both the companies and their customers are met in the fastest, most economical and efficient way.
Millenials are digital natives, having grown up at an age of technological disruption. Their affinity for technology extends to shape the expectations of their entire shopping and shipping experience. Currently, at least 83% of the 92M strong milenial generation opts for online shopping, turning their attention to brands that can offer the maximum convenience at the lowest price. Expectations of the millennial generation dictate that service chains will be as vital, if not more vital, than the product chain itself. With demanding, tech-savvy consumers, logistic companies, whose services are part of the experience, have to keep up or they might lose out.
Ensuring customer satisfaction is how a company grows. Trust trumps cost. Not only is trust fundamental in establishing a good relationship with your customers, it will also bring in repeat business. It is predicted that by 2020, customer experience will be the key determinant when it comes to purchasing decisions, far above the price, product or brand choice. Currently, nearly half of Americans think that shipping cost is inclusive in the overall shopping experience as compared to three years ago. The baseline of a good delivery should be both punctual and fast. Additionally, most customers do not factor in shipping costs while shopping online until they reach the check-out and are shocked by the total cost and have to rethink their purchasing decision.
First things first, what exactly does a TMS encompass?
Most TMS are equipped to handle four important operations of transport management which are:
i. Planning: Typically includes route optimization based on certain specified parameters set by the user, such as time-window constraints, maximum laden weight or volume capacity. The output is suggested, optimal routes for each vehicle in the fleet, prioritizing these constraints.
ii. Transportation Execution: This enables the operations team to execute efficiently, including automated dispatch to drivers, shipping documentation, tracking, and electronic Proof of Delivery (POD).
iii. Transportation Follow-up: Includes any physical or administrative work regarding transportation: traceability of transport, invoicing and booking documents and receipt editing
iv. Reporting Metrics: Includes a live dashboard and automated key performance indicator (KPI) reports for operations, customer service, and account managers to work effectively with.
Now that you have a general idea of what a TMS does, here are 6 reasons it’s time to get a TMS.
1. Visibility For Recipient of Goods
Everyone loves to be included. We love to know what’s going on, whether it’s the score of the latest at the Olympics, or the latest shipment we’re waiting on.
Logistic companies that are able to continually inform the recipient of the goods (the consignee) on the status of their delivery would definitely have a competitive edge, especially in this tech-savvy era. Real time delivery notifications – made possible via online tracking, automated SMS or email notifications – is a great way to make your customer feel as if you are paying special individual attention to their shipment, making them feel inclusive to the delivery process. It drives home that their order is important to you.
Additionally, consignees who are constantly curious about whether their order has been processed, shipped or on the way to them could find out for themselves, instead of continuously asking your customer service staff who are not only incredibly busy, but who may in turn have to make inquiries on delivery status themselves. Not only would your consignees be grateful for visibility over their goods, but your customer service staff will be too.
Consignees appreciate knowing exactly where the parcels are when they want to know it. With a modern TMS, they will be able to arrange their timings around it or reschedule a delivery, as opposed to being kept in the dark and praying that it shows up on time. Additionally, when consignees take the extra step to be there for their delivery, this can reduce delivery failure significantly which in turn saves on long term costs.
2. Transparency for Shippers & Cargo Owners
Just like your consignees, your customers, who are the shippers and/or the cargo owners, would also love be included in what’s going on and where their shipment is at any point in time. However, visibility alone may not be enough for your shippers.
In an interview with SupplyChainBrain, Nancy Marino from Columbus Consulting believes that when it comes to shippers, logistics businesses today have to go beyond visibility to full transparency.
Without online tracking, the shipper’s customer will contact the shipper who in turn will contact the transporter who has to contact the driver in order to know where a shipment is. From there, the communication goes back up the chain as the driver has to inform the transporter, who then has to contact the shipper, who will finally be able to tell their customer where their parcel is. This process is not only inefficient, but also tedious and time-consuming. As the number of deliveries increase with more businesses moving towards online platforms, this method is not scalable.
When it comes to shippers, accountability and reliability are vital especially if their shipments are of high value. For example, servers, optic fibres and copper wires are both high value and high risk. Having full transparency will definitely give your shippers peace of mind. This is not only reassuring for the shippers, but also makes them feel inclusive in the whole process.
3. Continuous Optimization
Supply chain can be unpredictable and subject to constant changes (flash floods!) and disruptions. These factors can make consistent performance in ‘delivery fulfilment rate’ difficult. On top of that, although the transporters are held accountable for it, most of it is not necessarily anyone’s fault or is out of the transporter’s control. Unfortunately, the shippers and consignees may not care about what the problems are and would just dismiss the delays and disruptions as a result of incompetency and poor service.
Having a solid TMS would allow for greater visibility and understanding of both successes and failures of a supply chain. With that, companies are able to zero in on their weakest link and focus their attention on them. This would definitely give the company an edge over other logistics services. TMS technology also stores all the information collected online. Logistics companies can benefit from access to current and historical data, which will help them identify trends, make smarter decisions, and pre-empt solutions to problems before they’re encountered in future. With high-quality data, such systems may even enable you to implement predictive analytics to help you continuously optimize your supply chain and minimize disruptions before they happen.
Firstly, scalability refers to a system or a program that is equipped to handle an ever-changing amount of work. Scalability is one of the most vital features of TMS. As a logistics company, it is highly unlikely that you will be delivering exactly the same number of parcels over and over again. When it comes to ‘flash sale’ events like Singles’ Day or Cyber Monday, there will definitely be a huge spike in the number of deliveries. This would place additional stress on logistics services companies, especially when they were not prepared to handle it. Thus, scalability becomes important to be able to deal with spikes in delivery volume.
Scalability allows one to calibrate space, labour and transportation according to their daily logistic needs. And when it comes to lull periods, the reverse applies. In order to maintain profitability when business is slow, scalability means being able to reduce your cost structure just as nimbly. Additionally, as a company grows in the long term, it would be reassuring to have a system that is able to grow with the company as well.
With a subscription-based TMS, companies have the option to use as much or as little they need to, tailored to the scale of their own operations. A logistics company should ideally be able to move different volumes of goods at any time, increasing their resilience and ability to react to market changes. Logistic companies on a subscription-based TMS are easily able to do so, adjusting their costs between busy and lull periods, pro-actively ramping up or streamlining resources as required.
5. Collaborative Network
Having a collaborative network is incredibly advantageous for logistics companies. An effective TMS increases visibility and enables better communication between transporters too. This would be especially helpful in situations where transporters need to collaborate because they have bid and won a tender together.
This can enable small companies to form collaborative networks to take on bigger projects, encouraging the pooling of resources. Collaborations and partnerships usually fall apart due to miscommunication and the resultant misunderstandings. With the use of technology, greater transparency between partners can be created from more robust information systems, with a lower chance of miscommunication errors.
Currently, about 85% of shippers don’t use a TMS to automate their logistics supply chain or operations. This is quite surprising because subscribing to a good TMS is a surefire way of saving logistic companies a lot of money.
Here’s an example: those who manage transportation poorly spend $53 for every $1,000 of total spend on outbound transportation, while those with proper TMS software and processes only spend $6.35 per $1,000. This is almost a 10x difference. Although the general consensus seem to be that only larger companies can benefit from it and are the ones that able to afford the TMS technology, the advent of cloud-based TMS has made it affordable and profitable for small shippers too.
With a modern TMS, the entire supply chain is given a common platform to continuously collaborate, from the shippers to the drivers. TMS allows for shippers, carriers and customers to receive real-time updates from anywhere at anytime. Drivers automatically update the TMS on each delivery status, notifying every stakeholder in the supply chain instantaneously. This allows for more systematic communication, with a lower chance of errors for all parties involved.
So, there you have it – 6 pressing reasons it’s time to get a TMS or at least start to check out some of the TMS solutions out there in the market, and how they can help you! If there are any other pressing reasons you have, do share it with us!