Only 35% of companies utilize a Transportation Management System (TMS) to manage their freight activities. This is a surprisingly low percentage rate considering the obvious and frequently published benefits that can be realized by fully adopting a good TMS.
On average, the implementation of a TMS alone can yield up to 5-8% savings without changing carriers or lowering rates (Arc Advisory Group). These savings can largely be attributed to basic efficiency gains and productivity enhancements. A good TMS can provide control over the logistics spend, carrier selection/routing and provide visibility to accurate pricing when scheduling shipments. Most of the impact of a basic TMS deployment is typically realized at the shipping level, however the value of a fully utilized TMS can and should go deeper. A good TMS combined with the effective management of the system and proactive relationships with the carriers can provide benefits far beyond just the shipping department, with an impact felt across many other facets of the company.
So with all this obvious benefit, what are some of the reasons that keep a TMS from being fully implemented?
- High cost
- Time to learn, train and implement
- Getting buy in from all departments that might benefit (after you have mastered the system)
- System upkeep and management
- Integration with carriers (EDI Management and APIs) – ongoing support
- Lack of expertise
- Contract Management (assuming you are contracting your rates with carriers in the first place)
- Risk change averse… knowledge and know how… justification and clarity of message to deliver ROI to upper level management.
Not all TMS packages are created equal. In fact, most 3PLs simply “check a box” of needed features so they can tout a TMS, but they don't successfully solve any of the problems that led the company to purchasing a TMS in the first place. Actual utilization and realized benefits of a TMS are not possible if the user doesn’t understand how to take advantage of the system.
With the right Logistics Solutions Provider (LSP), a managed TMS solution will provide a better realization of its full potential due to working alonside experts that not only know the system, but are familiar with the actual usage of the tools and the best means of deployment for a companies unique needs.
The value of partnering with a LSP is realized by providing:
- An easy to use, state-of-the-art TMS
- The back office support for the freight and management of the data
- Fully managed freight negotiations
- Mitigated invoice Audits, reconciled invoices, and oversight of GLCoding and cost allocation
- Accurate accrual reporting
- Imaging and management of the carriers EDI and digital interactions and capabilities
Implementing a TMS solution does not have to be a daunting task. With the right system and the right partner, a full LSP program can become a reality much easier than you might imagine.
Looking to increase productivity, control costs and have all the proper tools for management of your logistics needs at your fingertips? Register now for a 30-minute demo!