Ways a TMS Benefits a Company's Supply Chain
July 23, 2019 •Anna Young
How a TMS Can Benefit Your Supply Chain
In the blog entitled TMS Market Size & Growth Expectations, we briefly touched upon the benefits a transportation management system can bring to a supply chain, but we aim to provide more in-depth commentary on the topic.
Reduced Freight Costs
Reduced freight costs is a benefit companies will see after a TMS implementation.
The ability of a TMS to optimize on rate, route and consolidations quickly and efficiently find freight capacity at the best price, while also ensuring carriers meet service level requirements.
More specifically, TMS software not only encapsulates the negotiated freight contracts, but it also provides a “first look” into consolidation and multi-stop opportunities.
Simplifies Operational Execution
Efficient execution is the name of the game logistics teams easily obtain shortly after implementing a top tier TMS.
By choosing a TMS software platform that best fits the operational requirements of a company, the system automates away the vast majority of mundane operational work giving the logistics team more time to work on the exceptions and issues of the day.
Through the optimization module the TMS combs through thousands of alternatives to create the best load plan. Additionally, once the plan is created the freight is tendered out to carriers through “waterfall tender process” from least cost to most expensive ensuring the least cost will be obtained, even if the originally planned motor carrier is not available for the load.
The TMS software also plays a major role in carrier management, from finding capacity in a constrained market to streamlining the onboarding processes once a spot rate is found to then managing carrier risk through databases like RMIS. The connectivity into major logistics service support companies, like RMIS or the various freight load boards, streamlines the entire operational process.
Production, Warehousing and Distribution Center Efficiencies
With all inbound and outbound logistics freight movements tied into one system, also creates a tremendous amount of efficiencies in the other supply chain departments. While production, warehousing and DC's are top of mind for improvements, sales, customer service and vendor relations also picks up a great deal of efficiency by streamlining the communication and being proactive to potential issues.
Full Transparency and Improved Communications
The ultimate result of having full transparency and improved communications is better service to the ultimate customer, although every step along the way from supplies through to the end customer benefit from having all logistics and supply chain activities tied into the "control tower" aspect of a TMS.
Data for Improved Supply Chain Analytics
Undoubtedly, data is knowledge and an extraordinarily power aspect for logistics and supply chain professionals and the TMS brings this to its users in spades.
Not only can a TMS collect essentially and endless amount of data and references to fit any shipper, its ability to compile, organize, analyze large amounts of data and perform advanced analytics have become easier and even more user-friendly with each generation of transportation management software solutions.
By incorporating TMS software, companies can strengthen the analysis and benchmark performance on specific lanes and compare/contrast to other competitors by connecting into key industry platforms that have billions of dollars of freight spend on real origin and destination rates shippers and logistics companies are paying. No longer does a company need to tap into the largest logistics companies to get this info and no longer is the benchmark data averages of averages.
All said, data-driven decisions are more accessible than ever with TMS software, and its power should not be underestimated.
TMS software encourages companies to move to paperless freight audit & pay to ensure they are paying agreed upon rates and achieving it through highly automated optical reading software for optimal efficiency and accuracy.
TMS providers connect the OCR (optical character recognition) technology to the software platform for the audit process and for document management purposes. The OCR freight audit systems link a shipment's identification to all the key details of a carrier's invoice, while simultaneously matching it with the contracted rates in the TMS. All in, the audit process can be performed in 15 to 20 seconds.
A TMS also improves a company's order-to-cash cycle (O2C) by more efficiently utilizing supply chain inputs that reduce costs, but also get the order to the customer to be then billed and paid sooner.
One of the biggest supply chain input cost of inventory is improved by increasing inventory turns.
Conclusion on the Benefits a TMS Brings to a Company's Supply Chain
In short, a custom tailored TMS provides incredible value to companies by moving their logistics and supply chains from a cost center to a competitive advantage and the future continues to look brighter.
If you find yourself looking at alternatives for a TMS, managed transportation service solution or a TMS systems integrator, we’d love to be a part of the conversation. As a reseller and integrator for the MercuryGate TMS software, we can help in all three categories.
For more on Transportation Management Software (TMS), check out these articles:
- Transportation Management System - Functionality, Benefits & Implementation
- Best Transportation Management Software Systems
- Intek - Helping MercuryGate TMS Grow
- The Complete Guide to Managed Transportation and Transportation Management Systems