Inbound Freight Management: 5 Must Have Automation Features in a TMS
Inbound freight management and logistics is receiving a lot ofÂ attention as shippers continue toÂ look for ways to manage and mitigate freight costs. Traditional TransportationÂ Management Systems (TMS) vendorsÂ help with logistics planning, but doÂ little to address what happens in theÂ day-to-day execution. The problem isÂ complex and logistics expertise asÂ well as software systems are importantÂ to reigning in the escalating costsÂ and inefficiencies. It's important, if currently utilizing or looking to hire an outsourced logistics company, that the company offers integrated services, alongside their technology systems, to help you set up a robust inbound logistics program.
How big is the problem of inbound freightÂ management?
Inbound freightÂ accounts for between 40-80% of totalÂ freight spend and 75% of companiesÂ surveyed by the Aberdeen GroupÂ report that inbound freightÂ management is a key focus point.Â Total freight spend is betweenÂ 3.6% and 5.2% of surveyedÂ companiesâ€™ total sales, according toÂ Aberdeenâ€™s results.
To get a handle on costs, businessesÂ say they need increased visibility intoÂ shipments and orders, more control ofÂ inbound shipping processes, andÂ increased collaboration with carriersÂ and suppliers. Existing processes areÂ inconsistent at best â€“ real time freightÂ tracking and tracing is unavailable,Â plan optimization and routing rulesÂ are often not followed by suppliers;Â cost information is difficult to obtain;Â and current manual systems donâ€™tÂ scale well with growth. Unfortunately,Â 90% of shipping executives surveyedÂ said that their current systems,Â including their TransportationÂ Management Systems (TMS), areÂ inadequate for addressing theirÂ inbound shipping needs.
5 Must Have Automation Features in a Transportation Management System for Effective Inbound Freight Management
- Real Time Freight Rates: To combat rising transportation costs the application must make it easy for users around the country to execute policies that deliver immediate freight savings. Today, that means the application must be built with a state-of-the-art web services architecture, in order to receive live carrier rates over the Internet.Â No more theoretical savings, but hard ROI based on live, vendor neutral access to real-time market rates.
- Organizational Control: To regain control over inbound freight management, freight costs, and mitigating risk, a best-in-class application must have a rules engine, based on optimized plans and routing guides. The system must be flexible to accommodate custom company business rules, yet powerful enough to force all users, both internal and external, to follow the policies that ensure efficient and cost effective shipping. The systemâ€™s usability must be such that controls can be designed and implemented by logistics experts with decades of hands-on experience in logistics, rather than by computer technicians.
- Visibility and Data Analysis Reporting: For true shipment-level visibility and reporting, a carrier neutral, mode-agnostic data repository is critical. On-demand, managers must be able to identify up-to date trends and patterns, accurately forecast demand and supply, and make real-time decisions based on actual data, rather than guesswork.
- Speed and Scalable. The TMS must be able to support rapid growth demands, while not feeling bloated with unnecessary features requiring onerous training or orientation. Busy logistics professionals need practical tools that deliver results immediately. A system should still work as effectively whether you have 2 inbound freight shipments per day or 100. Inbound freight management, over time, with a scalable system, should start to see greater returns as your company grows.
- Dedicated Technology and Up to Date Web Standards:Â The technology driving the automation must be based open standards and an SOA architecture to allow easy integration with existing systems, including ERP. The inbound freight management shipping application must allow for rapid deployment. Delays due to IT controls and backlog reduce savings and put the success of deployment at risk. A dedicated technology team behind the TMS and logistics service provider will eliminate such updates and backlogs. Ask the provider if they themselves develop and iterate the application/system, or if the provider outsources to a software company.
A combination of inbound freight management software and expert integrated managed services provides an ideal solution to the complexities of inbound freight shipments where suppliers are a big factor in the cost-reduction effort. Partnering with a proven, reliable third party logistics company, who also has the ability to deliver both the system and the services is an ideal way to ensure the entire shipping process is effectively managed.