Cutting costs and maximizing value are hallmarks of an efficient transportation management system (TMS) solution. Unfortunately, as the modern era has given rise to dozens, if not hundreds, of lightning-fast systems, with many improving efficiency, it’s difficult to know which TMS best fits your needs. In fact, using a TMS solution decreases freight costs for more than 60 percent of companies surveyed, reports ARC Insights. More recent studies have found similar results. Rather than simply picking a system randomly, you can help your organization start the selection process by following these steps.
1. Define Your Needs For Your TMS Solution.
You cannot improve what you do not understand, and the same applies to your current operations. Define the type of transportation needs that exist within your organization.
For example, do you need less-than-truckload (LTL), small package, full truckload (FT) or freight consolidation? In some cases, a combination of all services may be necessary, so you need to clearly identify what areas may be improved upon through the TMS first.
2. Always Look For Optimization Benefits.
Route optimization is an essential aspect of a TMS solution, explains Steve Banker of Forbes magazine. Ultimately, most logistics problems derive from vehicle routing or scheduling issues. If a TMS can efficiently review all possible routes, an optimized route can be extrapolated and analyzed. In other words, the system must be capable of optimizing routes as its most essential function. All other functions are secondary.
3. Ask About How Optimization Is Achieved.
Every TMS solution offered will likely indicate route optimization. However, the experts can identify and explain how the system works.
For example, the system may follow a hierarchy-based system of analyzing possible carriers and routes against imminent risks, creating a more optimizing carrier-shipper route.
4. Is It a Partnering Entity or Self-Managed System?
This question reflects how the system operates. Does the TMS have the backing of a well-known third-party logistics (3PL) provider or does it run automatically? If the system is automatic, what types of safeguards are in place to prevent technical problems or service during scalability? These questions are a natural evolution of defining your organization’s transportation needs, reports Ann Grackin of Tech Target. An ideal solution is a combination of both automatic function and expert-guided assistance, such as the Cerasis Rater.
5. Think About International Compliance and Expansion.
Organizations grow and contract, and some domestic-only enterprises could easily encounter international shipments. Your system should encourage scalability in your organization and adhere to all subsequent trade compliance laws or statutes you may encounter.
6. Never Fold Your Hand.
Some may argue a TMS may exacerbate inflation among carrier-shipper rates. However, the nature of a TMS is built to keep bargaining chips in the hands of each partner. Thus, a dedicated TMS should always have the goals of all its partners at the heart of its programming. Consequently, your organization should retain the ability to negotiate contracts and services with carriers and other shippers alike. This is critical to freight consolidation across multiple shippers too.
7. You Need Audits.
Even the best systems and employees make errors occasionally. This helps keep your organization’s minds fresh and vigilant. However, auditing services afford an extra protection to your company.
They can help you reclaim overpayments, identify areas when carriers may have double-billed or review the logs from the exporter or importer of record. These benefits make audits a key factor in optimizing overall function and utilization of an effective TMS.
8. Narrow Down Options to Three Systems.
After reviewing the previous steps, you will be ready to select a TMS solution. However, avoid the temptation to choose one TMS immediately. Select the three systems you feel comfortable with, and begin the process of implementing the system. This including requesting bids for services from the manufacturer or creator of each TMS, conducting reviews or audits of how each system may save money for your organization and using negotiations to secure a TMS solution at the best price possible.
This part of the selection process is not a last-minute aspect. It can take several weeks to review each of the “final three” systems, but do not limit yourself either. If none of the methods appear to work for your organization’s needs, return to Step 1, and start the process again.
What Does It All Mean?
While looking for a TMS for your organization, you will be faced with challenges and plenty of information. Companies that offer TMS solutions know it is in their best interest to be visible, respectful and thorough, and you can use that to your advantage. Be willing to ask questions, try out systems when available, and remember that you are the customer. By following these steps, you can start the selection process, and you will be able to reduce inefficiencies and achieve cost savings across your organization simultaneously.