The Impact of TMS on the Car Industry

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What is the impact of TMS on the car industry? Henry Ford knew how vital transportation is in any business setting. “The real limit to the size of a corporation is transportation,” wrote Henry Ford in his 1926 industry treatise “Today and Tomorrow.”

“If it has to transport its commodity too far, then it cannot give service—and it limits its own size.”

“Our finished product, in the way we ship and assemble, goes out with a minimum transportation charge,” Ford continued. “It pays because it combines quick transportation both inward and outward…”

Henry Ford’s visionary understanding of the limits on his industrial capabilities was truly astounding.

His assertion about where those limits lie is more insightful in the 21st century than it was when he wrote it in the early 20th: “The cost of power and transportation is controlling.”

A Guide to Maximize the Use of a TMS

Transportation Management Should Be Core

At the center of any manufacturing logistics issue, you will find a transportation management system (TMS.)

Its function is to move needed things to places that need them.

Sometimes a TMS is nothing more than a couple of workers with a whiteboard and markers. There are some predictable difficulties with this approach.

Other companies have substantial computer networks, but that approach requires staffing, vast amounts of energy, space, and money.

TMS integrations can mitigate costs like these by offloading them to specialist providers in order to truly see the impact of TMS.

The most essential job of the TMS process is to plan, schedule and track shipments related to the manufacturing process.

Because they touch every other area of a company’s operations, logistics will either empower or encumber productivity and drive growth in the market.

The Impact of TMS Results Speak for Themselves

The time, investment and employee training can pay off big.

In 2008 Forrester published a study revealing an eight percent reduction in shipping costs for companies that integrated TMS.

The best way to implement TMS and integrate it into every part of the process is to hire specialists in the field.

Third-party logistics providers (3PL) make TMS their business and bring the expertise to implement, train and operate these systems as a service in order for the shipper to see the full impact of TMS.

The automotive industry has lagged behind other industries in adopting the TMS approach across the board.

There are notable exceptions within the industry.

Industry TMS experts point consistently to Ford, Subaru, Toyota, BMW and Volkswagen as models of automotive TMS integration.

They each have also implemented TMS systems through 3PL providers.

Where Is the Return?

The positioning enjoyed by these companies speaks louder than any metric about the need for cost management.

Henry Ford said it best: Power and transportation costs are controlling factors.

The impact of TMS improves control over freight flow and lowers power costs through more efficient flow into the factories through assembly and to the retailers.

Less time on the assembly line means less energy cost per vehicle.

Ford set up a system of supply and transport for the Model T that was completely governed by the needs of the assembly line.

That was a different era.

Ford accomplished his supply line efficiencies by brute force. He purchased them.

This solution isn’t practical in modern terms, even for giant corporations.

To get the impact of TMS focus on two approaches to control costs:

The most obvious way automation improves the process is with route planning.

Fewer miles traveled reduces the chance of damage, lowers maintenance and operation costs for transportation owners and reduces energy costs overall.

The other impact of TMS that pays big dividends is optimization. Embedded within the system are analysis tools and algorithms to optimize every detail of the process, regardless of whether a shipment is coming in, moving around or going out. By tracking every product from end to end, the program can intelligently optimize routes on a constantly updated basis.

Simultaneously, the system samples averages like cost per load, mileage or wear expenses and changes scheduling accordingly.

The loads are optimized for different sized vehicles, differing weights, and delivery dates.

These numbers are used to fine-tune the system on a continual basis.

Optimization Leads to Success

Many more factors are optimized to ensure the highest volume of movement for the lowest long-term cost.

These optimizations reduce the volume of inventory, reducing interest on financing.

Every automaker and big-ticket manufacturer needs to take a long, serious look at incorporating the impact of TMS processes to position their risk for the future.

Jen McKenzie is an independent business consultant from New York. She writes extensively on business, education and human resource topics. When Jennifer is not at her desk working, you can usually find her hiking or taking a road trip with her two dogs. You can reach Jennifer @jenmcknzie

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