Most businesses that ship freight via Less-than-Truckload or LTL freight services will improve the efficiency and cost-effectiveness of their transportation and logistics departments with the use of an automated transportation management system (TMS).
Many larger shippers, such as original equipment manufacturers (OEMs) or large distributors, with freight expenditures in the millions of dollars, typically have logistics departments with one or more traffic managers and are already using a TMS. However, many smaller companies, with lower freight spends, would also benefit from implementing a transportation management system for the same reasons of helping manage LTL freight more efficiently that a large freight shipper would use a TMS.
The Evolution of LTL Shipping Practices
There are many benefits of a TMS that shippers will realize if they implement one. However, a lot of smaller shippers believe that an implementation of a TMS is expensive. That is a myth. Most Transportation Management Systems today are web-based, have easy to use web services such using APIs, and are easily integrated into other systems, so there are seamless data interchanges, such as integration with an ERP system or address book program.
As a shipper, transportation management by avoidance is not a good option. Now more than ever before, transportation issues, especially in the fast-moving and complex world of LTL freight, demand increased time and attention. Transportation will not take care of itself. Surprises will eat into your margins. If you don’t know where your inbound freight is, you may be faced with shutting down a production line, or you may have to delay shipping orders to your customers. You may get hit with customer chargebacks if someone at the warehouse makes a mistake and sends shipments without knowing that they need to use a particular carrier in a specific lane (governance). The result is not a good one nor as most would agree, the desired outcome: lower profits and lower customer satisfaction ratings.
6 Benefits of Using a TMS for LTL Freight Management
The use of a TMS in less than truckload freight management helps ensure that your loads are matched to the best LTL carrier, equipment, and lanes so that you can get the best possible rates without sacrificing the service you expect and deserve. The main advantages of a TMS applied to Less than truckload freight include:
- Improved visibility to your shipments: When you know where your freight is, you can better communicate to your customer, allowing you to build better relationships with them. On the inbound side, it helps build rapport and accountability with suppliers.
- Availability of data and analytics: With reports generated from your TMS, you can better gain insight into your Less than truckload freight shipping activity and business outcomes. For example, you may find in a matrix report valuable information such as what would have you saved if you chose the least cost carrier each time or how is Carrier A performing in the way of claims vs. Carrier B. This kind of information allows you to make future business decisions that are based on fact and not gut or opinion.
- Automation in the Process of Logistics/Transportation: With a robust Transportation management system, you can realize such benefits as real-time freight rates, organizational control or governance by restricting user choices to those desired by management, speed, and scalability to avoid future growing pains as the TMS will grow easily with you as you ship more freight, and of course, a TMS that is backed by a dedicated technology team will make sure you have the latest and greatest technology to keep up with the fast paced changing world of logistics technology.
- Simplifies data entry and the elimination of many manual steps: Logistics automation features such as integration to your commodities via your ERP system and access to your address book, as well as automatic storage and entry of fuel surcharges and accessorials, will have you never again worrying about keying in the wrong information. These kinds of manual data entry errors will lead to increased shipping costs such as having to pay for shipping twice or paying a higher freight rate due to entering an incorrect commodity freight classification. Remember, several factors go into creating an Less than truckload freight rate, so it is vital you don’t let something such as manual entry, create a rate you shouldn’t have to pay.
- Invoice retrieval, consolidation, and audits: Transportation accounting can be quite the headache, especially if you have multiple locations or multiple freight shipments each week. Imagine if you were the controller or CFO at a manufacturing company, and you had 15 locations that each shipped 10 LTL freight shipments each week. That is 150 freight invoices that must be managed, paid, and HOPEFULLY audited against the original quote! Whew, that is a lot of process work and plenty of opportunity for costly errors. A good TMS should house all shipment information for easy access, automatically provide reporting on variances between quote and actual freight invoice, as well as provide further auditing features for piece of mind.
- Enhanced communications between all parties: Because most TMS programs are now web based, many of them also store documents for future use in very important discussions between various parties, such as the shipper, the consignee, the carrier, or a third party logistics provider. This allows for easy communication without having to dig for documents. They are available for whenever you need them. Add to the automatic notifications via technological applications such as EDI with carriers so all parties know where the freight is at any time, and a TMS allows you not to miss a step in communicating between all sides. It is the communication aspect in logistics where things can go awry, and when things go wrong, you know there is money being lost.
Partnering with a transportation management provider to obtain the benefits of a TMS also gives you access to that partner’s entire team of logistics experts. Further, you gain access to an array of other value-added services which can include LTL freight back office support to handle pick-up scheduling, tracking, appointment confirmations, proof of deliveries, claim processing, bills of lading, auditing of freight bills and daily reporting on pricing so you can charge quickly. What other benefits have you realized when using a TMS to manage better LTL freight?
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