A transportation management system (TMS) is often considered an ideal choice for less-than-truckload (LTL) and full truckload (FT) shipments. In reality, a dedicated TMS can be applied to improve the efficiency and dynamics of any type of shipment. For small package shipments, a TMS can prove to be an invaluable resource by providing the following significant benefits.
Shipping hundreds of small packages pose challenges for shippers. Getting a small package from point A to point B could easily vary greatly in terms of time requirements. The package may be transferred multiple times between different modes of transit as well. As a result, having an optimized route before sending small packages makes the difference between an on-time delivery and a late delivery. More importantly, the vast reaches of Amazon have made small package delivery expectations excel beyond traditional capabilities in legacy ERP systems. Therefore, the only way to effectively compete with Amazon’s rapid shipping is by ensuring small packages are assigned to the most appropriate, faster route through a dedicated TMS.
Customer service for small package shipments is more important than the same customer service for large shipments. Rather than focusing on a vast number of identical products, small package shippers need to be able to provide unparalleled customer service to hundreds, if not thousands, of individual customers on a recurring basis. Consequently, the amount of paperwork and documentation needed to improve customer service on a small-package level is much more, which can be effectively organized, managed and accessed from within a TMS.
Warehouse efficiency is defined by how many orders are processed, packaged and shipped in relation to the actual number of incoming orders. Moreover, small packages may not have the same valuation of larger items, so accuracy in completing these processes is critical to maintaining warehouse efficiency. A TMS furthers this cause by allowing shippers to integrate the process from start to finish, eliminating discrepancies and improving accuracy throughout the warehouse and into actual shipping. In addition, a TMS can help small package shipper monitor and manage inventory levels, explains Larry Lewis of PARCEL Media. In fact, this point is reiterated as one of the standards any shipper should check for when selecting a TMS solution for their business.
Small packages are usually less than 150 pounds, and as a result, they routinely fit into tight spaces. Unfortunately, small packages are inherently more likely to be misplaced, mishandled or forgotten when transferring them between modes of transit, reports Jim Greer of Talking Logistics With Adrian Gonzalez. In other words, a single small package may end up on a different truck than intended, and until a customer reports not receiving a package on time, the shipper is often left in the dark as to why the package is taking so long to be delivered. Yet, the volume of small packages continues to grow, and the carrier may not issue a refund appropriately. Therefore, increased automated auditing and enhancement of intermodal tracking and processing are critical to catching these billing inconsistencies in a cost-effective manner.
As the world has become more connected, ensuring your small package shipments adhere to any and all regulations for international transit is essential to preventing delays and the possible assessment of penalties. A comprehensive TMS must be able to automatically notify shippers of changes in shipping requirements when sending packages abroad. More importantly, some shipments may fall under specific criteria for verifying recipients and financial information before shipping. Ultimately, the TMS should serve as an automated system for verifying all small packages are ready for international shipping at the time of processing.
The manufacturers of legacy ERP systems have lost footing with the rise of the cloud. In some cases, these manufacturers may no longer provide customer service or updates to ensure your systems operates according to your needs. As a result, upgrading your system to a cloud-based TMS, such as the Cerasis Rater, may be more cost-effective in terms of simply maintaining your current operation than using your outdated system. Since the pressure to rapidly deliver small packages grows with each passing day, the need for a TMS to handle all of your small package needs has never been more important.
Buyer’s remorse is real, and customers ordering small items are more likely to decide to simply return an item due to buyer’s remorse. Unlike larger FT or LTL shipments, small packages are typically comprised of one or two items. As a result, shippers need to consider more returns will need to be processed when shipping small packages. In turn, the TMS can handle both incoming returns and outgoing shipments concurrently, reducing the incidence of lost costs for manual handling of incoming returns.
These are just a few of the benefits of using a TMS to handle small package shipments, and the real cost savings could easily add up to more than 15 percent. If you have not yet considered implementing a TMS for all of your shipping needs, including small parcels, you are losing money faster than you realize. Since the process for integrating today’s TMS solutions is much simpler than in the past, the time to act to improve your bottom line is now.
Using less-than-truckload for medium-sized shipments is one of the great innovations in shipping. It produces results at a fraction of the cost of full truckload (FT) or small package shipping. However, the needs of the modern shipping industry have reached an optimal point, and the only way to further push the envelope is by using a dedicated transportation management system (TMS). Take a look at some of the most important ways the ideal TMS impacts an operation.
A poorly functioning warehouse is tantamount to a poorly functioning supply chain. The ideal TMS can maximize the efficiency of a warehouse and directly affect inventory management. As a result, the amount of inventory can be managed to reflect the consumer demand.
Training new hires is the highest cost associated with new employees. The ideal TMS allows you to see where your resources currently are, and forecasting abilities give you the ability to determine what resources are available to train new hires. Moreover, the one-stop management capabilities of the TMS streamline the training process. New hires only need to learn how to use one system.
When more carriers are available for use, the cost savings increase. The TMS compiles all available carriers into one resource, allowing you to select the most competitive, timely carrier for your shipment. As a result, you can make sure you use the most cost-effective carrier for your needs.
Sometimes, the lines between FT and LTL are blurred, especially when all LTL shipments are compiled into FT via freight consolidation. This matters due to lower costs associated with FT when enough shipments are available. The TMS combines LTL needs to produce FTs when possible.
Your existing systems are probably outdated, but your TMS should be able to integrate with your existing system. Moreover, some TMS providers can completely replace your existing system, making overall management easier and faster.
Cash flow is one of the most important aspects of a successful business. With resource insight and allocation via a TMS, you can control your cash flow in greater detail and with greater accuracy.
It is hard to monitor the performance of employees in today’s global economy. Since the TMS connects to the Internet, the performance of all employees can be tracked and analyzed in real time. As a result, you can identify areas that need immediate improvement.
Better customer service means always satisfying the customer’s expectations, which include fast delivery, quick processing of returns and questions about your product or service. The TMS puts information at the disposal of customer service representatives, empowering employees and ensuring every customer’s complaint or need is handled timely and appropriately.
Access to the TMS is available across an organization, reducing organizational silos and forming a more cohesive supply chain. Furthermore, enterprisewide access enables all members of an organization, from stakeholders to seasonal workers, to understand their roles and responsibilities. The benefits increase when deployed industrywide as well.
An organization operates better when employees know what needs to be improved. The ability of the TMS extends to the optimization of workflows and duties within individual parts of the shipping network, promoting better execution and completion of duties.
Contract negotiation is becoming a major factor in shipping. The TMS allows an organization to see what rates are available immediately, allowing for more informed contract negotiations.
Sometimes, LTL is not the best choice, but knowing what mode shipping is most cost-effective is the only way to ensure the best choice is made. The ideal TMS combines all intermodal shipping options to ensure your needs are met appropriately.
Growth is evitable, and the TMS can enhance expansion needs, such as hiring more employees, accessing new markets and planning of new facilities’ locations.
The ability of the TMS to provide real-time insight into operations, in conjunction with auditing features, improves visibility and compliance with authoritative measures.
The TMS is easy to implement when compared to legacy systems of the past, further reducing training costs and delays from learning updates.
Staff members who know what is going on within an organization can identify what operations are the most time-sensitive, reducing unnecessary delays and costs.
The security of customers’ data and information about a company is of top priority in modern shipping. The ideal TMS reduces security concerns by keeping all information in a secure, highly protected area of the cloud.
The TMS builds a competitive advantage against shippers and organizations who have not implemented such policies. Furthermore, lower cost of SaaS forms of TMS systems is helping small businesses gain a competitive advantage against bigger organizations.
Dashboarding capabilities in the TMS allows management to compile reports and information for stakeholders more easily. In addition, the information can be transmitted directly to stakeholders when they log in to the system.
Automation is a symbiotic component of a TMS. As a result, errors from manual entries are reduced, increasing profitability and efficiency.
A TMS enables data-driven decision making, which reduces inconsistencies and problems, especially as it relates to change management. Moreover, an organization can become proactive to potential problems, which enhances risk management and overall production.
The legacy systems of the past are practically inaccessible to the mobile worker. Modern TMS applications are designed with a mobile-friendly environment in mind, which helps an organization maintain accountability and adoption of the system from any location.
The advent of the cloud and SaaS capabilities have given modern TMS providers the ability to reach an unparalleled market share. As a result, the benefits of deploying a TMS are applicable to organizations of all sizes, regardless of growth patterns and forecast predictions.
Gaining the most from a TMS is one of the best ways to reduce costs, boost production and ensure all parts of an organization work together seamlessly. While its key benefits revolve around LTL freight shipping, the ideal TMS actually results in a wide array of benefits for an organization, which apply to all positions from CEOs to custodial workers.
For the second year in a row, the Cerasis Transportation Management System, the Cerasis Rater, was included in Inbound Logistics’ Annual TMS Buyer’s Guide. Transportation management systems (TMS) offer tremendous benefits for shipment management, trading partner collaboration, and freight payment. But with so many products on the market, finding the right solution can be daunting. Shippers choosing a TMS must consider numerous options, from cloud-based applications to traditional on-site installations, targeted to freight moving over the road or by rail, in containers or as parcel shipments. To help you select the best option for your transportation management needs, Inbound Logistics’ TMS Buyer’s Guide offers a best-of-breed shortlist of some leading TMS providers and solutions.
The Current Landscape of the Transportation Management Systems (TMS) Market Place
Logistics and transportation managers are tasked with making the movement of freight between trade partners easier, cheaper, and more efficient. Often these managers turn to Transportation Management Systems (TMS) in the smooth and efficient operations of their supply chains for decades. Having evolved significantly over the last 30 years, such systems are typically available as standalone software packages, as part of a larger Enterprise Resource Planning (ERP) solution, or in Software-as-a-Service (SaaS) formats.
Calling TMS “one of the fastest growing enterprise application markets” in its most recent TMS Global Market Research Study, ARC Advisory group says that a whopping 63 percent of companies would see at least a 5 percent increase (23% stated a 10 percent or more increase) in total freight costs if they had to give up their TMS and revert to more manual transportation planning and execution processes. According to ARC, a TMS achieves these savings based on process enforcement, visibility, analytics, and optimization, “with virtually no other supply chain application offering so many different forms of optimization.”
Regardless of the technology delivery method, TMS tackles the freight movement puzzle by handling single parcels to bulk commodities and everything in between. In most cases, the solutions oversee the movement of all inbound and outbound freight modes (including intermodal), at the domestic and international level. A TMS’ fleet management capabilities are usually focused on the shipper’s own transportation assets while its planning and execution functions monitor and track movements involving both inside and outside service providers (such as third party logistics providers or “3PLs”).
According to survey respondents in the “Transportation Management Systems” Study by the Peerless Research group and Logistics Management, the top five areas that are important when focusing on a long term logistics strategy are:
Furthermore, when asked what aspects of their transportation and logistics operations could use improvement, more than one-half cited understanding and controlling costs (55 percent), better shipment planning (55 percent), and greater in-transit visibility (52 percent). Also high on the list of areas in need of development were electronic communications with customers and carriers (45 percent), overall supply chain processes (45 percent), and carrier and partner collaboration (43 percent).
An effective TMS can achieve all of these top 5 desires of shippers looking to shape a long term solution for their business to remain sustainable and cost effective in their transportation spend.
With a TMS you can have tools and features that notify customers of when their shipment is coming, or you yourself can login and see where the shipment is at any time. Furthermore, when you have a TMS that allows you to run various metrics and reports to analyze, you can see which carriers are getting your shipments in on time to your customer and which ones are not causing high levels of claims. When you weed out the bad, based on data, and focus on the good, you can then ensure with greater predictability that you will have a hassle free experience and confidence in getting your freight to your customer. You may also use that same data to better collaborate with carriers and those in the supply chain to sit down and address these facts and proactively improve so you continue to increase the customer service metrics.
Remember, lowering costs isn’t simply about the freight rate. It’s about total costs. As more and more manufacturers look at the total costs of business decisions and the total costs of their operations long term, the hard costs you see that are invoiced are not the only costs considered. In logistics and transportation management, when it comes to costs, you must also include the “soft” costs. These are things like the time it takes to process a freight shipment (calling various carriers, getting quotes, manual methods vs. using a TMS, etc.), the errors that come up due to not using automation features that are available in a TMS, or even the time dealing with such things like freight and transportation accounting or freight claims that a logistics service provider could handle as a value-add , such as managed transportation services to the TMS software offering, really do add up over time. Oh, and not to mention, if you aim to grow your business, which I am sure you do, the added costs of more resources and time to process more and more freight. A good TMS reduces time and allows you to scale cutting out many other unforeseen soft costs.
This improvement area in a long term logistics strategy by implementing a TMS is highly related to the second point of lowering costs, but let’s go with another angle. Have you ever noticed that when you have a very good process or system for doing something in your job, you have to think less about how you are going to get the job done effectively? The system is sound and allows you to rinse, repeat, and scale by not only following a sound process, but getting muscle/mental memory to get better and better as you use the system. Did you also notice that once you had sound processes you were more productive because you were then able to think strategically in such a way that it allows you to disrupt your other inefficiencies? As they say, it is hard to stay strategic or innovative if you are merely surviving in the land of tactics.
Again, as with logistics costs dovetailing into improved efficiencies, this 4th area of long term strategy focus is really only possible if you are efficient in process and are cost effective. When you are confident in a repeatable and scalable system that scales and is cost effective to deploy and maintain, you then have the think and brain power to strategically identify other issues in the organization and apply either more tools, technology, or systems to continue to drive the business forward. As a manufacturer, using a TMS can free you up greatly to focus on the marketplace and new products to open up new markets.
This idea also plays into operational improvements that allow your business to grow. With a transportation management system and especially one integrated to your ERP or Warehouse Management System, you can start connecting the dots to what inventory you have on hand, which ones are in transit and more. When you have integrated systems that easily allow you to calculate asset utilization, it allows you to continue to have a strategic mindset and quickly make decisions on what products or assets you should have on hand or order more of to ship inbound to your warehouse from a vendor.
The key to all five of these points is truly that a transportation management system frees up any shipper who utilizes one to get out of the weeds of process and put the focus back on their business and not the worry of how are you going to stay effective in transportation management. At best, it is a tool that empowers you, but make sure it’s a tool that has the capability to meet your unique needs. If you are unsure of your needs, make sure you schedule a consultation with one of our logistics experts and talk about how you could use a transportation management system to make your life better.
When using a third party logistics company who both offers a transportation management system and integrated managed transportation services, it is possible for shippers to easily achieve the above desired outcomes in their logistics and transportation strategies.
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