How often do you think about the value of a TMS? In today’s world, it is easy to think of a TMS as an add-on feature, something that only larger organizations can use. However, the rise of cloud computing and software-as-a-service (SaaS) models have changed the game for taking advantage of a TMS. Today, shippers can use subscription-based payment models to leverage the full-scale capabilities of TMS platforms without the traditional headache of lengthy implementations and high equipment and software costs, reports Steve Banker of Forbes. Shippers need to understand the value of a TMS to lower total cost of ownership and how it will impact their organizations.
Utilizing a TMS reduces the overall freight costs for the management of logistics. The cloud-based cost control measures of modern TMS offer significant advantages over traditional systems. They are faster to implement, easy to use and upgrade, have lower IT costs, and typically function well beyond their initial life expectancy. In other words, shippers do not need to reconsider implementing a new system every year or two to stay competitive, and therefore, more companies are looking for established off the shelf solutions, such as the Cerasis Rater, which is a dedicated over-the-road TMS.
Shippers that have increased control over their operation see a reduced total cost of ownership in managing labor. Total cost of ownership is the culmination of direct and indirect costs in managing freight. It includes all equipment costs, costs of labor, costs of management, delays of shipping, refunds, and lost value resulting from negative customer experiences. As the TMS functions, supply chain accuracy increases, reducing all the factors mentioned above.
One of the significant problems with today’s supply chains revolves around visibility. Over the last two years, multiple food-borne illness outbreaks have resulted in substantial losses to the global supply chains. Who can forget the romaine lettuce recall right before Thanksgiving in 2018? That recall cost millions of dollars and countless jobs. However, imagine what would happen if recalls could be eliminated by ensuring any issue was identified, tracked, and managed from the start. Instead of casting a wide net to catch all possible aspects of food-borne illness, shippers could refine the recall, ensuring only affected foods that were initially contaminated were in effect recalled.
Governments across the globe are under increasing pressure to implement strict compliance measures, and recently, the Brexit vote threatened to upend the entire transport management system in the UK and European Union. While the debate over this significant shift in global policy continues to rage, the Prime Minister of the UK has already resigned, and it is only an indicator of what may occur if companies do not take the steps necessary to prepare for an uncertain future regarding trade governance.
Major trade regulations could affect free trade zones, forcing shippers to rethink current operations and work with entirely new carrier networks.
Streamlined freight accounting also reduce total cost of ownership by automating manual processes revolving around documentation. Streamlined invoices might seem like a minor issue, but for the company sending thousands of shipments, considering each shipment may contain thousands of individual invoices to consumers, it is easy to see where the complexity becomes a problem. That’s why a TMS that captures all invoices and consolidates them into one, all while giving historical access to the invoices within the system, streamlines overall transportation and freight management.
Reviewing each item line-by-line could take multiple employees an entire year to review, assuming they do not stop to eat, drink, sleep, or anything else. It is simply unreasonable. Automating the process removes that labor costs from the equation. The same process applies to all auditing practices, and shippers that implement an auditing program are typically capable of recapturing between two, and 5% of total freight spend that resulted from billing errors or duplicates.
The value of a TMS is extensive, and it has a use case for every industry on the planet offering TMS results any shipper would envy. In the medical sector, increase traceability in tracking through TMS functions will reduce the incidence of fraud. Retailers may rely on a TMS to lower inventory carrying costs. The list is endless, and each change to your process, as well as efficiency, will only add to freight spend and your total cost of ownership. However, implementing a TMS is an effective way to immediately lower total cost of ownership without the high cost of traditional complete overhauls.
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