Taking the current and future transportation landscape into consideration, do we need to hit the reset button on transportation management systems (TMS)? In other words, are there capabilities that a TMS must have today that maybe weren’t as important or required just a few years ago?
That was the central question I discussed with Mike Mulqueen, Senior Director at Manhattan Associates, a couple of weeks ago on Talking Logistics. First, Mike discussed the new challenges shippers are facing today compared to five or ten years ago, including what he called “non-cyclical factors” that go beyond the usual challenges of fuel costs and capacity constraints:
The non-cyclical [factors] are the things that are making transportation and logistics a little bit more interesting, and it’s essentially the omni-channel revolution. All of a sudden, organizations that never had a need to have a core competency in parcel now have to be able to do parcel. Reverse logistics is extremely important. Home delivery using a courier network, or in some instances, private fleet for same-day delivery — these are real new challenges.
It used to be that the network was supplier to distribution center to store. Now all of a sudden, [you] have to deal with potentially 300 million customers in the United States alone. And transportation is such an important piece of the product people are buying, and…the ability to differentiate based on delivery services [is] really going to separate, from our perspective, the winners and losers in the retail revolution.
So, what TMS capabilities are becoming more important? Mike highlighted several, but the one I agree with the most is transportation modelling:
An organization that cannot do transportation modelling is going to be at a fundamental disadvantage. I always talk about challenging your transportation policy. What if we do things differently? What if instead of delivering to my stores once a week, I deliver to my stores twice a week? What if I offer my stores a 2-hour time window instead of a 4-hr time window? Do I have the right mix of pre-paid and collect freight on the inbound side? TMS systems are not designed to answer those types of questions. They are executional systems. An order comes in, and based on the constraints, the rates, and the capacity I have in my fleet and the different modes that I have, I’m going to come up with the best-cost solution, but I can’t change anything about the base criteria that is codified within my TMS. I can’t change those things. What if modelling is the key to enable an organization to change those things?
Mike also discussed different trends and approaches to transportation optimization. Watch the short clip below where Mike talks about predictive optimization, the move from batch to continuous optimization, and the importance of taking variability into account.
I also asked Mike if companies are actually “walking the talk” when it comes to truly taking an integrated approach to logistics management. For example, over the years, there’s been a lot of talk about the benefits of integrating TMS with warehouse management systems and processes, but in practice, many companies optimize transportation first and then let the results drive what happens in the warehouse. Here’s what he said:
I encourage you to watch the full episode of my conversation with Mike for additional insights on this topic. Then post a comment and share your perspective: Do you believe it’s time to hit the reset button on transportation management systems?