Last month on Talking Logistics, Adrian Gonzalez and I discussed “Not Your Father’s TMS: Important Questions to Consider When Evaluating and Selecting a Next-Generation TMS.” If you missed the live episode, you can watch it now on demand.
Here are some of the questions that Adrian asked me and a summary of my responses.
How is transportation management different today?
In today’s globally connected world, companies need to have automated systems and processes to ensure the information flow is seamless and simultaneous. For some organizations, they have relied on antiquated back office systems and their knowledge workers for far too long. The challenge for companies now is to automate and streamline both the inbound and outbound transportation processes to ensure that goods can be shipped anywhere at any time and drive additional business.
One of the natural outcomes of this globally connected world and rapid pace of change is complexity of processes. If companies don’t try to optimize and automate their key transportation decisions to reduce the complexity, they are at significant risk of not succeeding in today’s ultra-competitive marketplace.
Collaboration and end-to-end visibility – why have these been so difficult to implement and achieve?
As organizations look at their partner, supplier, and customer networks and understand their technological capabilities, they will see a wide disparity between them in terms of size, process automation, and IT infrastructure. Some organizations will be large and have enterprise software and integration capabilities, while others will be medium-sized organizations that may be part way there in terms of automation and some IT support, and many organizations may fall into the SMB categories and therefore lack the essential IT resources and generally struggle to become connected and integrated onto a network.
But there is light at the end of the tunnel with the proliferation of Cloud solutions, mobile apps, tablets, and other devices that provide connectivity. Multiple channels for connectivity, along with the Internet of Things, is creating an environment that should help deliver the benefits of collaboration and visibility between and among partners.
Convergence – what’s happening today to make this more prevalent and closer to reality?
Supply chain execution convergence is a concept that is fairly common today and involves both an internal and external review of an organization’s supply chain processes. A company needs to look inside and see that most functions/departments typically work in silos and don’t communicate with other business functions. By bringing the different silos together and enabling them to connect their plans, thus understanding the impact of various business decisions, they can operate as a single unit and gain significant benefits. In order for convergence to work, a company’s systems and processes must be connected and integrated.
This approach applies to both internal and external supply chains. Once organizations have the internal convergence problem solved, they can then look externally to engage with partners. Although it’s a different way of managing, organizations need to concentrate on the exceptions and focus efforts on collaboratively resolving those problems with both internal and external resources. These individuals need to have the capability to understand the problem, collaborate to assess what the best solution is and then act. After the fact, organizations need to be able to analyze the problem in order to minimize the situation in the future and once complete, advise everyone regarding the changes or improvements that need to be made.
What role do you see Cloud or SaaS playing and what is the evolution and will these help in this situation?
Typically, the partners within a network vary in size and capability. Cloud technology will enable the SMB partner to implement a transportation management system (TMS) without the upfront investment costs incurred in an on-premises deployment. From a technical perspective, the systems in a Cloud environment are usually delivered online, and along with the use of processes templates, limited IT requirements are needed ─ meaning an organization can get up and running quickly. Often organizations need to take a phased approach and ensure they are receiving an ROI from their investment. Being able to track results and leverage their incremental success is an important consideration in order to further deploy the platform over time. Organizations can align short term requirements and needs while still keeping long term goals in mind.
What differentiates a next-generation TMS from their father’s TMS?
In the past, the transportation processes were much more local, single mode, reduced or limited number of vendors, with simple consumer demand. Today’s supply chain complexities require a true multimodal TMS platform to provide the capabilities to plan as well as execute within an ever-changing environment. The ability to orchestrate rail, sea, road, air and even parcel modes is critical. This complexity is not going away.
Companies need to look for a multimodal transportation management solution that is exception driven to enable their organization to move away from the reactive, day-to-day planning to a more proactive, exception-driven approach to execution so that organizations can achieve a greater ROI and value. Internal experts can then focus more of their time working collaboratively with colleagues to build a more cohesive approach to supply chain execution and achieve real convergence.
Is the business case for a TMS centered on reducing costs and improving service levels or are their other factors that companies should take into consideration?
Traditionally, yes, that’s been the case, but things are changing. Today, if the TMS is part of an overall supply chain execution platform and allows the company to do the order fulfillment, access a broader set of carriers and freight matching, the likelihood is that the organization will achieve a broader and greater set of benefits including increased visibility, collaboration, and expanded partner integration. Bringing together companies that can provide an extension to the relationship is critical.
TMS is becoming a competitive differentiator in the marketplace today. Typically transportation and logistics impact the cost side of the equation but if done properly, can also drive top line growth and market share. For most industries today, the expectation is that they will drive sales and overall market share. TMS should be viewed as a strategic investment, not a tactical cost center.
Evan is Chief Marketing Officer at Kewill. With nearly 20 years experience in the supply chain industry, Evan has assisted enterprises and logistics service providers in more than 30 countries, across 5 continents, with their supply chain initiatives. Originally a demand forecaster and planner for Castrol in the Asia Pacific region, Evan moved to a solution implementation role with Mercia (Supply Chain Planning) and then progressed to sales, pre-sales, marketing and global product management roles with Mercia and then Finmatica (Supply Chain Management). Evan has been with Kewill since 2004 in senior Marketing and Product Management roles, most recently as Chief Operating Officer for Kewill Asia Pacific.