As we say goodbye to Q1 2018, one of the predictions for this year has already come true: managing transportation operations has become more challenging and complex than ever due to tighter capacity and more demanding customer expectations. How can shippers and third-party logistics providers (3PLs) work smarter instead of harder to succeed in this new environment? What role can technology play, specifically transportation management systems (TMS), in helping companies take greater control of their operational performance?
Driver Shortages and Tight Capacity
We began by talking about current trends in the trucking industry. Jim noted three factors impacting the market. First is the ongoing driver shortage, which Jim says has been exacerbated by Dept. of Transportation rules making it harder for potential drivers to enter the pool. He also said the electronic logging devices (ELD) mandate is taking “fluff” out of the market. “Even though it was bad capacity,” said Jim, “it is still taking capacity out of the market.” Jim’s third point was very interesting: he’s seeing more shippers and logistics service providers obtaining their own assets or using more dedicated fleets as a way to deal with capacity issues, and he expects this trend to continue.
TMS Facilitates Business Intelligence
In today’s fast-changing and tight-capacity environment, spreadsheets and other manual processes just can’t keep up. “The key to success is, and always has been, information flow [between shippers, carriers, 3PLs, and consignees],” says Jim. “The beauty of a TMS is that it facilitates real-time business intelligence. The user has immediate access to how a carrier is performing, their acceptance rates and safety levels so they can make effective decisions.”
From a management and procurement perspective, this business intelligence enables you to sit down with your carriers and have objective discussions about how they are performing and then collaborate with them to find solutions. “Gone are the days when you could bully your carriers,” said Jim. “Success today requires collaboration, and business intelligence facilitates that. It comes down to finding the right carriers for the right lanes.”
Integrated Procurement and TMS
Jim pointed out that beyond the business intelligence benefits provided by the procurement process, there are real operational benefits for integrating your procurement system and TMS. He notes that “old school” procurement professionals sometimes show up with paper-based contracts that are difficult to implement. “You’ll read things like ‘The rate will be $2.70 per mile east of I-81’ and a different rate west of I-81,” said Jim, “but no TMS understands ‘east of I-81’ versus ‘west of I-81’ so you have to [invest a lot of time and effort] finding the right zip codes and entering those lanes and rates into the TMS,” said Jim. “If the procurement system and the TMS are directly integrated, you’re automatically creating lanes that the TMS will understand. This saves a lot of work and errors.”
Beyond procurement, a modern TMS with integrated planning and execution offers many other benefits too. Jim noted the significant cost savings associated with automated mode selection, for example. To learn more about this and other ways that you can leverage technology to succeed in today’s challenging transportation environment, watch the rest of my conversation with Jim. Then post a question or comment and keep the conversation going!