Transportation cost savings is usually cited as the number one reason companies invest in a transportation management system (TMS), but does the value go beyond that? When it comes to getting the most value from a TMS, what can we learn from leaders in the industry? Those are the main questions I discussed with Chris Jones, Executive Vice President, Marketing and Services at Descartes Systems Group, during a recent episode of Talking Logistics. During our conversation, Chris shared some insights and advice from some TMS benchmarking studies he conducted recently.
State of TMS market
With the 2018 capacity crunch and scramble to cover loads, I began our discussion by asking Chris about the current state of the TMS market. Is demand for TMS increasing? “Spending, and the intent to spend, is definitely up,” says Chris. “In addition to [cost and service improvement], competitive differentiation is also driving this interest. It’s the highest I’ve seen since I’ve been in the business.”
Chris goes on to explain that in addition to cost savings, which management expects, supporting growth and customer service goals are key drivers of investment in transportation management systems today.
Transportation benchmark studies
For the past three years, Descartes has conducted TMS benchmarking studies. Why do these studies? “The companies we deal with are in varying states of transportation capabilities,” explains Chis. “Some do a phenomenal job with transportation management; it becomes a key part of their means to compete and grow revenue. The genesis of the study was trying to understand the strategies, tactics and technology these companies use to achieve this success when others don’t.
“It has been eye-opening for us and enlightening for our customers,” continues Chris. “The most frequent question I get is, can I show this to my management?”
Management attitude vs. financial success
Two of the questions Descartes ask in the survey, which received over 2,000 responses, are “What has been your financial success?” and “What is your management’s attitude toward transportation management?” Interestingly, there is a high correlation between those who feel transportation management is a competitive advantage (vs. a necessary evil) and the financial success of those firms. They are also the fastest growing companies.
Chris points out another factor is how companies measure success. Those companies that only use traditional supply chain measures such as cost savings and on-time/in-full aren’t as successful as those who include broader measures such as contributions to revenue and competitive differentiation.
Sharing transportation information
Besides sharing the financial data CEOs and CFOs desire, a TMS holds a great deal of other information that can be useful across the organization. Chris says, “Transportation involves multiple people, including suppliers, carriers, customers and your internal departments. That information has value to many constituencies. What the study found is leaders do a much better job sharing this information internally and externally than other companies. That helps drive efficiencies, the customer experience and other benefits. This is an area that is often missed. Transportation execution is important, but leveraging transportation information as broadly as possible is equally important.”
Getting the most from a TMS
When I asked Chris how companies can get the most value from their TMS, he says it starts with transportation experts being salespeople. He advises people to proactively seek out everyone who has responsibility for suppliers and customers to show them what transportation information can do for them. Second, he says to expand what you are measuring and share that information with all constituents. “That will prove the value of what you are doing and benefit the organization as a whole,” Chris says.
Chris provided a number of examples of how their customers are using transportation information to create value for their companies beyond cost savings. I encourage you to watch the full episode for all the details. Chris is also sharing more data and insights from the benchmarking study in an upcoming webcast (Tuesday, May 7 at 2:00 pm ET). After watching, post a comment and share your perspective on this topic!