For many years now, thanks to Amazon, consumers have gone from enjoying one-week deliveries of their orders for a price to expecting two-day shipping at no cost. This change in demand is not only for the business-to-consumer (B2C) market; businesses are now having to comply with many B2C expectations too, like free shipping, in one to two days, no matter the logistics hurdles.
B2C transactions tend to be more straightforward with fixed pricing, smaller order quantities, and fewer shipping locations. In contrast, with the sale of goods and services between businesses, one observes higher order volumes, multi-mode shipments, variable pricing, and external factors such as country-specific trade regulations. These factors make business-to-business (B2B) transactions more complex and costlier to perform.
To meet these daunting demands, companies need a networked transportation management system (TMS) that can support multi-leg, multi-mode, multi-currency, and multi-language shipments (typically with long cycle times) across countries. This is in addition to the core functionality of a TMS solution, such as order automation, transportation planning, carrier network, control tower, and freight spend management. The benefits of a networked TMS include global visibility of both orders and shipments in an integrated, tracked manner, reduced freight costs, simplified execution, continuous improvement, and better capacity management.
What capabilities are needed for successful B2B shipments?
- Instead of point-to-point connections or portals, businesses find it simpler to communicate with all trading partners over a digital network, capturing and executing transactions.
- Orders, forecasts, and other information need to support a large number of data formats transmitted via different connectivity methods.
- Implement a network that routes data, tracks orders, handles payments, and gives online visibility to shipments in transit.
- Quality data that passes specifications must integrate with other systems across the enterprise. Clean data is accurate, timely, and now usable.
- Visibility of orders across channels, modes, geographies, partners, regions, and systems needs to be available, including the entire order life cycle from order entry through proof-of-delivery and financial settlement, with predictions and alerts.
Selecting a TMS for Global B2B Shipments
A B2B transportation management system needs to have certain features to be successful in a global market. At a minimum, a networked TMS solution must support multiple languages, currencies, and geographies. It must support international date formats and postal codes for multi-leg shipments, international port tracking and integration, documentation and additional modes, such as ocean and international air shipments. Today’s TMS is typically SaaS-based, which reduces the barriers of entry because of lower upfront costs and ease of maintenance. They have at their core these minimum capabilities:
- Transportation planning: Global shippers need to use a TMS that supports all modes of transportation, including parcel, less-than-truckload (LTL), truckload (TL), ocean, and air. The TMS evaluates which mode is best for each shipment based on the customers’ requirements, including weight, length, need for refrigeration, and more. The TMS selects the right carrier, mode, and service level from thousands of alternatives, improving service levels and customer satisfaction. Transportation planning also involves load planning and consolidation, filling trucks as much as possible to keep costs low.
- Carrier Network: A networked TMS uses a digital supply network to broadcast transportation needs to hundreds or thousands of carriers connected to the network. Each carrier has visibility to the plan and can bid on the loads wanted. Carriers are evaluated based on selected shipping lanes, priorities, costs, and past performance.
- Control Tower: The control tower gives visibility from end-to-end, allowing shippers to know what is happening throughout their supply chain and to track and trace orders from beginning to end. Shippers know where their orders are at all times and can be alerted if there is an issue in the shipment.
- Transportation Execution: The shipper can see the different rates proposed by carriers and choose the best service level/rate. Loads tender electronically to carriers who accept and book the load. Bills of lading and other documentation are generated for each shipment. When the order is received, electronic proof of delivery notices can be signed and sent to accounting for invoice processing.
- Freight Spend Management: Freight spend should be analyzed by collecting historical data from shipments — shipping routes, modes, volume, carriers used, accessorials, and more. Invoice reconciliation evaluates shipment costs, volume discounts, indirect costs, and more to ensure that invoices are correct, audited, and paid accordingly.
- Business Intelligence and Reporting: Data gathered throughout the entire shipment process and across the network help shippers to identify consolidation opportunities and rate carriers based on KPIs and performance. Reports can vary from shipments per carrier, shipment type, on-time performance, and more.
Savings come through detailed multi-leg and multi-mode shipment planning, execution, and freight audit to the tune of up to 15 percent of transport cost savings. Other savings come through using the right mode, consolidating loads, and paying carriers correctly.
David Cahn is Director of Global Marketing at Elemica, The Digital Supply Network Provider for the Process Industry. He has been implementing, marketing, and product managing leading enterprise applications for over 30 years including ERP, SCM, TMS, and WMS solutions and lived the word of customer-facing solutions and customer experience for the past few years. David has held leadership positions at Phillips, KPMG, CA, AMR Research, Aptean, and Infor. Additionally, he has started, built, and sold his own e-commerce and supply chain software company during the dot-com days and had his own corporate development consulting company to the software industry for over ten years.