Today’s transportation challenges and opportunities are much different than they were just a few years ago, requiring shippers and carriers to innovate the way they work together. Fortunately, Transportation Management Systems (TMS) have evolved rapidly to aid shippers in addressing these new challenges. How are these evolving TMS solutions helping companies manage their transportation operations more intelligently and efficiently in today’s market? That’s the main focus of my discussion with Chris Noble, Senior Product Manager at PCS Software, in a recent episode of Talking Logistics.
Changing Approaches to Procurement
Transportation management is a broad topic, so I began our discussion at the front end of the process with procurement and how it has changed in recent years. Chris explains that standard practice, historically, is to do an annual procurement bid where you request quotes from carriers for your lanes based on your network and expected shipment volumes in the coming year (often based on historical data). You would then line up your carriers and routing guides, make buying commitments, and execute the plan. This would be followed with monthly or quarterly business reviews with carriers to evaluate service levels and performance.
Chris says, “All of that has changed. Due to the volatility in market pricing, large differences developed between spot market pricing and annual contract rates. This caused carriers to reject tenders, which forced shippers to go to the spot market to get their freight covered. This was a short-term solution.”
“I think the main takeaway is that the bid process and rate commitments have become a lot shorter,” adds Chris. “There is no more ‘set it and forget it.’ This means there has to be a lot more conversation and engagement between shippers and carriers to understand each other’s needs and to collaborate on the process.”
Procurement and Collaboration
I next asked Chris how technology can help shippers deal with the new, more frequent procurement process in order to secure capacity at reasonable rates.
Chris states, “It’s all about stability. In a fluctuating rate environment, you have to have the data, you have to have a system where you can go back and look at the lanes you move, your historical rates, and how you’ve managed them in the past. Because if your business is basically the same and you’re shipping in the same lanes to essentially the same customers, you need to bring accurate data to conversations with carriers. Then you can collaborate because both sides want that stability.
“The power of the TMS is that it’s a single source of the truth with a vast amount of data you can slice and dice and present to carriers in an organized way. Even though some things will inevitably change, these data-driven conversations will help you work through that. And since you have the data, you also have the ability to analyze the results down the road.”
Dwell Times and Becoming Shipper of Choice
In times of tight capacity like we’re currently experiencing, there is always a lot of talk about how to become a shipper of choice. There are a lot of things shippers can do to set themselves apart from other shippers in the eyes of carriers, but there is one thing that rises above them all: minimizing dwell/detention time for drivers. I asked Chris how a TMS can help minimize dwell time.
Chris explains that, “Because the TMS has the data, you can analyze arrival and departure times historically and see what average dwell times are. The carriers know this and will choose shippers who help get their trucks in and out of facilities the fastest. With the driver shortage, carriers want to keep drivers happy, and since drivers don’t get adequately compensated for dwell time, reducing it will help improve the driver experience. And there are ripple effects for drivers, such as missing reload appointments or not getting home to spend time with their families. Having the data helps identify problems for correction, including things like whether dwell times vary by time of day, and it facilitates the conversations with carriers.”
Breaking Down the Silos, Cloud Computing, and Selecting a TMS
Chris also discussed how to break down the business and technology silos that plague organizations; how cloud computing has transformed transportation management; and tips for selecting a modern TMS. Therefore, I encourage you to watch the full episode for all of his insights and advice. Then post a comment and keep the conversation going with your own thoughts and experiences on this topic.