There has been dramatic change in supply chain and logistics markets, requirements and procedures over the past 10-20 years. With globalization, the rapid rise in e-commerce during the pandemic, and confounding geopolitical events, supply chain professionals must continually adjust and adapt to the changing environment. Therefore, the status quo with regards to transportation management systems (TMS) must also evolve and adapt. What does that mean exactly? Why is it important to go beyond the status quo? And what defines and differentiates a “beyond the status quo” TMS? Those are the main questions I discussed with Pervinder Johar, Chief Executive Officer at Blume Global, in a recent episode of Talking Logistics.
Challenging the Status Quo
There has been so much change in the marketplace, especially over the past three years, it is hard to even define the status quo — or, as Pervinder puts it, there is no “new normal” yet. But there has been a status quo in Transportation Management Systems (TMS).
Pervinder explains that TMS solutions haven’t changed much since the early 2000s. They continue to do the basic blocking and tackling of consolidating and optimizing loads, and rating and routing shipments. What has changed, he says, is that many new systems have been developed around the TMS to address additional requirements such as visibility, purchase order management, ocean and air shipments, and finding capacity. “It’s all being done outside the TMS.
“Transportation management has evolved beyond the TMS,” states Pervinder. “It has gone from applications to a platform. The TMS has always been the glue that holds the supply chain together, but now companies are looking for how the transportation components can support their broader supply chain requirements to better serve the customer. There is no need for outside systems such as visibility to exist as long as you have a good transportation operating platform, which is what I call the evolved TMS.
“There is a big difference when you think of logistics as an operating platform for your customer-facing business,” Pervinder continues. “It’s no longer just truckload and domestic. It’s global and includes all modes of transport, including rail, intermodal, and parcel. And visibility is integral to all of that.”
Calculating the Business Value
Given that the evolved transportation/logistics operating platform covers a broader scope of processes than a traditional TMS, what does that mean for calculating its business value? Pervinder says, “The business value is much greater than it used to be.”
Pervinder explains that justifying a TMS in the past was about calculating the savings from load consolidation and supporting rate shopping and a core carrier program. Reducing labor costs was another factor.
“Today, when you include visibility, rail and international operations, you’re looking at the business value mainly from the perspective of your customers’ happiness,” Pervinder notes. “And how it can increase revenue, which was never tied to a TMS in the past. Also, how it ties back to manufacturing and order promising. It still has to do the basics like LTL-to-TL load consolidation, but today that’s a given.
“The value of the platform has risen to how it can help the CEO solve business problems, which used to be mainly about cost management, but now it is about increasing revenue and the customer experience.”
Saving a Trillion Dollars
Transportation management has evolved beyond the status quo of a cost-saving TMS to incorporate a full-blown logistics operating platform, and all of the business value that involves. But Pervinder feels there is still over a trillion dollars of savings that can be driven from global transportation operations. How? Pervinder mentions three gaming-changing shifts that go to the heart of supply chain operations. To learn more, I encourage you to watch the full episode for all of his insights and advice. Then keep the conversation going by posting a comment and sharing your own perspective on this topic.