Historically, many companies have viewed transportation management as a cost center – a non-strategic part of their business. It’s why many companies outsourced this function to third parties in the past. But in more recent years, especially since the pandemic, a growing number of companies have started viewing transportation management as a strategic weapon and competitive differentiator. Of course, controlling transportation costs remains very important, but CEOs and CFOs have also learned (sometimes the hard way) that transportation management affects customer satisfaction, inventory levels, sales, market share, sustainability, share price, and much more.
Considering the scale and complexity of most transportation operations today, trying to manage them manually or with Excel spreadsheets is extremely difficult, inefficient, and ineffective. Simply put, if you want to reduce transportation costs, improve service levels, increase productivity, reduce CO2 emissions, and improve customer satisfaction, you really can’t do that effectively or at scale without a Transportation Management System (TMS). I discussed this topic with Jeff McAtee, Logistics Manager, and Nicholas Cinatl, Logistics Analyst at Heartland Food Products Company, and Rachelle Yeingst, Senior Director, Product Management at e2open on a recent webcast hosted by e2open.
Acquiring a Sweet Challenge
Heartland Food Products Company is an Indianapolis-based manufacturer best known for their Splenda sweetener. When Heartland acquired the Splenda brand in 2015, they had been outsourcing their transportation management to a third party with a rudimentary transportation management system (TMS). With the added complexity this acquisition brought to their operations, and the need to ship via truck, rail, ocean and intermodal, Jeff notes they quickly realized the TMS they were using was not adequate for this new complexity. They, therefore, decided to bring transportation management in-house.
Rachelle comments that this need to address complexity is a common theme among shippers of all sizes and transportation spend. She says most companies, besides wanting to reduce spend and increase sustainability, choose to address complexity by automating as much transportation management as possible so they can focus on the exceptions. They want to concentrate on those priority issues that support their strategic objectives and improve the customer experience. Automation also helps deal with the skilled labor gap while improving employee recruitment and retention.
Selecting a TMS
Jeff explains that customers often send them multiple sales orders for different products that are going to the same location, and each order is typically not a full truckload. Shipping these orders individually was not economically feasible. Therefore, the primary requirement for a TMS was a robust consolidation capability that would not only consolidate orders within a customer, but also integrate these into efficient multi-stop loads to fill trucks or other transportation modes. It also must be flexible because their order volume can vary 20% – 40% from week to week. They felt e2open’s TMS best met these requirements.
Rachelle points out that in addition to the capabilities Jeff mentions, a key consideration is the ability of a TMS to integrate smoothly and easily with other systems that surround and exchange data back and forth with it, such as a WMS, ERP, carrier systems, and transportation visibility applications. With more functions being automated today, this integration requirement is only increasing. “It should be a top consideration in any selection process,” she says.
Rachelle also notes the importance of integrating AI into the TMS to leverage past and present data to continuously improve transportation decisions, such as for optimization and freight rating. This has been a big area of interest in recent years.
The Benefits
Nicholas explains that the consolidation process has enabled them to get two to four stops on each truckload, greatly improving their efficiency. But he also notes that the reporting capabilities allow them to analyze their loads and stops to find the most effective routes for cost containment and customer satisfaction. “We’re using data analysis to decrease the variability and increase the predictability as well,” he says. “One of the things this has allowed us to do is issue three-month RFPs based on our predictions of rates.”
Rachelle comments that the next step in extracting benefits from a TMS after the data analysis is done is through change management. “This can really drive value across the organization.” In addition to the example Nicholas gave of using data analysis to change their approach to transportation procurement, Rachelle mentions using data analysis for finding opportunities for shifting modes as another example.
Jeff, Nicholas, and Rachelle shared a lot more insights and advice on the topics above and more. They also addressed a lot of great questions from the audience, so I encourage you to watch the full webinar for all the details on this TMS success story. Then keep the conversation going by posting a question or comment for the panelists!
