Businesses are increasingly focusing on how to optimize their supply chain operations such as transportation and delivery logistics and one way they can achieve this goal is to use transportation management systems. They are compelled to adapt to changing supply chain business environments including choosing a transportation management system that promotes efficiencies. There are many challenges facing large and medium transport organizations and they range from escalating costs due to increased fuel prices to proliferation of many ineffective and incompatible transport management systems- TMS tools in the market.
In order for logistic organizations and departments to improve their efficiencies, reduce costs and overheads as well as grow profits, while at the same time meeting customer satisfaction, they need to integrate the best TMS tools. When choosing a transportation management system, there are numerous factors, which should critically be considered;
1. The TMS technology solutions
Before you embark on any transport management system in your company, you need to analyze what benefits it offers. It is essential that you have a chronology and prioritization of the challenges your company is facing. Logistics organizations and departments want to achieve efficiencies in transport, reduce costs of transportation, optimize on distance and mileage coverage, initiate proper route planning and scheduling, avoid delays in delivery and promote customer satisfaction.
You need to evaluate how the management systems application is able to solve key problematic aspects in your transportation services. In cost management, when choosing a transportation management system, it is important to ensure that it addresses the aspect of load distribution and cost allocation in movement of goods.
The reason is that cost management in logistic companies is a major drawback. These companies are facing difficulties in cost allocation and dispatch scheduling. With fuel price margins not expected to go down, businesses need to streamline their costs of operations in supply chain to ensure high efficiencies in fuel consumption.
2. Upgrading needs of the system
It is important to point out that software application systems are dynamic and changing. This means that you may obtain a transportation management system today and after a few months or years, it is rendered obsolete. When choosing a transportation management system, you should examine the possibilities of upgrading its features to keep pace with new developments.
There are enterprise and network-based TMS solutions. The enterprise based models are highly customizable and require internal infrastructure and this means that if there are upgrades to be done, you have to meet cost of the upgrading the infrastructure too.
3. Data collection, evaluation and reporting
One of the main aims of using transport management systems is to be able to gather essential data that can be used in making decisions. When you are choosing a transportation management system, you need to ensure that it provides key metric data that can easily be interpreted for wise decision making. If the system is able to provide real time information, it means that companies can change their strategies to align with the prevailing transportation challenges and needs.
4. Compatibility/integration of existing management systems
One key aspect logistic companies should evaluate when choosing a transportation management system is its compatibility with the existing enterprise resource planning -ERP. If your TMS easily integrates with other software applications such as warehouse, accounting, purchase and HR resource management system, this means that information is easily shared among all the departments in a company.
With a TMS that fits in the Enterprise Resource Planning Tools, it means that logistic managers can share important information in real time with financial managers, purchasing managers and Human resource managers. This helps in the decision making process. If you are acquiring the best-of-breed TMS tool, you need to ensure that it can be incorporated in the already existing system.
5. User experience and navigation of the software interface
Whether you are using a third party logistics (3PL) tool or an in-house transport management tool, it is important to ensure that it can be accessed easily. The navigation and user interface should be self-guiding and easily maneuvered by users. If you have a complex system, this means that it takes a lot of time for the workers to derive the data they want.
If a staff is drilling down a report to find crucial data, it should easily be found within a click of a few buttons. This is essential because, at times employees accessing the data will need to provide instant feedback to questions raised by vendors and customers about their shipments or transportation orders. This will ensure that customer satisfaction is achieved. What this means is that if the system cannot easily be accessed with straightforward leading interfaces, then it can be complex for it to achieve its intended goal.
6. Sustainability of the TMS
The sustainability of a TMS tool can be analyzed in different perspectives whether in inbound transport, outbound goods movement or fleet management operations. If you are choosing a transportation management system, it should amicably address the aspect of sustainable growth in its application. The system should be able to reduce carbon footprints and environmental degradation, which have a cost implication on the company. It should also be able to provide in-depth analysis through key performance indicators (KPIs) of the aspects such as engine inefficiencies and amount of emission of carbon monoxide.
The system should have a trace back capability in monitoring green logistic infrastructure. It should be able to capture and report shipment information and history. There is need to get prove of the TMS’ reliability and scalability not to acquire a tool that will not be able to perform a few years down the line. This is a mission-critical application that should support current infrastructure and any future expansion and growth of the company.
7. Financial feasibility
Although you may acquire a TMS tool for your business at relatively low cost, if you are not careful, this could be trap that can easily lead your business into financial pitfalls. When you are choosing a transportation management system, you need to leverage current and future cost implications, which range from training of employees to execute the system, upgrading to new versions as well as offering network security measures to avert risks of hacking and theft of essential company information. Most in-house TMS tools can attract additional costs in the future.
This is one main reason why companies are outsourcing for the transportation management system so that they are able to concentrate on the application part. The infrastructure and maintenance tasks are left with the systems vendor, and the logistics companies can concentrate on key aspects of data analysis and implementation of key strategies.
According to a 2012 Supply Chain Software User Survey conducted by Logistics Management (LM), a supply chain news and resource information analyst, it shows that 37% of companies are using TMS. This is an increase from 32% in 2011. The report cites that the use of TMS is slowly-and-steadily gaining a positive growth path. However, companies are facing challenges on how to go about in choosing a transportation management system that fits to their business goals and objectives. In essence, despite the slow adoption of the TMS by logistic companies and departments, this transportation systems management tool has a proven track record of enabling companies adopt efficient and cost effective freight movement only if the right software tool is obtained.
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