Tag Archives: transportation management

Industrial Distributors Can Create Value With Transportation

Industrial distributors are beginning to see the potential of proper transportation management, how it can add much-needed value throughout their supply chain, and how it can address some of their toughest challenges. The challenges distributors face are unique, but the effects of these challenges are representative of the difficulties many are having in the broader industrial sector – restricted supply, plummeting demand, dropping revenues and out of control operating costs. 

Many distributors have yet to address problems in transportation because it is seemingly unrelated to some of their biggest obstacles. There are 4 main challenges that distributors face:

  • Lagging Technology. Distributors struggle to provide real-time product availability and inventory status, which customers are demanding more and more, leading to a poorer quality of service. On top of this, many manufacturers are now offering free configurators, which allow customers to develop their own custom product specifications without going to the distributor first, creating a shrinking customer base.
  • Customer Growth. Distributors’ customers are growing as a result of mergers and consolidation. These large customers use their size as leverage to demand more services, faster movement of goods through the supply chain, and lower prices, all at the same time. This strains distributors’ day to day operations.
  • Supplier Expectations. Manufacturers typically require distributors to have some form of a volume-purchasing agreement, which forces distributors to buy a lot of product at once. With demand as low as it is, volume-purchasing agreements cause them to have far more stock than they need. This creates difficulty with inventory management, slowing the flow of goods through the supply chain and reducing product visibility.
  • Differentiation. When competitors like Amazon enter the picture, it can be difficult to stand out. Amazon can provide lower prices and convenient online experience, so industrial distributors must differentiate themselves in some way to retain value with their customers. Not only do they have to differentiate themselves from Amazon, but they must prove their value over other distributors within the same vertical.

Many industrial distributors focus on that last point – differentiation. If they can provide a superior level of service, in a way that others can’t, they will be able to continue providing value to their customers, who will be less inclined to use Amazon’s services or work directly with a manufacturer.

Some distributors are expanding the services they provide up and down the supply chain, which is one effective way of differentiating yourself, but one simpler often overlooked aspect is proper transportation management.

When transportation is managed effectively, operating costs are reduced, the flow of products through the supply chain is quicker, product visibility is improved, inventory management is more efficient, and overall customer service levels are improved significantly. Providing a high level of service to customers is one way to differentiate from other distributors.

There are 3 things distributors need to provide superior service levels through transportation management:

  • Robust TMS. Industrial distributors need a powerful TMS with the ability to integrate with current systems. This allows them to book loads quickly based on cost and speed. It also provides visibility into freight and product movement, providing a crucial piece of the puzzle for an end to end visibility in the supply chain. Most TMS software provides real-time, instant shipment status notifications along with detailed historical reports for transportation optimization.
  • Scalability. Demand fluctuates constantly for distributors. They often hire the help of 3PLs to combat this issue. 3PLs bring a large carrier network and pricing structure that can scale up and down to fit the needs of a distributor. For those industrial distributors who own private fleets, 3PLs can add surge capacity in good economic times, and help increase the productivity of the fleet in bad economic times.
  • Cost Reduction Strategy. Industrial distributors need a strategy to reduce transportation costs that is informed by information from a TMS. By focusing on a few particular points of transportation, such as inbound freight movement and average dwell time, distributors can reduce costs in some of the most expensive parts of transportation and more efficiently begin tackling overall freight costs. Low freight costs mean lower operating costs, which can lead to increased revenue and product value, and even reduced prices for customers.

Transportation is an untapped source of cost savings and superior service potential. With proper management of freight movement, industrial distributors can provide value to their customers and remain competitive within their vertical by providing superior service levels.

Want to learn more? Continue reading: Market Update: Industrial Distributors Have Serious Service Issues.

How a TMS Supports Shippers Pursuit of Lower Transportation Rates

costs with tmsThe CPG industry reported a 14% increase in transportation costs since 2012. Freight costs have increased drastically because of the fewer drivers, growing consumer demand and changing regulations. These factors create a competitive transportation environment and make transportation rates inflate considerably. However, shippers can reduce costs with TMS.

The American Trucking Association forecasts a 23.5% jump in freight tonnage from 2013 to 2025 and a corresponding 72% increase in freight revenues.

In order to cut spending, shippers are looking for new ways to remove inefficiencies from the transportation strategy. One way shippers can reduce costs and increase margins is to eliminate manual processes and invest in a TMS. Nearly half of supply chain executives report at least 1 manual step in half of their processes, and 71% said more than a quarter of their processes require manual steps. The risk of error is too great with manual methods, especially since it limits visibility, magnifies costs and detracts from performance.

Shippers are attempting to stabilize carrier rates and control costs through transportation management technology, which provides shippers with the ability to automate rules, monitor shipments and generate real-time data. Shippers can reduce costs with TMS and increase margins is to eliminate manual processes, all while gaining visibility into freight transportation.

Advantages of Using a TMS for Cost Management:

  • Determine the best mode, carrier, and lane
  • Advanced communication of fees (tolls, accessorial charges, etc.)
  • Don’t have to increase staff to handle freight moves
  • Opportunity to respond to risk and disruption in real-time with data that supports the decision
  • Automated rules
  • Combine billing and invoicing
  • Monitor KPIs

Shipment transparency is a critical differentiator in today’s consumer-centric environment. 97% of shippers identify real-time visibility as “important” or “very important,” and they’re boosting routing efficiencies, capacity levels, and profitability through a centralized TMS.

As shippers attempt to fight rising transportation costs, they should know employing a TMS to drive results to the bottom line is a proven strategy.

Learn more about our TMS, PLS PRO!

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5 Ways a TMS Supports Omni-Channel Commerce

Having a powerful, scalable transportation management system (TMS) is necessary for effective transportation operations. Omni-channel commerce is much more difficult to handle than everyday operations from a transportation perspective, and visibility into the supply chain is the key to success. A TMS can provide detailed reports to improve omni-channel functionstms for omnichannel ecommerce

A TMS with advanced reporting features will be able to:

Send alerts regarding disruptions

A TMS provides automated alerts when a shipment is delayed, damaged or unable to be delivered. Because of this alert, a customer can be notified of a delay or a new product source can be identified and dispatched immediately.

Track total transportation spend

TMS software has to ability to aggregate and finds the total cost of transportation for a company, which typically exceed the expectations. This information will allow a company to begin making improvements and track progress.

Provide on-time delivery metrics

A TMS provides on-time performance results to a DC, store or supplier. This information helps to determine where inefficiencies arise in logistics processes. It can also help uncover the most efficient routes and what combination of DCs and stores will enhance service such as the buy online, pick up in store model.

Create inbound shipment visibility

TMS software offers real-time information on inbound shipments. This allows a company to prepare for unloading/loading to keep operations moving smoothly and to plan appropriately for labor needs.

Reduce shipping costs

A TMS creates cost-saving opportunities, first through visibility, which allows identification of the problem, and then through tracking the progress of the solution. A TMS helps find the most operative lanes, consolidates shipments, picks out the most productive carriers, and even helps keep inventory moving smoothly through warehouses.

Omni-channel logistics is extremely difficult to manage and will only get more difficult as e-commerce grows in popularity. The reports a TMS provides are invaluable for transportation optimization, and in turn, customer satisfaction.

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Transportation Management Done Right: 3 Examples to Learn From

There are an array of challenges when it comes to successfully applying an outsourced transportation management strategy. Companies want to make freight moves as efficient as possible, which means centralized systems, qualified carriers, managed schedules and visibility. Realizing opportunities for transportation efficiency starts with identifying challenges. Below, we examine different challenges from 3 companies and how PLS solutions created and maintain notable results. 

Steel Manufacturer
Challenges:

  • Decentralized transportation across multiple plants and DCs.
  • Unmanaged truck movement and scheduling.
  • Excessive use of expedited shipping.
  • Sub-optimal carrier use.

PLS Solutions:

  • Integrate systems and apply web-based dock scheduling.
  • Tactical execution and control of carriers.
  • KPIs defined and measured. Reports generated monthly to track lane analysis, performance, volume trends, costs and trends.
  • Manage emergency shipment requirements.

Results:

  • Maintained on-time delivery above 95%.
  • Automated shipment status notifications, gained visibility for effective freight management.
  • Increased capacity to support shipment surges by adding carrier and modes.
  • Eliminated need for unnecessary expedited transport.

Consumer Goods Manufacturer
Challenges:

  • Not carrier-friendly facilities.
  • Acquired additional costs at delivery.
  • Missed pick-ups and scheduling conflicts.
  • Poor LTL freight management.
  • No visibility into shipment status.

PLS Solutions:

  • Manage LTL freight moves (from shipment tendering to delivery notification).
  • Incorporate centralized TMS and EDI systems.
  • Generate monthly reports based on company KPIs.
  • Continue analysis for shipment consolidation, new DC locations, and supply chain enhancements.

Results:

  • Improved pick-up and delivery times due to centralized technology and visibility.
  • Automated BOL and load tendering.
  • Reduced fines and chargebacks from improved freight management and carrier performance.
  • Streamlined billing and invoicing.
  • Discovered significant cost savings on LTL freight.

Industrial Manufacturer
Challenges:

  • Unmanaged logistics process.
  • Manual transportation management.
  • No time to manage moves outside core inbound and outbound needs.
  • Missed deadlines.

PLS Solutions:

  • Integrate PO verification
  • Create dedicated account management team for inbound, MRO and outbound moves.
  • Optimize different modes.
  • Gain control and visibility through TMS.

Results:

  • Buyers gained time to concentrate on negotiation costs.
  • Increased visibility to automate rules, schedule loading times and track shipments.

 

Transportation solutions are often applied after data analysis. Click here to download Powerful Reporting Improves Insight. This ebook illustrates examples of PLS’ standard and customized reports, outlines the importance of big data in the supply chain industry and how explains how shippers can leverage the information to enhance operations.

The 5 Benefits of Transportation Management

transportation managementWhat is transportation management?

Freight transportation is a subset of logistics management. Transportation involves moving goods from one location to another by any mode (air, rail, barge, maritime or road). Transportation is an expensive and emission-heavy process, making it an ideal target for carbon footprint and cost reductions. But many companies overlook the importance of transportation management.

What are the benefits of transport management?

TMS Logistics & Visibility

Proper transportation management begins with a transportation management system (TMS). A TMS will automatically tender loads, track shipments, and gather and analyze historical performance data. This data, often referred to as big data, allows a company to see what’s happening in its shipping operations. Once visibility is gained into transportation operations, changes can be implemented to increase efficiency and customer satisfaction, reduce transportation spend, and optimize packaging or stored procedures that are harmful to overall supply chain goals.

Inventory Flow

Effective transportation management keeps a company’s whole supply chain running smoothly. With successful transportation execution, inventory can be kept lean and can be moved in and out of a warehouse quickly and efficiently. This improves warehouse efficiency, reduces overall lead time and saves money on storage. Supply chain disruptions can be costly while hurting customer satisfaction and loyalty. Creating effective inventory flow through transportation avoids damage caused by the disruption.

Sustainable Logistics

Consumers are more and more aware of what it is they’re buying and what ideals a company subscribes to. Also, transportation is an emission-heavy industry. Customers want to buy from companies who take social responsibility seriously and work hard to reduce their carbon footprint and minimize their energy consumption. Having inefficient transportation processes increases these environmentally-hazardous processes. Also, it can make a product unappealing to a customer due to the harm that comes with it.

Preferred Shipper Status

The ATA estimates the transportation industry is currently short 48,000 truck drivers. This shortage is expected to grow to 239,000 by 2022. A truck capacity crunch is due to the significant lack of drivers. Since there is much less trailer space to go around, shippers must compete to secure capacity. A company that has optimized transportation processes, such as short dwell-times and long tender lead times, will be a preferred shipper and have an easier time finding capacity because carriers will want to work with someone who boosts their efficiency. Having access to reliable capacity in the coming years can save logistics costs. Additionally, it can continue to provide a high level of service for customers.

Customer Satisfaction

The processes in between procurement and shipping can be long and complicated, but out of all of these processes, transportation is the one where a company has direct contact with a customer. The point of delivery reflects the competency of the entire organization – if a company is constantly delivering products late, the customer will have a very negative view of this company and will likely not use their services again. Last mile logistics, the last stretch before delivery, is complex, costly, and it is often this part of the delivery that causes disruptions and delays. Proper management of transportation can ensure high delivery performance and consistent customer satisfaction. Therefore, the importance of transportation management is hard to overestimate.

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The Difference between TMS and MTS in Transportation

It’s easy to confuse the various services of third-party logistics companies. The confusion may be because of the many service offerings, or because companies don’t want to waste time worrying about transportation, or it may be due to a general unfamiliarity with the logistics industry. Either way, it’s important for shippers to understand the difference between transportation management systems (TMS) and managed transportation services (MTS). 

Transportation management systems and managed transportation services are not exclusive but are different.

TMS technology is necessary to improve transportation operations. It helps a shipper book outbound loads, find the lowest cost routes and carriers, and most importantly, provides visibility into transportation and shipment operations in order to find further cost saving opportunities.

Shippers can choose to operate a TMS themselves or have a third party logistics (3PL) company operate the software for them. Most opt for the latter since TMS implementation can be time-consuming and costly, not to mention the software can be difficult to learn when solely operated internally. TMS’ are available through 3PLs that employ experts who know how to use the system effectively.

Shockingly, around 85% of shippers don’t use a TMS to automate and manage freight spend and movement. This is more surprising since TMS software saves companies a lot of money – those who manage transportation poorly spend $53 for every $1,000 of total spend on outbound transportation, while those with proper TMS software and processes only spend $6.35 per $1,000. Mostly large companies implement TMS technology, even though the advent of cloud-based TMS software has made it profitable for small shippers too.

Managed transportation services include a wider scope of offerings from a third party logistics company. MTS not only includes access to a TMS, but a 3PL will operate and monitor the TMS for a company as part of the transportation services offered.

MTS differ slightly from fully outsourced transportation management. In a full outsource of transportation management, a 3PL will act as an entire transportation department, with full control of all shipping functions and data. Annual goals are set and the logistics company is left alone to meet those goals. Usually, the pay structure is a long-term contract.

MTS services are more collaborative in nature and frequently have a transactional pay structure. A 3PL will operate a TMS for you and still run any or all of the transportation functions you want them to and when you want them to. The 3PL still acts as an outsourced transportation department, but in the MTS scenario, they operate under your direction.

There are many benefits to MTS:

  • Integrate a transportation management system
  • Keep transportation goals aligned with the organization’s goals
  • Ensure effective operations and an efficient supply chain
  • Gather data and gain new insight through customized reports
  • Cost and time savings

MTS are common in the transportation industry, but it’s not to be confused with a TMS. Managed transportation services almost always include the use of a TMS, but using a TMS does not necessarily mean a company is involved in outsourced transportation.

Want to learn more about managed transportation services? Click here.

Don’t Make This One Big Mistake During TMS Implementation

Implementing transportation management software (TMS) can be a long and difficult process for some companies. Shippers usually choose software that will provide them with the fastest ROI, but this may not be the best answer long-term. Most shippers overlook one crucial area of TMS implementation: carrier connectivity. Because of this, shippers are prone to make some TMS mistakes.

TMS mistakes

Carrier connectivity refers to the use of a cloud-based TMS application, which many carriers access in order to find loads, in which data is collected and transmitted to both shippers and carriers.

Being connected to carriers through your TMS allows you to book loads wherever and whenever you need to. A TMS without direct access to carriers may provide immediate ROI, but it will not yield sustainable and substantial ROI in the future. More time spent during implementation to connect carriers to your TMS goes a long way. Disrupted carrier connectivity is one of the huge TMS mistakes.

There are 2 key benefits to carrier connectivity:

  1. Access to a broad network.

Shippers gain access to an extensive network of carriers through a TMS, especially when you’re partnering with a 3PL. Within a broad network of carriers, shippers are able to automate the RFP process and leverage lower rates due to higher competition between carriers bidding for freight. Having access to multiple carriers means there is available capacity, even if favored carriers don’t have it.

Through carrier connectivity, shippers can collect significant amounts of data. Since many carriers are using the same system, data is accumulated on shipment patterns. Using this data, shippers can find the best performing carriers in their network and begin to optimize shipping procedures. Once data is accumulated, companies can start automating KPIs and monitoring carriers to ensure consistent performance.

  1. Become a shipper of choice.

Connectivity makes communication much easier for carriers and shippers. Carriers are particularly appreciative of quick communication because they deal with multiple shippers. Spending less time coordinating a load, freeing up the time to coordinate another load or completing other administrative tasks, leads to huge savings for carriers. Also, through connectivity, carriers gain the data they need to improve service.

TMS mistakesWhen you support a carrier through communication, they will prefer to work with you. Being a preferred shipper is especially important in a time of rising transportation costs and dwindling capacity; it allows you to negotiate lower rates and find reliable truck capacity. With carrier connectivity, not only will your service improve, but the carrier’s service will improve too, leading to lower costs and a mutually beneficial partnership that can be used as a competitive advantage.

Learn more about our TMS, PLS PRO!

4 Benefits of SaaS TMS Software

There are a variety of transportation management systems (TMS) software available, including premise, hosted and SaaS (Software as a Service) models.  The SaaS model has become an industry preference.  benefits of saas tms software

SaaS software is an accessible way to provide transportation management technology to any device with an internet connection.  Shippers and carriers come together through the same web-based technology.

There are 4 key benefits to this model of software delivery, including:

  1. Faster ROI after Implementation.  Implementing TMS software is a difficult and risky time for a company.  SaaS TMS implementation requires no upfront investment in technology; a company pays for what they use and there are no costly upgrades. You can achieve faster ROI through the speed of implementation and usage of these TMS systems.
  2. Flexibility, Scalability.  Companies can use a SaaS TMS as much or as little as they need to.  In transportation management, scalability means having access to carriers that are already in the system’s network.  When a shipper can move small or big volumes of freight at any time, they increase the ability to react to market changes.  SaaS solutions provide the user with the means to make smarter logistics decisions to avoid service disruptions.
  3. Visibility.  When shippers and carriers use the same transportation management software, all historic shipping data is recorded and distributed for supply chain visibility.  In a SaaS model, real-time communication is possible, which means every party knows what is happening when it is happening.  Transportation decision making is far faster and more accurate with comprehensive data reports and visibility into logistics processes.
  4. A Collaborative Network.  Network collaboration is one of the most significant benefits of SaaS TMS software.  When shippers and carriers come together through the same technology, they can communicate in real-time.  Businesses can collaborate on shipping procedures while looking at the same data, at the same time on the same web page.  This allows for streamlined communication, less chance of service errors and extra capacity to be spread out for those who need it, among other collaborative opportunities.

Summary

When shippers and carriers use the same technology, both businesses are able to provide better service.  The SaaS model has quickly gained popularity because of its efficiency in today’s data-driven world.

Continue reading: 3PL Technology Helps Enhance Customer Experiences.

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