Supply Chain
Transportation

13 Reasons Why You Need a Global Transportation Management System (TMS)

In today's turbulent trading environment, the value proposition for global transportation management is significant. From optimizing freight movements and controlling freight costs, to supply chain SKU transparency and optimal inventory management, global transportation management systems deliver crucial functionality.

Ned Blinick

November 8, 2018

In today's turbulent trading environment, strong global transportation management capabilities deliver exceptional benefits and value. From optimizing freight movements and controlling freight costs, to supply chain SKU transparency and optimal inventory management, the value proposition for global transportation management is substantial and significant. In 2014, a Supply Chain Council survey found that managing global supply chain complexity was among the top 5 major issues. Complexity in the global supply chain has increased dramatically since that time. A very recent survey of U.S. manufacturers found that 60% of the companies operating in China are considering moving operations to other Southeast Asia countries in the next few years. Massive shifts in supply chains are underway because of trade turmoil increasing the complexity in global supply chain management and related transportation management.

Global TMS - a key element in managing global supply chain complexity

Global supply chains are highly complex...even the simple ones. With sourcing spread over multiple geographies requiring logistics moves that involve multiple entities and numerous handoffs between 3rd party providers, and customs and regulatory agencies at both ports of export and import; the ability to effectively manage the global supply chain is challenging under the best of circumstances.The reality is that most companies do a poor job of managing the global transportation process...if they manage it at all. Let me qualify that statement. Most companies do not have a systemic and measurable approach in place to manage their global transportation and/or their logistics providers whether they are carriers, freight forwarders, or 3PLs. Most companies do not actually manage or monitor their freight providers for quality of information or freight contract compliance. This means that the work is executed without significant scrutiny.

10 global TMS functions that will make your life easier

Gartner defines a TMS as "a software application that deals with the planning and execution of the physical movement of goods across the supply chain" (Critical Capabilities for Transportation Management Systems, 2018). Depending on its level of sophistication, a global TMS offers a systematic way of managing:

  1. Freight Quoting, Contracting, and Contract Management - the ability to automatically negotiate freight contracts and capture the details of the freight contract including all base freight rates, ancillary charges (including origin and destination charges), and quantity commitments.
  2. Load Building - the ability to optimally configure transportation units (containers, airtainers, small packages, etc.) based on dimensional weights to maximize load and reduce per unit cost. It supports the ability to consolidate multi-vendor/PO shipments to optimize total shipping costs.
  3. Freight Booking Management - the ability to automate and control the freight booking and confirmation process.
  4. Route Optimization - the ability to view all potential carriers, transit times, and costs for a lane and optimize a delivery schedule.
  5. Logistics Status Monitoring and Alerting- the ability to monitor shipments in real time and "see" the status of the shipment as it is executed. Alerting provides the ability to nominate specific high priority shipments and receive alerts when a meaningful deviation occurs to its arrival schedule.
  6. Product Visibility - the ability to see, identify and manage product/SKU level detail during the logistics life-cycle.
  7. Total Landed Cost Control- the ability to capture all budgeted, estimated, and actual product landed cost elements and provide a complete total landed cost on all inbound SKUs. The ability to automate this process is an additional bonus.
  8. Freight Auditing - the ability to easily review and check 3rd party provider freight invoices against system generated proforma invoices (based on established freight contracts). This capability can be fully automated if the 3rd party freight providers provision their invoices electronically.
  9. Configurable Reporting - having the ability to configure the reporting criteria to provide the data in a format that supports the required objective.
  10. Analytics, Business Intelligence, and AI - the ability to use the vast amount of collected data to analyze activity and trends, to provide meaningful metrics and insights into the data, and to prescribe solution options through iterative machine learning.

3 value reasons why you should consider acquiring a global TMS

Managing the complexity of global transportation requires human capital, time, and/or money. All of these inputs are relatively limited and optimizing their output is important in controlling total product cost and profitability. Generally, organizations, regardless of size, tend to outsource many of the basic global TMS functions to 3rd parties. This is necessary because it is not possible for a company to maintain the physical assets necessary for a global TMS program.However, where companies should have control, but rarely do, is over the relationships they have with their 3rd party providers. This failure to impose structure and control over their 3rd party providers is too often a result of simply not having the human capital or time required. While this was a reasonable position in the past, it is no longer the case. Today, there are off-the-shelf global TMS solutions that allow a company to build internal expertise to manage its global transportation programs. With proper global TMS in place, an organization can control everything from the initiation of contracts with 3rd party providers to the monitoring of their performance.The 3 reason a global TMS solution delivers value are:

  1. The optimization of Human Captial: A global TMS the organization optimizes the value of transportation teams (human capital) by refocusing their efforts to managing suppliers, service providers, and processes and not reacting to foreseeable and preventable calamities.
  2. The optimization of Time: Managing global transportation activities requires time. Negotiating contracts, organizing and optimizing shipments, tracking and tracing product through the transportation lifecycle, managing and measuring suppliers and service provider performance, auditing freight invoices, and communicating and collaborating with stakeholders all take time. Without supporting system control and access to meaningful information it collectively takes a lot of time. Global TMS systems organize transportation activities and support real-time access to information helping to increase effectiveness and efficiency and optimize time.
  3. The optimization of Money: Optimizing the value of money is the easiest metric to measure when it comes to on-boarding a global TMS solution. Each of the 10 reasons above has a distinct and measurable value. Until recently it has been difficult to understand the unrealized cost of managing global TMS without proper systems. There were no practical ways to achieve and measure the value that a global TMS could provide. However, that is no longer the case.

One final thought - ease of use: a major differentiator and value creator

Today shippers have a reasonably broad choice among TMS providers. Automating global TMS is a huge win for any organization with any kind of international freight volume. However, automation itself does not imply ease of use. Global TMS is a function of both the science of transportation and the art of design. It is in the art of design that global TMS solutions are truly differentiated. It is the art of design that determines the ease of use and the ultimate simplification of global TMS.About 3rdwave:3rdwave simplifies global trade through automation. 3rdwave is a GTM platform that delivers total global supply chain visibility, minimizes manual data entry, streamlines business process, and provides contextual information enabling its users to make informed decisions to reduce global supply chain complexity and risk. It's a cloud-based platform that requires minimal IT resources for quick implementation. 3rdwave ensures that companies meet the highest levels of global TMS execution and Trade Compliance conformance.Ned BlinickChief Product Officereblinick@3rdwave.co(416) 510 8800 ext 234https://www.3rdwave.co