Transportation Management Systems: 5 Shipper Demands Shaping the TMS Landscape

Characterized as one of the fastest growing enterprise application markets by ARC Advisory Group, the transportation management systems (TMS) sector has been growing at a double-digit rate over the last couple of years—and isn't showing signs of letting up anytime soon.

A technology solution that helps companies efficiently, reliably, and cost effectively move freight from origin to destination, most transportation management systems includes both planning and execution solutions (systems for freight moves involving carriers). Shippers are embracing transportation management systems, according to ARC analysts, thanks mainly to the strong ROI offered up by such solutions.

“The simple, bottom line is that TMS can save companies money by lowering their freight spend,” says Steve Banker, ARC’s service director of supply chain management.

Banker points to an ARC survey as proof of that point, adding that over 40 percent of respondents felt that if they were forced to give up their TMS and go back to more manual processes for planning and execution, their total freight costs would increase by 5 percent to 10 percent. “In fact, 23 percent felt their total freight costs under the control of the TMS would increase by over 10 percent if they were to stop using it,” he adds.

For logistics professionals charged with the movement of freight, transportation management systems can also help create transportation efficiency, provide real-time dashboards, enable better decision making, and handle myriad other tasks that can’t be adequately addressed with phones, faxes, and spreadsheets.

5 Shipper Demands Shaping Transportation Management Systems

Here are the 5 shipper demands that supply chain software analysts say are shaping the TMS landscape—and pushing even more logistics professionals to put it to work.

1. The omni-channel retailer needs support

transportation management systems omni channel 187x300 Transportation Management Systems: 5 Shipper Demands Shaping the TMS LandscapeNo longer able to compartmentalize their various business channels, today’s retailers and industrial suppliers need help running seamless, omni-channel systems that incorporate bricks-and-mortar, online, mobile, catalogue, and other sales channels under a single umbrella.

Transportation plays a key role in this streamlining, which means transportation management systems also play an important part in creating the omni-channel environment. For example, with the B2C sector gaining much maturity in the world of online/eCommerce fulfillment, more and more distributors and industrial suppliers are putting catalogs online and offering seamless eCommerce freight shipping calculations to their customers, because now the shipping quotes include real freight rates, such as LTL and small package, because the shopping cart integrates into transportation management systems.

2. Transportation Management Systems Mirroring Trends such as Near-Shoring and Reshoring

Undoubtedly you have heard of the biggest trend shaping US Manufacturing at present: Near-shoring and Reshoring. If you want to know more about this trend, make sure you read our reshoring series here. However, as companies are now moving manufacturing facilities back to the US, and as companies in the automotive industry are moving facilities near the US to places like Mexico, we are seeing an increase in volumes of freight. As in any economic force, when there is greater demand for capacity, the prices are going up. To combat rising prices due to economic forces, logistics managers are going to have a competitive edge if their transportation management systems can handle shipments in all of North America, with all American, Mexican, and Canadian facilities having visibility to all shipments under one user control. This visibility allows for good information flows, giving access to data, which allows for better business decisions when making future business decisions involving transportation.

3. Embedded analytics are in high demand

Bombarded daily by terabytes of digital information, shippers need a way to wade through the data, select its most useful components, and then use that information to make the best possible transportation decisions.

Transportation management systems that effectively embed analytics, help to discover rich and meaningful patterns within the data, will remain in high demand. A TMS that includes carrier score-carding, for example, should be able to cross-pollinate that rating information for application during the vendor-selection process. Embedded analytics allow shippers to come up with useful key performance indicators and actually consume and utilize the data as they go about their other activities.

4. Shippers Want Transportation Management Systems that help them utilize Backhauls and Support Services for Reverse Logistics

Retailers and those in the automotive aftermarket industry are particularly interested in not hauling empty trucks back to their DCs after the goods have been delivered, says Rishi Raina, principal of North American supply chain technologies at Capgemini. “They want to be able to utilize their networks more efficiently, and they’re looking to their transportation management systems for help in this area,” Raina adds.

And while some of the more established vendors have historically incorporated back haul capabilities into their platforms, the challenge lies in setting up more of a robust reverse logistics program: tying carrier contracts, agreements, and negotiations into the equation. “If a shipper can get through those hurdles, there will be a lot of savings to be unlocked on the backend,” says Raina.

5. Planning, Execution (Read: Integration) could get a place at the TMS table

Right now, transportation management systems vendors are looking for ways to better tie planning and execution systems into their platforms. “Traditionally, those systems have operated within their own silos, and with no tie-in to transportation,” Raina points out.

Many transportation management systems providers are beginning to integrate those processes in a way that will allow shippers to more efficiently monitor manufacturing and production cycles as part of the distribution process. “There has to be a better way of managing the flow and synchronization among transportation, planning, and execution,” says Raina. “In fact, there’s a huge amount of interest in this from the shippers’ perspective right now, but none of the TMS platforms are fully there yet.”

Other Transportation Management Systems Trends

transportation management systems cloud 300x289 Transportation Management Systems: 5 Shipper Demands Shaping the TMS Landscape


Other trends unfolding in the TMS space include the continued interest in cloud-based solutions that require low upfront fees and minimal IT infrastructure; an ongoing push  to upgrade older systems and replace them with state-of-the-art platforms; and the need for holistic TMS that can do more than just track transportation movement and  spend. Raina adds that the latter will likely help drive TMS growth and innovation well into 2014.

Third-party logistics providers are especially interested, for example, in adopting end-to-end, holistic TMS that can handle optimization, dedicated fleet management tasks  such as driver invoicing and payroll, and traditional brokerage operations.

“There hasn’t been a strong case for a TMS that can do all three of these things well,” adds Raina, “so it’s an area that software vendors are examining more closely based on the  market demand that we’re seeing for it.”





By Adam Robinson

March 10, 2014

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When did Supply Chain Solutions Become Mature?

I am not sure exactly when it happened, but one day I woke up and realized that supply chain solutions such as warehouse management systems (WMS) are finally considered “mature” software applications. Being in the logistics Industry for 45 years, this was quite an epiphany for me. I spent my early years working with companies that wanted a “build to specification” solution, which required a lot of product customizations. I guess you could blame it on a few key aspects of that time period: early versions of WMS were not functionally rich; they were not highly configurable; and the buyers believed that a built-to-order solution would provide them with a competitive advantage. It was inevitable that the early WMS projects were going to be highly customized deployments. But somewhere along the way, things changed.

Current WMS solutions have a strong base of functionality and include a level of configurability that enables extensibility without code modifications. Although most software vendors continue to enhance their products and release new versions on a routine basis, the products can address the core functional requirements for most companies in most major vertical industries across the globe. In parallel, the buying behavior has changed.  Today, most companies are looking for a WMS with a low total cost of ownership (TCO) and expect the baseline WMS to address their core logistics requirements without requiring additional customization. This may be a “chicken and egg” situation, but my guess is that the functional richness of many of today’s WMSs had something to do with this change in attitude.

So this is where I apparently woke up…

Now is a good time to be in the WMS software industry.  Today, we’re seeing a great deal of interest in new WMS solutions. I see a few macro drivers for this increased interest: food safety regulations, pharma drug serialization regulations, a need to replace legacy WMS applications (remember the TCO that I mentioned?); and of course, the dynamics associated with order fulfillment in an omni-channel world. Companies looking to upgrade their warehousing capabilities are often happy to discover that many of today’s WMS solutions can satisfy their needs right “out of the box.”

So what’s the next frontier for us software providers? What is the next best thing that we can offer our current and future clients that will give them the greatest business value? How about another way to pick an order? Hmmm, probably not. How about another putaway algorithm? Ummm, I don’t think so.

I think it will relate to breaking down the silos of individual supply chain applications. Just as the WMS applications evolved through functional richness, so have transportation management systems (TMS) and demand planning & fulfillment (DnF) applications.  By itself, each solution provides tremendous business value. Each has the ability to react and respond to supply chain disruptions as they occur. But each also commonly operates within a silo and does not take into account the constraints across the three application areas. Nor do they provide the ability to iteratively re-optimize tasks when it is necessary to re-do the original plans.

Ahhh, so perhaps THIS is the next best thing!

Well, I see the huge potential business value.  But these new “intelligent fulfillment” processes can be difficult to implement.  To be able to efficiently conduct constraint-aware planning and iterative execution, you must start with an application platform. Trying to get to this level of operational effectiveness with a group of disparate applications from multiple software vendors is a non-starter. The integration costs and upgradability costs are too steep for most companies (…and please remember again my point about their desire for a lower TCO!).

I mentioned earlier that I find this to be a good time to be in the WMS software industry because of the amount of interest and activity we are seeing today.  Some of the companies we are currently engaged with do, in fact, share this vision of what we refer to as an “intelligent fulfillment platform.” But they are still a minority. Most of the company software evaluations in which we have had the privilege to participate only involve a single supply chain silo. I think these companies are setting the bar too low for themselves. That is why I try to talk to companies about the vision of the intelligent fulfillment platform whenever I have the opportunity.

Once they understand the business value, they tend to agree that it is a great new way to look at improving their respective supply chains and indeed, represents a wake-up call for the industry.


The Next Generation of TMS Helping More Carriers Become Comprehensive Logistics Service Providers

As shippers and service providers move beyond the now outmoded concept of the “supply chain” (which never really matched the complex realities of surface transportation within North America), they are finding that traditional boundaries between asset and non-asset-based providers are quickly disappearing. Next generation technology solutions are enabling virtually every supply network participant to broaden operational capabilities, all to the ultimate benefit of the customer who seeks the most efficient, reliable and cost effective means of moving their goods.

What might come as a surprise to some is the speed with which even small- to mid-size carriers are emerging as comprehensive logistics service providers, augmenting their proven ability to drive efficiency within their own fleet operations with newly acquired tools to manage and optimally consolidate shipments across multiple modes of transport. Their rationale is spot-on: although capacity is almost historically tight at present, they recognize the need to run their businesses more holistically to better address an ever broadening range of customer needs. This, in turn, will enable them to avoid the commoditization of their services and foster more profitable and enduring business relationships. It’s no longer simply about operating trucks – it’s about the ability to master the complete transportation lifecycle, from order to delivery.

These same next generation transportation management systems are also available to empower shippers and 3PLs that want to better manage the transportation process – perhaps even blending their own private or dedicated fleets with third-party assets – to reduce costs and gain significantly greater supply chain visibility. Given that a majority of these companies still use Microsoft Excel as their de-facto TMS solution, the ceiling for cost and efficiency gains seems remarkably high.

Streamlining the Convergence Process
While the operational convergence of carriers and intermediaries isn’t new, each party’s ability to more efficiently and completely leverage its extended enterprise has been challenged by the limitations of yesterday’s technology. As a result, many of these businesses have been forced into technology silos that separately manage their asset and non-asset-based operations. Even some comparatively new TMS solutions fall short of the needs of these users in several respects, including:

Ease of use. Many 3PLs or logistics service providers have tried to address their operational convergence through the use of three or four separate applications cobbled together under a TMS umbrella. Beyond the obvious implementation, reliability and scalability concerns, these solutions are flat-out too hard and time consuming to use. Load planning and execution in today’s harried business environment should be a matter of a few simple clicks, without the need to manually transfer data between multiple applications, some in the cloud and some not. When these applications are not designed and supported for seamless integration, they are not a true next generation solution for effectively managing the countless exceptions and constraints involved in the transportation process.

Lack of embedded optimization. When a solution’s data resides in more than one application, as in the cases cited above, there’s an unavoidable loss of responsiveness and control. Today’s complex supply networks and compressed delivery cycles require that you and/or your service provider be able to optimize every load in real time, as many times as necessary throughout the day. The optimization engine should be a core interactive piece of the TMS for increased speed and to permit a broad range of advanced planning capabilities.

Cloud bias. Many carriers and shippers are understandably ambivalent about SaaS solutions, and the perceived lack of control and potential security and reliability issues associated with the cloud are indeed important considerations. Companies will often need direct access to the TMS database for more advanced systems integration, business intelligence and other purposes, which can be challenging when data resides in the cloud. Still, in many situations the speedy deployment made possible by a SaaS platform is worth some tradeoffs. Don’t be swayed by the hype around SaaS, but take time to understand the real needs of your business when it comes to transportation planning and execution capabilities. Ultimately, you need to be comfortable with your application delivery options, which means having options.

Inadequate rating capabilities. Supply networks are becoming more, not less, complex each day and shippers and logistics service providers are using more types of rates, for direct, multi-stop, TL, LTL, parcel, pooling and other strategies. Managing this complexity to achieve optimal cost efficiency requires a comprehensive, easy-to-use rating tool.

Shippers and transportation service providers have an impressive record of partnership in reducing overall logistics costs over the past quarter century. The drive to find new opportunities for savings and the need to build stronger, more total-value-based business relationships is leading a growing number of industry participants – including shippers, carriers, 3PLs and brokers – to expand their operational capabilities beyond traditional boundaries. This convergence is quickly gaining momentum thanks to the arrival of a new generation of transportation management solutions.


Less-than-truckload Update: Sunny forecast for carriers

As long as LTL carriers remain disciplined on capacity additions, and the U.S. industrial economy remains strong, the LTL sector is well positioned to continue expanding margins due to operating benefits from increased density and higher freight rates. Analysts agree: It’s time for shippers to pump up the freight budget.

“Trucking fleet owners, on their part, must expect to pay for the services of men who are worthy and are willing to promote the interests of their employers.”—“The Truck Driver Problem,” Traffic World magazine, Dec. 12, 1914.

There is nothing new about “the truck driver problem” over the past 100 years. Good, reliable drivers have always been in tight supply and coveted by the most progressive trucking companies. However, in today’s $35 billion less-than-truckload (LTL) sector, even a century’s worth of experience may not have sufficiently prepped the industry for the capacity crunch currently in the LTL market.

Drivers are as scarce as ever, regulations are tightening, equipment costs are rising by double-digit percentages, terminals are frightfully expensive to build or acquire, and shipper demands for faster, more trackable deliveries are only mounting as e-commerce and omni-channel fulfillment turn up the pressure on both retailers and manufacturers.

However, for carriers who are able to meet these challenges and stay viable, the rate forecast is certainly brighter than it has been the last five years. “To put it into weather terms, the forecast for LTLs is sunny today, tomorrow, the rest of this year, and into 2015 and 2016,” says Satish Jindel, principal of SJ Consulting, an analyst firm that closely analyzes trends and pricing in the LTL sector.

According to Jindel, LTL carriers are benefitting from strength in the U.S. industrial sector. Also, a capacity shortage in the truckload (TL) sector is causing a “trickle-down” effect of freight to the LTL sector. Such favorable market conditions are somewhat tempering LTL carriers’ bottom lines due to an unprecedented cost increase in labor, equipment, terminals, and replacement parts and tires, carriers say.

In fact, a recent study by the American Transportation Research Institute (ATRI), a unit of the American Trucking Associations, confirmed what nearly every shipper in the U.S. has discovered: trucking costs and rates per mile are rising with no end in sight.

In its most recent Analysis of the Operational Costs of Trucking that analyzes trucking costs from 2008 through 2013 derived directly from fleets’ financial and operational data, the ATRI found that the average marginal cost per mile in 2013 was $1.68, an increase from the $1.63 found in 2012. Because of costs associated with operating terminals, some expensive union labor contracts, as well as secondary costs such as tolls and health care benefits, LTL carriers’ costs are even higher than those averages, analysts emphasized.

While shippers may not appreciate the mid-single digit rate increases the next time they renegotiate their LTL contracts, carriers and analysts say that it’s about time for those rate hikes.

“Our rates over the last several years have not kept up with our cost of doing business,” says Pitt Ohio President Chuck Hammel. As way of proof, he says that since 2009, Pitt Ohio’s rates have gone up on average 11 percent; however, costs of power units have risen 24 percent, trailers 18 percent, tires over 50 percent, parts 14 percent, and wages are up 16 percent during that period.

Data clearly show that LTL pricing has trailed the increases in the truckload, parcel, and rail sectors for nearly 10 years. According to SJ Consulting, LTL rates have risen 5.1 percent from 2008 through 2013, compared with 8.1 percent for TL, and 13.1 percent for ground parcel. LTL pricing has even slightly trailed the 8.2 percent rise in the Consumer Price Index (CPI) that tracks inflation.

“Now is the time for LTL carriers to raise rates aggressively and rapidly,” says Jindel, adding that those hikes are not only necessary to pay drivers more, but to invest in equipment and reward shareholders.

Tight capacity
The combination of a decent economy combined with a stagnant LTL driver situation means that capacity is limited. Add it all up and it probably means that we’re going to experience the tightest LTL market since 2004-2006—a period of sharply rising rates for shippers following the 2002 bankruptcy and liquidation of Consolidated Freightways, a $3 billion unionized carrier.

“Currently the market is tight and we’re headed into the busy season,” says Pitt Ohio’s Hammel. “I suspect that demand will exceed supply in the fourth quarter, and in the near term things will get chaotic and capacity will be in short supply.”

Phil Pierce, executive vice president for sales and marketing at Averitt Express, says that Averitt began experiencing some positive signs in November 2013. And after a harsh winter, the second quarter was very strong in the LTL market. “That trend has continued in the third quarter, and all indications are that 2015 will continue to see an increase in freight movement,” he adds.

Shippers looking to add LTL capacity won’t get much help from the TL or rail sectors. The TL sector is unable to put drivers in their trucks, causing even more freight to shift to LTL carriers, while the railroads are still recovering from service meltdowns from last winter.

Larry Gross, an intermodal analyst for FTR Associates, recently said that average train speeds have declined 8 percent to 9 percent year-over-year and that there are no real signs of improvement. Service remains stable, but at unsatisfactory levels, says Gross.

Thom Albrecht, transport analyst at BB&T Capital Markets, is predicting that rail service might not return to 2013 service levels by 2015, meaning even more freight “downstream” for LTL carriers.

“Capacity is tight, but it’s not because carriers are more disciplined,” says analyst Jindel. “It’s because they can’t hire people. The wages the industry pays for the kind of work it takes to drive a truck are not commensurate with what people have to put up with to drive a truck. However, the industry can’t afford to pay too much more.”

The regulatory situation
Roy Slagle, president and CEO of ABF, says that he expects “more of the same” from Washington regulators in 2015. That would mean more tweaks to the current hours-of-service (HOS) regulation, adjustments to the Compliance, Safety, Accountability (CSA) program, and more edits to the requirement that truckers outfit their fleets with electronic logging devices (ELDs) to prevent cheating on HOS.

“ABF Freight supports the FMCSA’s efforts to mandate ELDs in commercial vehicles and sees this effort as one of the most impactful ways to promote safety on the highways,” says Slagle.

As for CSA, the Obama administration’s three-year old program designed to weed out as many as 150,000 unsafe drivers, is still plagued by technical oversights that carriers say unfairly penalize truckers for offenses that they have little control over. “CSA is a great system fundamentally, but it’s seriously flawed,” says Pitt Ohio’s Hammel. “Until the flaws are addressed and corrected, it will not work as designed.”

Electronic onboard recorders are the next regulatory hill for truckers to climb. They’re designed to prevent drivers from cheating on HOS and are backed by most of the large LTL carriers.

“We have all of our power units equipped with them and have for the past few years,” adds Hammel. “But some carriers are struggling to raise the capital to bring their equipment up to the regulation, and they’re beginning to run out of time.”

As for how carriers are responding to higher costs associated with the Affordable Care Act and other government initiatives, Hammel says that “most carriers are just complying to the new regulations, some are selling their company, and the rest are closing down operations.”

Bill Logue, president and CEO of FedEx Freight, is pushing heavily for regulations that would allow 33-foot trailers instead of the current 28-foot “pups” currently used by LTL carriers in combination vehicles. If FedEx and UPS LTL and parcel units could utilize that equipment, Logue says that truckers would travel some 600 million fewer miles, saving 100 million gallons of fuel. Use of 33-foot trailers would mean an 18 percent rise in capacity using the same number of trucks.

“That’s a safer environment,” says Logue. “Between LTL and parcel, that’s a huge opportunity. You just can’t double the volume out there on highways. Ocean has megaships coming, rail uses doublestack trains, and air has wide-body aircraft. Yet, we have an industry moving 70 percent of commodities, and we have to find ways to be more efficient.”

Logue’s dream of 33-foot trailers is a long shot. But given that Congress again will revisit an extension of the Interstate highway funding bill next May, it’s possible that trucking lobbyists could get that language inserted in such a measure. “The short-term
extension gives us time so everybody can understand the situation so we can continue to educate everyone on the importance of trucking,” Logue says. “We need efficiency improvements.”

Logue has a point. There have been no productivity improvements in trucking since the Surface Transportation Assistance Act of 1982 allowed greater use of longer combination vehicles (LCVs) in exchange for a nickel rise in the fuel tax that year. LCV use has been frozen since 1993, and only allowed on interstates where they were allowed prior to that year.

When asked whether LTL carriers would back an increase in the fuel tax in exchange for greater use of LCVs, Logue said that it’s a very realistic solution. “The fuel tax is most efficient way to capture it. It’s very efficient, and that’s the ideal way to go. The crisis is today, and we need to solve it today; otherwise, you’re putting more tonnage on same amount of capacity.”

Driver pay pressure
Con-way, the nation’s second-largest LTL carrier, recently raised driver pay by about 6 percent at both its LTL and TL units. That was in response to what Douglas Stotlar, Con-way’s CEO, calls “the most pronounced driver shortage we’ve ever seen.”

Trucking analyst David Ross at Stifel Inc. says that he does not believe Con-way’s move will be matched by other public LTL carriers. He noted that ABF and YRC have union contracts that will not change, while Old Dominion and Saia are already planning on giving normal annual wage increases and do not seem to have any “catch-up” increases to make.

Ross adds that TL carriers should continue to see “much more significant driver pay pressure” than the LTL market because TL wage levels are significantly lower. Still, the underlying issue of demographics, the trucking industry’s inability to attract minorities and women, and the tough nature of the job are limiting new entrants into the truck driving field, including LTL carriers.

A changing regulatory environment such as the one LTL carriers are facing today “tends to have a negative impact on the driver pool,” says Averitt’s Pierce. “More veteran drivers are leaving the industry before they’re ready to retire, making it even more challenging to find qualified drivers,” he says. “Carriers are under pressure to recruit and retain drivers, and that’s as competitive an environment—or more competitive—as securing new business.”

Pierce adds that driver retention is just as important as recruiting. Some 10 percent of Averitt’s work force has been with the company at least 20 years. To increase that percentage, it recently began a Driver Advisory Council to offer feedback on what’s going on out on the road and how it can help drivers succeed.

If the LTL tonnage remains as strong as it is presently, analyst Ross says that any driver wage increases should be covered by higher rates in 2015, including the recent raises at Con-way Freight.

Where are rates heading in 2015?
Analyst Ross says that as long as LTL carriers remain disciplined on capacity additions, and the U.S. industrial economy remains strong, the LTL sector is well positioned to continue expanding margins due to both operating leverage benefits from increased density and higher freight rates.

“Rates are a product of capacity,” Pierce adds. “It looks like LTL volumes will continue in an upward trend in 2015 and rates will continue to be firm in the upcoming year.”

No matter how one slices it, demand is up for LTL services while capacity is static. There have been no major entrants in the LTL market place since FedEx and UPS entered the sector in the early 2000s. And those players currently in the LTL space are not adding significant capacity due to the cost of building or acquiring terminals and the scarcity of drivers.

“Due to ongoing driver shortages fueled by restrictive regulations, industry capacity will likely continue to be tight in 2015,” ABF’s Slagle adds. “However, our perspective is that this issue most directly affects truckload carriers.”

“Capacity is shrinking while demand is growing,” Pitt Ohio’s Hammel says. “Driver shortages, business shutdowns, and an improving economy are creating the current environment. I don’t see any short-term fix.”

When all the factors are added up, analysts and industry executives believe that the inevitable conclusion is that LTL rates will rise significantly in 2015—on top of the mid-single digit percentage increases this year. “Carriers have no choice but to continue to increase rates to cover these increased costs,” adds Hammel.


By John D. Schulz, Contributing Editor
November 01, 2014 - LM Editorial
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You Asked, We Answered: What Are the Essential Features of Supply Chain Management Software?

As a business owner, you know that an optimized supply chain can increase customer satisfaction and vastly improve shop floor operations. Conversely, a poorly functioning supply chain will ruin relationships with suppliers and customers, and will cause headaches in every aspect of business. Luckily, many business owners turn to their supply chain management (SCM) software to improve end-to-end supply chain management.

Yet choosing a SCM software solution isn’t as simple and straightforward as the benefits of utilizing one. In fact, choosing SCM software can be a daunting task, especially for business owners who aren’t sure what to look for when buying a new solution.

At, users frequently ask, “What are the essential features of supply chain management software?” For this reason, we decided to create this short blog post to explain six key features of supply chain management software your company should look for when purchasing a solution.

1. Inventory Management

inventory-iconFor a smooth, efficient supply chain, your business must effectively manage inventory. Raw materials and supplies, finished goods and spare or additional parts must be stored properly, in the right quantities at the right time. Inventory management capabilities help optimize inventory levels to ensure that your company never has to deal with overstocking or understocking. Real-time tools let you know where your inventory is at any given moment, allowing you to operate precisely.

The Bottom Line: Built-in inventory management ensures that your stock levels are optimized.

2. Order and Billing Management

order-mgmtIt’s no secret that robust order and billing management is of the utmost concern to your supply chain. Your SCM software solution should be able to create orders and bill clients from one centralized location, all from within the solution. Flexible order management capabilities are best, as they ensure that the solution can work with your unique order needs and are highly configurable.

The Bottom Line: Orders are how you generate profits, so a flexible, built-in order management system is a must-have for any business.

3. Logistics and Transportation Tools

transportation-iconLogistics and transportation tools ensure that your company transports materials and goods efficiently, all at the lowest possible cost. These tools provide the necessary resources to manage fuel costs and various ever-changing state and federal rules and regulations. To reduce overall operational costs and remove any kinks from the supply chain, these capabilities should be included within your chosen supply chain management solution. Dispatch management, appointment scheduling and yard management may all be included as part of your built-in logistics and transportation tools.

The Bottom Line: Transportation and logistics tools ensure that materials are shipped efficiently and cost-effectively.

4. Supplier Collaboration

collaboration-iconThe right supplier collaboration tools can make for a very smooth supply chain. These tools allow suppliers, employees and customers to collaborate from disparate locations in real time, ensuring that every key player is involved in problems or issues as they occur. Many SCM software solutions also provide a self-service portal where suppliers can access relevant information and submit requests, all directly through your company’s supply chain management solution.

The Bottom Line: Supplier collaboration functions keep suppliers, customers and other key players in the loop. Empowered partners = a smoother supply chain.

5. Warehouse Management

smb-iconWarehouse management tools allow your company to optimize warehouse stock and increase warehouse accuracy and efficiency. These capabilities allow companies to process orders from multiple sources, ensuring that all needs are fulfilled in a timely, cost-effective manner. Since warehouse operations are an important aspect of your supply chain, choosing a solution that lacks built-in warehouse management solutions could complicate and hinder the overall supply chain process. Yet with warehouse management, your company can oversee receiving, putaway, replenishment and cross docking.

The Bottom Line: Your warehouse is an important part of your overall supply chain. Make sure that your chosen SCM software will manage all necessary warehouse processes.

6. End-to-End Visibility of Your Supply Chain in Real Time

visibility-iconComplete end-to-end visibility of your supply chain is a must-have capability of any SCM software solution. Your employees need immediate, real-time access to various aspects of the supply chain to ensure that there are no hiccups, bottlenecks, missing goods or unhappy customers. Real-time capabilities allow your business to react to changes in the supply chain as they arise, as well as access up-to-date analytics that can inform future decisions. This feature is incredibly useful for businesses of any size, though larger businesses must have real-time capabilities to stay afloat.

The Bottom Line: You can’t manage a supply chain without deep visibility into the end-to-end functions and processes. Real-time capabilities are a must-have for any business.



By Kiri Picone on Sep 3rd, 2014

[Image courtesy of Walmart]

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