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.