What makes for a good Business Intelligence (BI) module for a Transportation Management System (TMS)? There are different types of TMS solutions. Today I will focus on the most common type: solutions for shippers who work with third-party carriers to move their goods.
There are six things to look for in a transportation BI module:
Role-based thinking: Roles include transportation planners, managers tasked with making sure carriers are paid accurately, executives that monitor adherence to transportation goals, and the VP of Logistics that has to put together the annual transportation budget.
But there are also external touch points that involve people outside the transportation department, such as the manager tasked with transportation-related environmental, health, and safety performance, or people involved in the S&OP process (longer lead times means increased safety stock).
Holistic Data Sources: Not all of the data needed for the BI module will come from the TMS. For example, in “Mining the CSA Database,” I highlighted how some TMS vendors are accessing the Department of Transportation’s CSA database and importing data from it into a business intelligence engine, and then presenting near real-time analytics to shippers that want to work with safe carriers.
Because transportation is an inherently collaborative process, EDI data quality (i.e., whether carriers are sending shippers timely and accurate electronic messages) is another important set of carrier metrics. For traditional TMS solutions (i.e., architected to be deployed in-house), this is an external data source. For single-instance, software-as-a-service (SaaS) solutions, it can be internal to the TMS vendor’s data set. Some network-based solutions are also starting to provide benchmark data on rates (see “The Missing Link in Transportation Business Intelligence”).
It will be natural to look to purchase BI solutions from TMS suppliers. However, Transportation BI solutions often need to pull data from a variety of IT solutions and external data sources. And they may need to export analytics to other BI solutions. Thus, it can make sense to also look at solutions offered by BI vendors.
Root Cause Analytics: Common carrier management metrics include tenders refused by carriers on a particular lane, or the number of billing discrepancies. But are these metrics fair?
If a shipper gives a carrier only one day to respond to a tender, then, logically, there should be a higher percentage of loads turned down compared to if a carrier is given a five-day notice. Similarly, a rate curve analysis can help show why tenders are refused.
Another common carrier metric sums the number of billing discrepancies between a carrier and the shipper. The implication of this is that carriers with a high number of discrepancies are less honest. However, if a shipper can drill into the accessorial costs, then to unplanned accessorials, and then drill down to demurrage by location, the shipper might find that one of their sites is consistently making carriers wait many hours before they can unload.
Embedded Analytics are beginning to emerge. As Steven Blough from MercuryGate wrote in a recent guest commentary, “As the TMS collects information, the data is analyzed and the results are fed back into the solution, which are then used to alter processes automatically in response to changes. For example, carrier performance may be fed back into the carrier selection process to change the ranking of certain carriers. The information gathered through the execution process helps the system adapt automatically to changes in real-time as they occur.”
It is often not enough to find a problem; companies also need to enforce behaviors that alleviates it. The more automated this can be, the more money companies can save.
Landed Costs: A TMS provides good data on the transportation components of landed cost. Most companies want to know their true profitability by product and customer. Accurate transportation costs are an important input to that calculation. A BI module that calculates this based on finalized freight audit data, and thus includes unplanned accessorials, will be more accurate than a system that uses projected costs coming out of the tendering engine.
Follow the Money: No BI module will have everything. What is most important? Follow the money! A TMS can provide data for better procurement; allow for better mode selection, load consolidation, routing, and load building; and can help to minimize the amount of carrier overcharges. These are the main ROI buckets. Metrics that document the savings from these activities, allow users to see if they are making progress or going backwards, and provide insights on root causes, will be of particularly high value.
In conclusion, there are a lot of factors that can make a TMS cutting edge: end-to-end process coverage across all modes, the power of its optimization engine, a flexible architecture, and so on. But more and more, it is business intelligence that differentiates one TMS solution from another.