Selecting a transportation management system (TMS) is no easy feat. In other articles, my colleagues have discussed key considerations when choosing a TMS, such as why RFPs aren’t generally helpful and the difference between deployment options. After the work of selecting a TMS comes the no less rigorous step: implementation. During a TMS implementation, there are some phases during which an organization can set itself up for an improved ROI down the road.
When preparing for a TMS implementation, a good first step is to collect and gather all of your existing transport contracts and rates that you are currently using. Depending on your company’s structure, these contracts might be arranged by several different offices or you may discover overlaps – or perhaps even different accessorial prices and conditions for the same lanes. Duration and expiration dates of the contracts will differ too: on certain lanes, you might have contracts with more than one service provider, and the service times offered by those providers will be different.
Compare contracts and calculate rates to cut costs
After your contracts are entered into your TMS, you have the opportunity to compare and confirm them based on least-cost versus the service times that your providers offer. During this phase, look for duplication and service overlap, or perhaps there are certain areas or lanes that don’t have an agreed-upon contract. New (improved or additional) contracts and rates can be defined, agreed to, and entered into your new TMS.
Now that your contracts are entered, your TMS can calculate the real cost and deliver precise rating and pricing for parcel, LTL, and truckload. Your TMS should have a rating engine that determines the real cost – the actual invoice amount – by considering contract terms, weekly fuel and accessorial charges upfront, and identifying the least cost carrier and managing upcharges. This will give you more visibility into your options and immediately impact your business processes for the better.
The load optimization capabilities of your TMS can determine the most cost-effective combination of orders in as few shipments as possible by using the contracts and rates that you’ve already entered into the solution. To ensure that your least-cost option matches up with the service standards, your TMS will use the required service time and other order constraints (such as type of equipment) that are included in the contract with the service provider.
In addition, take the time to focus on and fully utilize certain traffic lanes via multi-stop and/or pool distribution transport. The TMS should empower you to build shipments with constraints in real time to confidently determine the fastest and most efficient mode. You may have to ask your service provider to adjust the agreed-upon contract and rates to include multi-stop costs and service levels for the extra service, but in the end it will help fully maximize the use of your equipment.
Integration can be a big hurdle for most TMS systems. For instance, according to the Transportation Planning and Execution Benchmark Study by American Shipper, 61 percent of respondents said the biggest challenge of their TMS was system connectivity. And yet a TMS is only as powerful as its connections.
If your TMS has a unique and modern design, the phase of your implementation during which you on-board customers, carriers, and trading partners should be faster (and therefore less costly) than TMS systems of the past. As a result, you save money and time with simpler and faster set-ups – and your customers do too.
To maximize the value of your TMS, be prepared to do more than just examine what’s possible during the implementation phase. If one can assume that your TMS is adaptable to your evolving needs and you have the ability to configure it yourself (without requiring the constant and costly help of the TMS vendor), then you will need to regularly examine your processes and workflows in order to identify gaps.
Demand more from your TMS implementation
TMS systems of the past have been notoriously difficult to implement, but the good news is that there are more modern, uniquely designed systems on the market today that are breaking that mold. Ask your vendor for a step-by-step timeline for their TMS implementation process and be prepared to examine cost-savings at every step to accelerate your ROI.
Leon Kohlen has more than 26 years of transportation management and supply chain industry knowledge and experience, and is responsible for professional services and implementations of the 3Gtms solution in EMEA. Leon’s past experience includes similar positions in Europe, the Middle East and Australia for companies such as G-Log, Oracle and Eyefreight. Prior to working in the TMS industry, he worked for PricewaterhouseCoopers Management Consulting doing process improvement projects in the supply chain throughout Europe.