When companies build global supply chains they often leave one crucial piece out of the puzzle: transportation management systems (TMS). Freight transportation can be managed tactically at the local level, but every decision should be driven by a global strategy. To enable this, many companies are taking a “control tower” approach to freight management, either developing the capabilities in-house or working with a logistics service provider.
What is a control tower for freight management? There are a number of possible definitions, but here is one: “A multi-regional freight management system for a global supply chain network that executes tactical operations and provides the visibility and information needed to lower costs, raise efficiency, and elevate the overall management to a more strategic level.”
Think of “one version of the truth,” an essential feature of multimodal operations that span many geographies and encompass regulations, best practices, performance metrics, cultures and infrastructures that differ from nation to nation. These challenges can be daunting for companies that are not familiar with the local landscape. For instance, in India and Saudi Arabia, the lack of truckload brokerage services means that capacity is provided by asset-based carriers. Poor infrastructure and patchworks of regulations also complicate the freight management picture.
The control tower concept is designed to overcome challenges like these at the global, regional, local and even single process levels. To achieve this, a control tower must have TMS technology that is flexible and tailored to each operating unit and geographic region; a staff with the expertise to leverage the solution internationally; and if you’re working with a 3PL, a provider that offers global coverage.
Considering the investment in systems and people, what is the ROI of a control tower? Here are a few examples (in no particular order):
- A single web portal for real-time visibility of all freight movements across all modes in all countries.
- Shared best practices across carriers, factories, warehouses, both nationally and regionally.
- Analytics on freight movements worldwide.
- The ability to negotiate supplier contracts internationally.
- Expert representation on the ground in multiple countries.
For example, take the experience of an international manufacturer headquartered in Europe that launched a global control tower program about three years ago. The company manages freight movements across multiple countries through a single web portal. Key events such as load arrival notifications are reported on the site in real time.
The company contracts with numerous carriers worldwide that supply operational and statistical data in many different ways. The portal functions as a clearing house for this information, enabling the manufacturer to analyze its distribution network in various countries. For example, it can analyze waiting times at the factory level as well as routes and load configurations on an international basis.
Benefits such as these add up to significant cost savings. For instance, there is huge potential for consolidating loads from plants in the same geographical areas that usually handle their shipping needs independently. The world view of transportation also helps the company to manage supply chain risk more effectively.
Developing a global freight transportation management capability is becoming more important as enterprises look to emerging economies to drive future growth. Also, the adoption of more sophisticated TMS technology in these countries will give users greater leverage to lower costs and increase the efficiency of distribution networks. The availability of centralized data across countries will enable shippers to develop international metrics for transportation that they can use to benchmark their operations worldwide. Moreover, if a shipper partners with a 3PL that provides a TMS platform, they can capture these benefits without having to make substantial, upfront capital investments in the technology.
The control tower concept may not be the best fit for every shipper. However, for many companies it will become indispensible as transportation takes its place as a major component of their global supply chain strategies.
Happy Holidays to all Logistics Viewpoints subscribers and I wish you all the best in 2011.
Adam Davis serves as General Manager of TMC’s Asia division, currently based in Mumbai, India. In his role, Adam manages all aspects of TMC Asia operations, which began in August 2010, including account management, employee development, and development of opportunities for regional expansion. Adam works closely with TMC’s General Managers in Europe and North America to ensure consistency of service across global TMC accounts. Since joining C.H. Robinson Worldwide, Inc. in 2000 and becoming a part of the TMC team in 2004, Adam has served in a variety of roles, including sales, operations management, and strategic account management. Over the past decade, he has achieved the highest levels of client satisfaction across a diverse group of clients.