How To Make Better Transportation Decisions

May 11, 2007
TMS technology has evolved to become a popular tool throughout entire supply chains.

Every year, U.S. companies spend more than $600 billion on transportation. Not included in that amount is another $1 billion, more or less, that companies are spending on transportation management systems (TMS), which are software solutions designed to reduce the costs and complexity of moving goods from Point A to Point B.

For any manufacturer, but especially those who sell through retail channels, time is money, and failing to be on-time means even more money thanks to late delivery charges (if the shipment is accepted) or lost sales (if the shipment is inaccurate or, in extreme cases, refused). One of the main reasons companies adopt TMS solutions is to automate key transportation functions, and frankly, to help the logistics department make better shipping choices, whether in carrier selection, load building, routing and scheduling, or freight audit payment.

Top 10 Supply Chain Trends

1. Global supply chain priorities will ensure product/process agility, global visibility and cost effectiveness.

2. Expect continued supply chain globalization and lower-cost sourcing, but strategies will shift toward nearshoring and differentiation.

3. China will continue to over-heat, and manufacturing and supply chain activity will be come more risk averse-focused.

4. China will shift its label from "made in China" to "designed and made in China," setting the stage for heightened innovation and global competition.

5. Supply chain technology markets will show continued growth, and vendor consolidation will continue.

6. Major supply chain disruptions will continue to occur in 2007.

7. Manufacturing in North America is in a very uncertain state.

8. Transportation will become the Achilles heel for global supply chains.

9. Extending lean/Six Sigma upstream in the value chain will continue in 2007 and beyond.

10. Business process outsourcing for supply chains will be concentrated in the indirect procurement and transportation areas.

Source: Manufacturing Insights

Consumer electronics manufacturer Polaroid Corp., for instance, uses a TMS solution from HighJump Software to obtain the least-cost carrier and method to ship its products between various manufacturing plants and to retailers throughout the U.S. and Canada. Tree of Life, a distributor of natural and specialty foods, has improved inbound freight efficiencies from 55% to 75% thanks to its use of a TMS from JDA Software. Orange Glo, a manufacturer of household cleaning products, has automated its freight payment process while greatly improving its on-time delivery rate through its adoption of a TMS solution from LeanLogistics.

The growing popularity of TMS solutions reflects the increasing significance of supply chain management at companies. According to research conducted by analyst firm ARC Advisory Group, the value proposition of a TMS now extends beyond the traditional transportation department to include other corporate departments, as well as customers and supply chain partners.

"TMS is migrating away from being a stand-alone, monolithic application used by only a handful of transportation users to a platform where users across the value chain can execute role-specific, transportation-related business processes via configurable user interfaces, workflows and web services," explains Adrian Gonzalez, director of ARC's Logistics Executive Council.

TMS, In 25 Words Or Less

A transportation management system (TMS) is a software program that automates a company's shipping process, from carrier selection to routing and scheduling.

Transportation Management Technology Priorities

Advanced shipment visibility -- 66%
Carrier collaboration -- 53%
International transportation management -- 36%
Inbound freight management -- 34%
Online transportation information for the enterprise -- 30%
Freight audit and payment automation -- 23%
Source: Aberdeen Group

See Also

About the Author

Dave Blanchard | Senior Director of Content

Focus: Supply Chain

Call: (941) 208-4370

Follow on Twitter @SupplyChainDave

During his career Dave Blanchard has led the editorial management of many of Endeavor Business Media's best-known brands, including IndustryWeekEHS Today, Material Handling & LogisticsLogistics Today, Supply Chain Technology News, and Business Finance. He also serves as senior content director of the annual Safety Leadership Conference. With over 30 years of B2B media experience, Dave literally wrote the book on supply chain management, Supply Chain Management Best Practices (John Wiley & Sons, 2010), which has been translated into several languages and is currently in its second edition. He is a frequent speaker and moderator at major trade shows and conferences, and has won numerous awards for writing and editing. He is a voting member of the jury of the Logistics Hall of Fame, and is a graduate of Northern Illinois University.

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