Supply chain visibility is becoming increasingly important to transport departments, and technology plays a vital role in achieving this. Here’s how a Transport Management System (TMS) can help to address the issue.
Why transport needs supply chain visibility
A recent survey by logistics industry research firm Transport Intelligence examined how global transportation trends have changed, and what key issues face supply chain professionals today.
For 73% of industry professionals, the risk of poor schedule compliance by transportation partners represents a key concern. On top of this, 33% worry about transportation partners’ performance against service level agreements.
In addition, 74% of respondents were also concerned about keeping control of costs, reporting that a sudden increase would impact on revenue and profitability. When profit margins are tight, even minor changes in costs can tip the balance and make an order unprofitable.
It’s not surprising then that transport companies pursue supply chain visibility in order to monitor and manage performance. “Accountability and visibility go hand-in-hand,” explained Transport Intelligence CEO John Manners-Bell. In order to find the weakest link in the supply chain, transport departments need to achieve transparency across their operations.
Is a transport management system the answer?
In order to address their concerns, 54% of survey respondents were planning to invest in additional IT capabilities that would improve visibility. A recent survey by Logistics Management found that just 35% of shippers are currently using TMS as part of their supply chain management strategy. Interestingly though, 39% of companies did plan to purchase or upgrade their TMS during the coming year.
How an integrated transport management system can help
A TMS can enable a more proactive approach to supply chain management. Logistics Management argues that transportation departments which rely on a mix of spreadsheets, phone calls and emails are more likely to be “reactive” to changing situations. However, when a TMS is used as a data repository and analysis tool, supply chain visibility is much improved, and it’s far easier to forecast demand levels ahead of schedule.
TMS solutions also offer a strong ROI. Money can be saved by lowering a company’s freight spend through lower cost modes, better routing and stronger procurement negotiations. According to an ARC survey, respondents indicated freight savings of around 6% with the use of a TMS application. That’s a £60,000 saving on every £1 million spent! And nearly 60% of users indicated that less than 25% of net savings were absorbed by the TMS, proving that the investment paid off.
Finally, TMS users can enjoy numerous indirect benefits such as improved customer service, all thanks to better supply chain visibility. “TMS provides an angle for shippers small and large to capture the necessary data points, conduct analytics, and make improvements as they see fit,” concludes John Santagate, research director for IDC’s Manufacturing Insights. “All of that is pretty hard to do with a spreadsheet-based system.”