Part 3: The House TMS Built!
The House TMS Built! A trilogy by Tony Wayda
Implementing a TMS is much like building a house. In the first blog, we discussed the design and planning process as it relates to TMS. In the second blog, we discussed foundational elements necessary for every TMS, and in this final blog, we will begin utilizing our new TMS.
Now that we are finished with the base data loading, configuration and testing, we can begin to utilize our TMS. Where possible, start small and simple, and then begin to expand. If you are implementing outbound transportation, start with the smallest and least complex DC during the slowest part of the year. This will allow you to identify and correct unforeseen process or system issues.
Follow the same philosophy if you are deploying inbound transportation first. Typically, with inbound, there are more processes outside of your direct control, such as suppliers confirming quantities and requesting pickup appoints as well as carrier loading/processing at the supplier site. I have found it very beneficial to pilot with a variety of suppliers before rolling inbound transportation out to the larger audience. Operative word – variety. Choose some difficult suppliers as well as some of the less demanding and complex. This mix will help identify over 95% of the issues you will experience with suppliers, whether they are systemic or related to business process.
While most men would prefer to set up the media room (aka ”man cave”) first, it is important that basic needs are addressed upon move in – a bed to sleep in, kitchen items to enable cooking and the ever-essential bathroom items like toilet paper! It is no different with a TMS. We must ensure the basic items we tested are working as designed now that we are in production. This includes order receipt, shipment planning, rating, carrier selection, tendering, tracking, payment and the business processes that support the system activity. For a seasoned TMS user, this may seem like pretty basic functionality, but the 24th Annual Trends in Logistics and Transportation Study presented at the Council of Supply Chain Management Professional (CSCMP) Conference this year shows that 27.5% of the companies surveyed still use email and spreadsheets to manage transportation. Another 19.6% used their ERP, 15.7% use a 3PL hosted system, 5.9% use a cloud-based TMS and 23.5% utilize an on-premise TMS.
For shippers that move from manual processes to a TMS, the savings and benefits can be enormous. (I am using “shippers” generically. This could be a manufacturer, distributor, 3PL, etc.) Typical savings from TMS implementations range from 2%-12% with the average around 6%-8%. This is based on my experience, and there are industry numbers that support this. However, my personal opinion is that this number is skewed to the low end because of poor and incomplete implementations.
This brings me to my next point – finish the basement! We all have purchased a house with an unfinished basement or room that, if finished, would significantly increase the value of our home. Operations must own the TMS and drive the use and implementation of advanced features. Most TMS implementations do not reach phase 2 which brings the greatest savings through more advanced optimization and network improvement. Why? Shippers usually underestimate the effort required for base data cleanup/loading and carrier connectivity, so when the first phase is complete they are over budget and late. Phase 2 then gets eliminated or indefinitely postponed.
Today, the scenario described above is easier to avoid. The ever-growing cloud-based TMS providers with their existing ecosystem of connected carriers can significantly decrease the time to value for an implementation. Plus, the cost of acquiring and implementing a TMS has dropped significantly especially for small to midsized shippers. While at CSCMP this year, Cloud Logistics announced their Same Day TMS, implementing a shipper the same day. These cloud TMS vendors will continue to grow and increase their capabilities. Cloud-based TMS solutions are not limited to new software providers. The tier 1 TMS suppliers (Oracle, Manhattan, Lean Logistics, One Network, etc.) have been providing a cloud-based option or moving to the cloud for the last few years. Cloud-based solutions are not the correct answer for every shipper but even if you choose to deploy behind your firewall, many cloud-based TMS providers have hybrid models that still allow you to leverage their connected carriers and shippers. There are also providers, like Descartes, that allow you to leverage their ecosystem of carriers and suppliers even if you are not using their TMS.
There is always a home improvement project around the house even if you bought it new. A TMS implementation is a continuous improvement project as well. If done correctly, your TMS should provide year-over-year improvement driven by Operations. TMS systems must constantly be re-configured, tuned and upgraded to meet the ever-changing demand of carriers, suppliers and consumers. E-commerce and omni-channel proliferation has affected all participants in the supply chain. Manufacturers are shipping direct to stores, stores are shipping direct to consumers, consumers are shipping returns back to fulfillment centers, and every permutation of the above exists in most retail supply chains.
To recap this blog series –
- Start by changing your business processes to industry standard and best in class. Inform, involve and get “buy-in” from all parties, internal and external, affected by the TMS implementation.
- Do not underestimate the time base data cleansing and loading will require. Start simple and build up to utilizing more complex functionality.
- Limit risk by starting small and simple where possible. Don’t diminish the importance of phase 2, make sure Operations takes ownership, and implement continuous improvement programs.
One last parting comment. If you don’t currently have a TMS, get plans on the books to do so in 2016. The barrier to entry is much lower than it has ever been and there are multiple features that can quickly deliver a positive ROI, such as Freight Audit & Payment, Optimal mode and carrier selection, consolidation and carrier bid and procurement, just to name a few. If you have a TMS but it is not being utilized or you never implemented phase 2, work with the business or bring in some professionals to elevate the system to the next level. Below are links to some articles and resources to help further educate you on TMS so you can begin building a business case for a TMS implementation.
*SCApath is vendor agnostic and has no formal relationships with any of the software providers referenced.