8 min read
Transportation Management: Then, now and next
By Jonathan Raemdonck on Dec 6, 2021 2:56:44 PM
In celebrity terms, supply chain and logistics is the new “It” boy.
In the past, nobody was really interested in supply chains or logistics. They were background actors. Body doubles. Unremarkable and largely unnoticed. Today, they’re major stars. There is never a moment they’re not in the spotlight, for better or worse.
People want to know: Am I going to receive my Christmas gifts on time? When will my new car be delivered? Where’s the new custom-built bike I ordered 4 months ago?
Meanwhile, the pressure that logistics and supply chain leaders are under to perform and deliver the goods is higher than ever. They’re struggling with increased costs and delayed shipments. So while expectations rise on the demand side, the supply side is scrambling to meet them. It’s amazing that no one ends up in rehab.
What’s happening to logistics?
Short answer: the global logistics infrastructure has become unreliable and more expensive to operate.
For example, one person we spoke to said they’d had to source a truck to ship from China to Europe, costing them 20.000 euros. All because they couldn't find ocean capacity.
Naturally, this has a huge impact on logistics teams. They’re working day in, day out trying to solve one crisis situation after another. Supply chain resilience has actually come to depend on people’s willingness to put in the extra hours, and work like crazy.
But there is a better way to manage transportation that doesn’t put workers at risk of burnout and companies at risk of going under. It comes down to the classic proverb work smarter, not harder.
How logistics used to be
In the good old days, transportation management was about moving goods from A to B in the most cost-efficient way. To do this, shippers needed a system to keep track of shipment data, costs, etc. What they used at the time was one of the most famous and versatile systems on the planet: Good old Excel.
And some kept on relying on Excel for years .... and years ... and years.
You know that guy from high school who never changed, never moved out of his parents’ house, and still tries to rock the same style all these years later? Well, that guy is the logistical equivalent of working with Excel.
What we’re getting at is this: Just like Winamp or MySpace aren’t used anymore for listening to or sharing music, Excel isn’t designed for managing transportation. (We’re dying to create an informal poll to see who’s still using Excel to manage transportation, but we’ll be nice and spare you this.)
If you are still using it (cough, cough) you're not alone, there are still a lot of companies relying on spreadsheets. We recently spoke with a company in the Nordics who have 45 Excel spreadsheets to manage transportation at their 45 factories.
While there are many reasons why companies still rely on Excel, the reality is that these are also the companies where logistics people are struggling the most.
So just like we all shelved our beloved CD collections in favour of streaming, it's time to move away from outdated software and towards a proper TMS.
Logistics evolution 1.0: Classic TMS
What replaced Excel was the first generation of Transportation Management Systems, or what are now known as classic TMSs. On the up side, they’re great systems designed for data, but the downside is they’re nearly impossible for humans to use. (We think of them as divas).
Sure, with a classic TMS you can source your carriers, plan your shipments and calculate costs. You might even send the shipment details to your carriers using old-fashioned EDI connections and settle up afterward. But these classic systems will not help your employees survive in today's world of exceptions because the information flow is broken.
For example, when logistics teams are flooded with queries, they waste almost 20% of their time searching for information and keeping people informed about what’s happening, when. That's like having a team of 5 FTEs, where 1 person’s full time job is to search for information. And that’s fine if that person is a librarian, but not if they’re trying to manage complex transportation flows.
Another issue with classic TMS systems is that you often don't have a clue what's happening once the goods have left the warehouse. This flying blind factor has led to an impressive rise in real-time visibility providers.
This is mainly driven by customers wanting the so-called 'Amazon Experience'; and we’re not talking about a jungle experience in Brazil. Tracking a shipment at any point along the way has become the standard customer expectation.
But used this way, real-time visibility brings you NO value. Because when you ask IT to add real-time visibility to your classic TMS, what typically happens is it's not embedded or integrated into your processes.
You can't keep on renovating your classic TMS and try to ice that stale cake with a layer of visibility at the same time. It’s not going to change the fact that the TMS is past its due date. Just like it was a bad idea in the past to install the 'Internet start package' for your Windows 95 computer: you needed Windows 98 before you could experience all the benefits of the internet.
This is exactly why logistics teams are under more pressure than ever. They lack a single interface to not only manage, but also monitor their transportation flows.
And this leads to the current state of play where you don't have visibility or reliability, your people are continuously firefighting, customer deliveries are running late and costs are climbing every lost minute.
When using a classic TMS with real-time visibility, people still have to check two different systems to see the full picture. Which is a bit like this picture of Mr Bean.
You can try and integrate these two, but you'll quickly realize that classic ERP/TMS systems aren't really designed for this new type of streaming data, such as ETA, GPS, events, exceptions, documents, and so on.
Next level: Modern TMS
A modern TMS is designed to bring together both worlds. On the one side, the transactional data from your ERP, and on the other, the contextual information such as real-time visibility data.
It’s what we call a full-circle TMS, from sourcing, planning and execution, to monitoring, collaboration and settlement. Everything is in one single platform, creating a sort of holistic overview of your operations. But since we don’t like to use Shangri-La buzzwords like ‘holistic overview’, here’s a breakdown of what we mean without all the fluff:
You create an overview like this screenshot of our TMS and Control Tower.
Here, you have ERP information, showing product details at the SKU level, packaging units, material lines, pick up and packing time, and so on. Typical TMS data like volumes, transport orders, carriers, freight rates. In-transit visibility information, such as locations, GPS and milestone updates using geofences, and live ETAs.
Within this Transportation Control Tower you can automate your workflows, manage milestones, and collaborate with all stakeholders involved in shipping via integrated chat. Everyone will benefit from using this single interface to manage and monitor transportation.
Your transportation planner is able to manage and monitor all transportation flows. Your inbound logistics team knows exactly when certain goods will arrive and they can inform production on time if and when something is running late. Your warehouse manager sees which trucks are going to be late and can adapt the schedule. The customer service team can proactively inform customers when shipments are running late. And the logistics director can slice and dice all logistics costs and performance data in different ways. You can even extend this visibility to your customers using a customer portal where they can have the B2C experience. Here’s how the customer portal could look for our customer Sony Playstation:
You can send an email to the customer with a link to this portal and your customer can immediately see the details and status of the shipment. You can even provide them with a login and password so they can see the entire shipment history. Plus, create different customer portals for all the different business units in just a couple of clicks.
So, coming back to real-time visibility: it can only bring value when it’s truly built into your processes to the point where it becomes a company-wide capability, rather than an added feature.
Logistics 4.0: Automation
So you've ditched Excel and your classic TMS in favor of a modern TMS with embedded visibility. But this still won’t cut it in today's reality.
Moving freight is becoming more complex, you have multiple carriers, shifting to different modes, last minute changes, capacity shortages. Trying to manage all these variables is time-consuming (and migraine-inducing) and you can't just keep adding more people to your team.
Imagine that you could automate up to 80% of your transportation processes.
A modern TMS is event-driven and will alert the user when something requires his/her attention, and suggest appropriate actions the user can choose from. This is what’s referred to as the 'human in the loop' - the system automates as much as possible, but still requires input from the user to make certain decisions. But again, getting to a point where you can have a smart TMS like this requires a shift.
We sometimes compare it to autonomous vehicles. You can't turn a classic car into a self-driving car like Tesla; the architecture just isn't designed for it.
The same applies for a TMS. If you want to automate your transportation management process, a couple of things need to fundamentally change. You need the right technology, you need to rethink your processes, and you need to revise the comfortable, change-resistent, 'we've been doing this for years' approach.
Some things are tried and true. But a TMS is not one of those things. Nowadays, to face what’s on the horizon for the supply chains and logistics sector, a TMS needs major cosmetic and perhaps reconstructive surgery to have the proper logistical staying (and star) power. Otherwise it ends up being a has-been. The right TMS could make or break your company. Make sure that the tools and tech you carry in your kitbag gives you the necessary leg up in an already tough and competitive market.
What to know more about what our TMS offers? Give us a call. This could be your lucky break.
Written by Jonathan Raemdonck
Head of Growth at SupplyStack
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