Tim Fawkes, managing director of 3t Logistics Ltd., explains how transport management systems have evolved to meet the needs of demanding supply chains.
Whatever the product, transporting supplies and goods cost effectively is a key part of any supply chain. And just as many day to day business processes have become increasingly automated, from finance and HR to manufacturing and warehousing, so have logistics practices. This has been largely due to the creation of increasingly advanced transport management systems (TMS). These systems have been developed partly in response to industry's changing needs. Demand for JIT deliveries rose throughout the 1990s and 2000s, while next-day deliveries are now expected as standard by many end users.
Up until 2010, transport was still managed manually; irrespective of whether it involved direct delivery of product to an end user, or delivery of product to build inventory levels. Although tracking systems have been in place decades, the visibility of consignments through the general haulage network has been all but non-existent. Over the past decade, the use of telematics to locate vehicles and set up geo-fences has become standard as the cost of installing such systems has fallen.
However, these systems will become increasingly obsolete as the ubiquity of smartphones and other mobile devices has resulted in the development of easily accessible and cost-effective applications that are able to track consignments from departure to delivery. These systems are revolutionising the way in which vehicles are tracked and controlled, bringing with them some obvious and significant benefits: they are usually cheap to buy and operate; most people already have access to a smartphone or tablet, and they offer an unprecedented level of flexibility and mobility.
Furthermore, the running and transmission of data using mobile over the networks costs a fraction of the price that companies currently pay to track vehicles. The transmission of mobile data also facilitates the centralisation of data transmitted in real time. This means that people can see their proof of delivery (PoD) almost immediately after delivery, which also saves the costly administration process of scanning PoDs when the vehicle returns to base.
Implementing a TMS won't automatically reduce transport costs: as complex systems they can be difficult to implement, and unless the time and money is invested upfront then the returns will not be realised. Accurate data is also critical to the success of any system, and the process of ensuring accurate data is maintained can be the single biggest success factor. There are two types of data required in a TMS:
- Static or reference data which remains constant for a defined period of time; e.g. transport rates, product dimensions, type of container etc.
- Dynamic data which is changeable and flows through the system on a daily basis; e.g. demand – orders and order lines.
An effective TMS will utilise the static data, assess the demand, consider how it's packed and, based on the combined information, choose the optimum method of shipping. Demand flows through to the TMS as orders are placed on the production ERP and a good TMS will dynamically figure out the optimum transport mode and routing. There are now transport apps emerging which can be used as a standalone option or part of a modular based transport system offering access to a whole range of facilities/operations in real time including:
- Booking collection slots online.
- Live tracking of consignments.
- Access to interactive delivery information, uploading any changes in schedule so that live information is always available.
- Instant download of PoD.
- Instant delivery of photographs and videos of damaged products.
- Geo-fencing which automatically triggers a notification when pre-set boundaries are crossed.
Using these applications, carriers and their customers can view and manage an entire delivery manifest, allowing instant access to a whole range of information previously unavailable.
By its very nature, a TMS is involved in managing the processes that are often outside of an organisation's core competencies – processes controlled by the 3PLs once a product has been produced and is in stock, waiting for call off and through the delivery process. This fragmentation means that the integration of the TMS with a multitude of systems (including external systems and inputs) is important. Not only does the TMS need to integrate with an ERP system to receive orders and updates, but also with carrier systems to receive tracking information. It ultimately becomes a conduit of information flow providing visibility and control as the consignment moves through the supply chain.
So how do you choose a TMS? One of the greatest pitfalls is assuming that once the system is selected then the hard work is over. At the end of the day, a TMS is only as good as the processes in place to manage transport within a supplier's business. The benefits of a TMS are manifold and include:
- Enhanced visibility – of deliveries through the transport process and also visibility of cost and issues – cost to serve for customers and the capture of issues that arise during the order fulfilment process. This results in improved customer services from a proactive approach to client communication.
- Cost savings – reduction of administration costs as well as the opportunity to reduce transport inefficiency and waste in the transport process.
- Cost control – capturing transport costs throughout transport processes, ensuring transport rates are applied correctly including surcharges e.g. fuel and transport is accurately accrued and unnecessary surprises are avoided.
- A platform for continuous improvement – unless you can measure, it you can't manage it. Measuring transport spend and activity is the only way to ensure compliance is maintained within your transport function – and that you are providing your client with a world class service.
Technology enables us to do more than we ever have before. Over the coming year, many organisations will be investing in systems to ensure that their internal processes operate as efficiently as possible. However, they need to ensure that they are applying this strategy to all the links in their supply chain – including transport and management processes.