Supply chain professionals continue to push the limits of their freight networks with advanced transportation management system (TMS) capabilities and software. It’s broadly believed that an overall ROI of TMS features is 8%, but the right software suite can yield additional savings. One area of savings: a 60% reduction in time spent tracking and tracing inquiries.
There is a need to leverage more effective means to reduce transportation spend and boost administrative efficiency. As the world navigates changing conditions, retailers and supply chain workers must find a way to increase efficiency and meet the demands of the e-commerce boom. But there are other issues to consider, such as how sustainable the supply chain can truly be.
Consider what William B. Cassidy of JOC.com said, “An increasing number of government mandates will also play a role, as the US rejoins the Paris Climate Agreement and the Biden administration calls for billions of dollars in US investment in electric vehicles and charging stations. There are already concerns that programs demanding the use of near-zero emissions trucks, such as the Los Angeles-Long Beach Clean Air Action Plan, will overwhelm electric grids.”
His views imply a need for more strategic positioning in supply chain management. Truly, it is possible for a TMS to enable optimization, but that’s limited to how well and thoroughly such a platform can boost efficiency through its various features. Let’s take a look at five more considerations in calculating the ROI of a TMS from a feature standpoint and how a 3PL-based TMS can deliver up to 300% ROI over a 5-year period.
In part 1 of this series, we covered 5 questions to ask when vetting any TMS. In this installment, we will consider 5 more considerations focused on data use.
1. Review the Final Mile Potential rOI of TMS Features
The leading benefits to expect from your TMS features include a better way to plan for disruptions and mitigate issues as they arise. The importance of proactive planning cannot be understated because few aspects of logistics are more fraught with risk than final-mile management.
With real-time visibility all the way through the last mile coupled with the robust capabilities of a transport management system, leaders can boost efficiency in the last stage of delivery. That’s why any plan for maximizing the functions of a transportation management system must include final-mile planning and a way to ensure digital management of this critical stage.
2. Remember to Consider the System’s Ability to Continuously Adapt to Changing Routes
Along with all other functions of a transportation management system, shipment predictive estimated time of arrivals (ETA) are a critical aspect of improving efficiency.
Without a predictive ETA, the final mile becomes an even greater challenge, including the increased risks of upset customers, encountering delays in restocking, and more. It’s all subject to what the next step is for a given shipment. If it is a delivery to an end-user, delays and poorly optimized routes might result in an increased risk for returns.
Meanwhile, a slow delivery to a warehouse might result in delays in restocking and effectively contribute to out-of-stock notifications when freight is literally on the way. There’s also the fact that some shipments might require pickup by couriers along the delivery route. It’s complex and requires a data-driven process to ensure your team adapts to changing needs.
3. Assess the Value of Insight Into Performance and Better Freight Payment Management
ROI of TMS features also include generating data analytics insights to help your team understand its strengths and weaknesses. That includes tracking the performance of owned versus outsourced assets — such as courier networks versus an in-house fleet, to handle transportation in the final mile.
The balance between in-house and outsourcing depends on an innovative and automated platform. These capabilities of a transportation management system give rise to the ability to manage by exception and know when it’s necessary to scale your network.
Another side of this goes back to carrier management. Using the MercuryGate TMS, users can mitigate carrier liability, onboard new clients easily and quickly, and spend less time responding to inquiries and status requests. Moreover, typical MercuryGate users experience an increase of 2% in annual freight revenues due to increased accuracy in billing, as detailed in this Hobson & Company report, “Driving ROI: The Business Case for a Comprehensive Transportation management System for 3PLs.”
Users also realized time savings of up to 75% when handling freight audit and payment. In other words, the back-office costs associated with auditing were immediately reduced from 1-2 hours to mere minutes, when intervention was necessary.
4. Consider the Value of Automated Digital Freight Matching
Capacity procurement is the name of the game for today’s shippers. For carriers, it’s all about finding the most profitable load that’s going to maximize use of assets. However, your team and your supply chain strategy rely on the ability to rapidly identify the most lucrative loads or moves.
That’s where automated digital freight matching becomes the next TMS feature to assess when evaluating platform ROI. As the market continues to adapt to current trends and fluctuating economic conditions, automation will help everyone do more with less and avoid missteps.
5. Think About Inbound Freight Costs Too
It’s not enough to simply manage the outbound freight flow. Shippers need a better way to manage inbound activities, including confirming vendor shipment details, optimizing the vendor delivery schedule, and increasing trailer pool usage.
The added ROI of TMS features to handle inbound logistics has the potential to lower annual inbound freight costs by up to 5%. Isolating the topic to pooling strategies alone, inclusive of outbound freight, amplifies the potential savings by up to 5% too, making for a $1 million annual ROI per the report mentioned above.
Promote Your Success in Transportation Management by Partnering With MercuryGate
With the help of advanced TMS functions, shippers and LSPs can maximize both throughput and efficiency while deriving a stronger ROI. It’s time to increase your competitive edge by choosing a system that aligns with all the above needs and ways in which a system can increase ROI of TMS features. Capitalize on the numerous capabilities of a transportation management system.