5 Ways to Calculate Return on Investment for TMS Features – Part 1

5 Ways to Calculate Return on Investment for TMS Features - Part 1
Logistics managers must maintain high productivity levels to maximize the efficiency of freight shipping services and provide exceptional customer service. Today, in order to pull that off, they largely are using transportation management systems. The easiest way to maximize return on investment (ROI) is with the use of innovative transportation management software and services that can account for the unique needs of an omnichannel world. In other words, it’s time for the omnimodal TMS to become a value-add resource that is used for much more than merely finding capacity. Companies that want to maintain a strong competitive advantage are turning to Software as a Service (SaaS) experts like MercuryGate in order to leverage advanced transportation management system features. But how can supply chain managers accurately calculate and track their ROI?
Asking the right questions during the vetting of any TMS is a great place to start. Here are five conversation-starters that will help gauge the functionality, effectiveness, and overall usability of a TMS.

1. Can Users Upload Digital Documents Within the Platform?

Digital dashboards help to streamline many day-to-day activities within the supply chain optimization process, but there will always be a need to add documents along the way. Proof of delivery, bills of lading, and electronically captured signatures are just a few examples. Automated reporting and document sharing are also important for successful network management. An advanced TMS will provide a stronger ROI by enabling automated document management, including on-demand file sharing, uploading, and analysis of digital documents. Shippers gain access to more features and functionality with digital document management, and that’s an essential TMS feature that should exist within any omnichannel-ready platform.

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2. Do the TMS Features Support Rating Across All Modes?

An integrated TMS platform should include features that are designed to help shippers, carriers, and logistics service providers overcome the increasing demands of a volatile market coupled with unpredictable fluctuations in consumer spending. Unifying everything related to transportation in one comprehensive platform supported by a world-class predictive supply chain strategy can significantly improve day-to-day performance and increase profitability. This also provides the ability to rate all shipments across all modes at any given time, enabling a true view of the most competitive rate and appropriate service level for each shipment.

3. Can It Enable Ongoing Route Planning and Optimization?

The best transportation management platforms support real-time features that can help avoid disruptions and mitigate issues as they arise, as highlighted by Forbes. The critical question for shippers today is how the TMS platform works to enable route planning and shipping optimizations. Having real-time data and insights makes it easier for transportation service providers to calculate their ROI and compare route models and simulations in a real-world setting. This valuable insight maximizes investments on a shipment level and helps with the ongoing optimization of procurement and carrier management. In fact, past MercuryGate studies have found that our TMS can reduce the amount of time spent managing carriers by up to 85%.

4. How Well Do Advanced Features Enable Visibility Into Real-Time Shipment Status?

Thanks to shipping and transportation technology innovations, transportation service providers can now implement a TMS with fewer fees, less overhead, and lower shipping rates. Real-time shipping status access and monitoring can significantly boost ROI by improving productivity and transparency. There’s also strong evidence to support ROI of a TMS with the most basic features too. According to an article by Gartner’s Bart De Muynck via LinkedIn, “most companies achieve a 5% to 10% productivity improvement by using a TMS, but there are many pitfalls companies need to watch for that could derail their journey to accomplishing their ROI.”

Furthermore, in a white paper titled “Driving ROI: The Business Case for a Comprehensive Transportation Planning & Optimization Solution,” a Hobson & Company study found that a lack of visibility or poor optimization may lead to freight cost increases of 5-25%, or approximately $1 million in waste. These costs echo the pitfalls De Muynck speaks of and are the limited functionalities that may exist in some systems. Comprehensive and innovative TMS features, ranging from insight and management of final mile through street-level visibility, are critical to achieving efficiency throughout the inner workings of the supply chain.

5. Does the Platform Support Settlement Processes?

State-of-the-art technology, modern innovations, and digitization have never been more critical in logistics than during the current e-commerce boom. Top features of in-demand platforms are now focused more than ever on perfecting delivery processes and pre-empting volatility in the freight market. And that must include freight settlement capabilities.

After all, even the best plans will fail if the carrier experiences added delays in payment, and shippers will realize more trouble in transportation management if settlement processes, including freight bill auditing and payment authorization, fall by the wayside. Additionally, in research from Hobson & Company, presented in an infographic titled “Breakthrough ROI for Shippers,” found that leveraging a TMS can lead to a 75% reduction in time auditing freight, contributing to a 2% decrease in annual freight payments and approximately 0.5% more in annual revenue.

Ensure Your ROI by Choosing the Right TMS Solution

One thing has been demonstrated repeatedly over these past few years of market volatility and consumer uncertainty — the modern freight shipping market is still alive and well. It also needs technology-driven processes and advanced capabilities to keep pace with demand and achieve the next level of success. As a result, retailers are drastically changing approaches and pivoting how they use technology. Choosing the right management platform with advanced TMS features can significantly improve ROI throughout the supply chain and enhance executability across all freight within the network.

Learn more about the must-have TMS features that form the basis of MercuryGate. Also, be sure to check out part two of this series in which we’ll take a look at five more things to consider when assessing and calculating ROI for your next TMS implementation.

Contact MercuryGate today to request a demo

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