8 Best Practices to Lower Transportation Total Cost of Ownership

MercuryGate Blog - Accounting Category

Corporate responsibility depends on the successful execution of transportation processes, careful inventory management, and the delicate understanding of customer needs. 

As explained by Deloitte, corporate livelihood depends on efficiency and accuracy in transportation management. Freight tonnage is expected to grow 27% by 2027, so gaining control over transportation total cost of ownership is now paramount for shippers.

Total Cost of Ownership

The Gig-Economy is the new buzzword in supply chain circles. It involves the outsourcing of freight delivery and logistics processes to freelance drivers and more. While this increases profitability through more delivery options, it opens the door to new risks.
For example, how does outsourcing affect current contracts or negotiating tactics?
At the same time, the neck-breaking growth of omnichannel retail and omnichannel everything is pushing traditional supply chains to their breaking point. It is not enough to move freight. Now, shippers must consider the freight as an extension of service, and in some cases, white-glove services, such as installation or removal of debris, may be necessary.
Changing traditional logistics processes will increase costs. Legacy systems were designed for a single delivery, not the thousands of potential shipments deriving from a pallet. Thus, evolved supply chain management processes, including the use of a transportation management system (TMS), are crucial to success.

A TMS Lowers Transportation Total Cost of Ownership

Using a TMS effectively builds end-to-end transparency and accountability within logistics. The features go well beyond merely shipping products to business-to-business partners. A single TMS connects shippers with hundreds of potential carriers, specific to the local areas serviced. Such diversity enables rapid scalability—an essential function during peak season and throughout the growth of e-commerce. By understanding more about a shipment from procurement through delivery, as well as product data regarding reverse logistics, shippers make more informed decisions and lower their supply chains’ transportation total cost of ownership.

Best Practices for Deploying Your TMS to Keep TCO in Check

To optimize freight and leverage the full potential of your TMS, as explained by Supply Chain 24/7, shippers must follow these best practices.
  1. Recognize trends within the industry and implement processes within the TMS to leave room for customized workflow management.
  2. Leverage the latest technology to track and manage shipments, utilizing algorithms, and big data analytics to understand how reroutes and changes to loads will impact profitability and customer experiences.
  3. Take advantage of vendor-provided training and resources to encourage the adoption of a TMS throughout your entire enterprise.
  4. Use key performance indicators (KPIs) and metrics to enable around-the-clock planning and management of freight.
  5. Connect assets within your organization to the Internet of Things (IOT), enabling the tracking and aggregation of the real-time data.
  6. Eliminate uncertainty with the use of a cloud-based TMS, putting the responsibility of managing the system and ensuring its optimum performance in the hands of a third party, such as MercuryGate.
  7. Never spend the full transportation budget at once, allowing for flexibility to handle changes in shipment details, schedule fluctuations, variations in the forecast, and more.
  8. Consider the indirect cost savings from TMS implementation too, such as increased employee retention, reduced customer complaints, and lower carrying costs.

Choose the Right TMS and Transportation Partner to Derive Greater Value

The right TMS will provide a lifeline for organizations struggling to stay competitive. In today’s age, Amazon will take every last competitive advantage. However, shippers that take the time to understand the value of a TMS can avoid the risk. It lowers transportation total cost of ownership through improved access to data. Meanwhile, the application of data can mitigate the Amazon Effect.

Request a MercuryGate Demo to Get Started


Leave a Reply

Your email address will not be published.