Why Wholesale Distributors & Retailers Are Looking at TMS Solutions

Cloud-based TMS software provides tools needed to achieve transportation optimization
Wholesale distributors and retailers continue to undergo significant disruption. As Amazon grew to power, big-box retailers tackled e-commerce directly. Both Walmart and Target have invested heavily in both business-to-business and business-to-consumer selling strategies. While this means more businesses can take advantage of broader distribution networks and potentially lower vendor pricing, explains Deloitte, it increases the risk of disruption. More complex supplier relationships lead to higher risk. However, more and more wholesale distributors and retailers have set their sights on the use of a transportation management system (TMS). Because TMS solutions improve operations and manage additional demand they are increasingly sought after.

What’s Wrong With Traditional, Manual Logistics Management?

Wholesale distribution companies enjoyed significant growth in performance through 2006. Yet, when this growth occurred, more risks began to permeate the traditional, manual logistics process.. And problems began to arise as the financial crisis came to a head. By 2015, the growth rate had dropped 8.3% points below the peak at the end of 2005. Add in the fact that today’s consumers have access to more information than ever. Even primary business-to-business customers expect real-time access and accountability in their supply chain relationships. In this environment, traditional, manual logistics management fall short in modernity.

Retailers and Distributors Need Data and Real-Time Controls

Effective wholesale and supply chain management requires access to real-time controls and data. Over the last two years the economy grew significantly, pushing the growth of e-commerce higher than believed possible. But today, the uncertainty surrounding the trade war with China and generalized instability mean distributors need to be prepared for change well in advance. Each day brings new challenges, and the plans of yesterday may not necessarily reflect the needs of tomorrow.

Benefits of Modern TMS Solutions That Work

According to the DAT Broker Benchmark Report, TMS use among both freight brokers and 3PLs have been associated with a 16% increase compared to 2017. Of course, exceptions exist, but overall profitability looks to surpass original predictions for the year. Additional benefits of modern TMS solutions for distributors also include the benefits afforded to shippers, such as:

  • Reduced lead time through faster, enhanced load planning and scheduling.
  • Taking full advantage of all over-the-road cargo through reduced deadhead.
  • Faster dock loading and unloading from better yard management, lowering dwell time.
  • Cost savings through fewer assessments of dwell charges.
  • Improved cycle times for on-hand inventory, reducing carrying costs.
  • Access to consolidation/deconsolidation programs to ship less freight in volume to unlock discounts.
  • Review of past invoices (auditing) to identify and recapture billing errors.
  • Access to a broader carrier network.
  • A path forward for taking advantage of cross-docking and drop-shipping for shippers—leading to more activity among wholesalers.
  • Automated notifications for both delivery, refusal, and returns, if applicable.
Countless additional benefits exist, and they vary based on the level of digital transformation in your organization. For example, connected devices may work with ELDs to track more data about drivers and their performance. Data is power, and in this world, those with the most meaningful data apply it through TMS solutions.

Deploy a TMS to Guarantee Success in Your Supply Chain

Few changes guarantee success, but TMS solutions stand apart as a proven way to increase profitability and efficiency. The gains are higher for organizations with larger shipment volumes and lower profit margins, primarily wholesalers and distributors.

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Phil Melton

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