Want to Maximize TMS Value? Focus on These 3 Things
Whether you are evaluating potential Transportation Management Systems (TMS) or you are looking to squeeze more value out of your existing technology investment, it’s important to keep the end goal in mind. Know what you are trying to solve for, and then align those needs with the capabilities of the TMS. If you are still in the buying process, it will help you narrow your list of potential vendors. If you already have a TMS, it will help you generate more value from the system you have invested time and money into.
Several years ago, the logistics team at electronics manufacturer Celestica, identified three primary outcomes they wanted to achieve and maximize the value of their TMS. Those three outcomes are:
- Improved Cost Control
- Increased Productivity
- Enhanced Visibility
At the time, Celestica’s business growth necessitated a better way to manage its growing and increasingly complex transportation network. That need led them to a decision to add a TMS. After a full qualitative and quantitative analysis, they determined the value they could extract from the TMS.
Outcome #1: Improving Cost Control
The first area the Celestica team felt they could impact through a TMS was cost control. Most of their transportation spend is around inbound activity. Additional analysis allowed them to understand where they were spending their dollars, and which suppliers they needed to get a handle on.
Not uncommon in the industry, Celestica was using a paper routing guide that was sent out to the company’s supply base on a regular basis anytime there was a change. They asked their providers and various sites to utilize specific vendors for certain types of shipping and modes, etc… It also ensured that the vendors are using the best cost option or best option for transit time. With the TMS, that process is much faster and comprehensive utilizing an electronic routing guide.
Outcome #2: Increased Productivity
The second area Celestica wanted to address was productivity. The first step was to roll out TMS process, which boosted operational productivity by automating several activities that had been manual, particularly around the booking process. No longer do their transportation managers have to pick up the phone to call carriers or partners to determine rates. With the TMS, all the rates for a specific lane are available instantly. And, then the booking is executed seamlessly through electronic connectivity, either by EDI or Web Services, both of which Celestica has in place for its various carriers.
The Celestica team also points to the single platform of their MercuryGate TMS as a productivity booster. The team manages multiple modes, so having a single platform to track their various shipments means having everything in one place. They don’t need a separate forwarder system or a separate system for parcel.
Outcome #3: Enhanced Visibility.
The last major element that the Celestica team looked at was visibility – both at the control tower and site levels. They wanted to know what’s moving outside the four walls in the company’s transportation network. The reports that they are now able to pull from the TMS provide a clearer understanding of their transportation spend.
The improved reporting capability also helps the Celestica team understand whether certain costs are recoverable. If the best cost option is not used, a report will identify if it was a supplier issue or if Celestica requested for a shipment to go out at a premium cost.
Very early in its TMS implementation, Celestica established connectivity with its various carrier partners and to its ERP system. Through this connectivity, the team gets active notifications on the delivery date, pickup time, when the delivery is scheduled for, and all the messages in between. That information allows the logistics team to calculate on-time delivery and to measure carrier performance. The team also has greater visibility into the number of partner numbers on each sales order.
Over the course of its TMS journey, Celestica has successfully extracted value from the system by focusing on what they are trying to solve for. It’s that focus that has allowed them to identify true savings.