A global transportation management system (TMS) can transform the way you do business. But what does it take to successfully deploy a TMS platform with a worldwide reach, and what are the specific benefits?
Not all TMS solutions are created equal; some are built to function within domestic national boundaries, while others have a limitless geographic range. Knowing the difference between the two – and what is required to upgrade from the first to the second group of solutions – is becoming an essential part of the TMS playbook.
Why? Because if you are not already geared to managing transportation globally, the chances are that you will have to make the jump to the world stage soon. The competitive winds are blowing at gale force in that direction.
Let’s look at a couple of structural advantages that smooth the way for the globalization of your TMS.
A common ERP platform is a definite plus. Broadening the horizons of a TMS is much easier when everyone is working off the same ERP page. The required changes are far less daunting when there is a single point of integration and one process to marry to transportation. Additionally, the training demands are relatively straightforward.
Another advantage is centralized decision-making. When decisions are taken centrally it’s usually easier to avoid the lengthy, momentum-sapping “internal selling” process across multiple regions that project champions have to go through. In addition, this model expedites the tactical decision-making process. Even better, when the work is complete, a centralized structure complements your newly minted global TMS and helps you to get the most value out of the system.
If the above features are not in place don’t despair; the job might be more complicated but it is still possible to roll out a global TMS. Perhaps you can piggyback off another project, for instance. TMS deployments are often paired with business transformation projects. If this is the case, use the activities of the twin project to revamp transportation processes and support the globalization of your TMS. It sounds like a lot of work, but the potential rewards are rich. Here are some notable examples.
True regional agility. Expanding into foreign markets has become such a mainstay of corporate thinking that it is easy to underestimate just how difficult globalization can be. Often, the toughest part of growing a manufacturing footprint is moving goods in and out of the new regions on your company map. Regional taxation and payment rules, legal requirements, and unfamiliar documentation, are some of the items on a long list of issues that have to be dealt with. Established management systems probably have to be translated into at least one foreign language.
We sometimes find that companies do not expand their global operations as quickly as planned owing to the cost of the analysis and the sheer size of the task. They can achieve savings by setting up a single plant in a foreign market, but there is little point in developing such a strategy if it can’t be used to build multiple plants.
Some shippers have second thoughts and opt for a hybrid solution: a capable TMS platform for their core region, with the other regions coping as best they can. That can mean hiring a manager who is conversant with moving freight in the secondary regions to figure out a coping strategy. Not an ideal solution.
A truly global TMS avoids these messy compromises and provides a direct route to regional agility. The shipper can operate in a new region quicker and at lower cost with a fully fledged global system. In other words, the organization can reach its goals faster, a critical competitive advantage in today’s business environment (for more on this A New Fast Lane for Freight Management )
Global supply chain visibility. Extending supply chains across more countries introduces more risk. Upstream issues can have wide-ranging ripple effects; each new provider that touches a shipment also increases the chances of a service failure. The increased risk of disruption and the expanded duration of fixes make forewarning critical for supply chain managers. This is why the 20/20 supply chain visibility across all regions afforded by a global TMS is a key benefit.
Centralized procurement and compliance management. A single pool of procurers can leverage the company’s buying power worldwide. Similarly, making sure that managers and operational personnel scattered across countries comply with corporate procurement programs is easier when a centralized management system is in place. Training is less onerous when provider selection is driven by a tool rather than a voluminous Standard Operating Procedures document. Again, these capabilities are part of a global TMS.
Global transportation strategy. A global transportation platform brings common metrics and performance standards across multiple regions that allow for apples-to-apples comparison of facilities in these countries. Spend analyses are more reliable and comprehensive, leading to better decision making. Common practices also increase the mobility of top talent because it is easier for a transportation manager who excelled in one region to duplicate that success elsewhere. A great example of this transference of knowledge is the increasing use of route guides in Europe, a practice that is well established in the United States (this trend will be described in more detail in a future post).
Bringing a global TMS to fruition may seem intimidating, but remember that the technology has advanced in leaps and bounds over recent years. Also, if you are a successful international player, it is likely that you already possess most of the change management skills needed. But perhaps the most persuasive argument of all is that you should take the leap before the market pushes you.