Supply Chain Expertise and Technology Blog by TMC, a division of C.H. Robinson

Analytics in Action

Analytics-in-Action-

In our last post we looked at the cultural barriers that prevent shippers from using advanced transportation management systems (TMS) to reengineer their supply chains, and capture impressive cost savings (Developing a Managed TMS® Culture). This week we consider how you can become a more effective user of high-power TMS technology.

First, let’s take a step back to appreciate what you already have under the hood. Implementing a TMS solution such as Managed TMS® is not a trivial exercise (for more on this see Capturing the Hidden Value of TMS Solutions). And one of the big payoffs is that this carefully planned process equips your organization to perform sophisticated network analyses.

As is described in the above post, a properly executed implementation project ensures that the data which underpin TMC’s Managed TMS solution, as well as every relevant process and associated corporate function, are aligned with the capabilities of the technology. The exercise takes transportation management to a strategic level.

Consequently, the data sets and reports generated by the system are screened rigorously for quality. This is important for any analysis, but particularly for the kind of advanced network studies that Managed TMS makes possible. Many logistics reengineering projects run aground on flawed data.

But even recommendations that are thorough and germane can achieve next to nothing if you do not get buy in from key constituencies within the company, specifically the finance department.

Moreover, the data reflects the operational nuances of your freight network, because TMC’s Managed TMS solution has been tailored to the organization. We often hear of ambitious modeling projects that failed to achieve their objectives because the data – and hence the recommendations – were based on external sources or case studies that did not mirror the shipper’s needs sufficiently well. Failures like these not only waste money, they deter shippers from getting involved in this type of project.

But even recommendations that are thorough and germane can achieve next to nothing if you do not get buy in from key constituencies within the company, specifically the finance department.

Most logistics engineering projects come down to cost savings. Even those that are focused on service goals that are of interest to other disciplines such as sales and marketing have a strong financial component. Top management always wants to know how much the recommended changes will cost.

With this in mind, it is crucially important that your proposals are framed so that the company’s financial gatekeepers can relate to and understand them. The provider may even be able to give the briefing on your behalf if that is the preferred route.

The same goes for making the case to senior management. Say, for example, the recommendations point to an increase in inventory levels, but a senior vice president has mandated that there will be no build ups in this area. Preempt the inventory issue by emphasizing how the extra cost is far outweighed by the savings captured when you solve the company’s expensive carrier capacity problems with additional stock.

Don’t forget the implications for suppliers such as carriers. As we have argued in previous posts (see How to Maintain Enduring Carrier Relationships), maintaining strategic relationships with providers requires that you keep them in the picture when significant network changes are in the pipeline.

A modeling exercise might alter the way in which freight is consolidated, and the end result is less business for the carriers involved. As the buyer you will go ahead with the reconfiguration and reap the savings. But make sure that the service providers are aware of what is driving the change and why it is necessary.

The new generation of TMS technology offers limitless potential for redesigning distribution networks, and developing innovative logistics solutions that were unattainable less than a decade ago. Logistics teams that embrace the consulting approach to managing freight operations will not only capture the rewards of more efficient networks, but also position themselves as a strategic resource within the company.