Transportation management system (TMS) technology has advanced rapidly over recent years, but there is one element of the technology’s evolution that still lags behind: its global reach.
Some shippers, especially large players that spend many hundreds of millions of dollars on freight transportation annually, have made strides in globalizing their TMS solutions.
Overall, however, there is still some way to go before shippers reap the full benefits of today’s TMS technology in a global setting.
The challenge is highlighted in a report published by the trade journal American Shipper.[i]
The report is based on information gathered from 299 shippers and 145 logistics services providers in December 2014 through January 2015. About one-third of the respondents identified themselves as logistics services providers, 28% as manufacturers, and 22% as retailers.
Only around one-third of the shippers that responded use a single TMS across their organization. Given that roughly one-third of the shippers’ transportation spend is dedicated to international modes, “this constitutes a major constraint on visibility and data sharing,” the report says.
The research also found that only about half of the large shippers and around a quarter of small/medium-sized shippers have completed an international roll out of their TMS solutions across modes and regions. Only 57% of 3PLs have done so, “suggesting they often see TMS as purely a domestic tool,” the report comments.
Tying TMS solutions to domestic freight networks prevents shippers with international supply chains from unlocking the full potential of these systems. Moreover, we see a growing number of companies centralizing their regional transportation management functions in order to leverage operational scale and reduce inefficient fragmentation. A U.S. company might establish a central transportation function in Europe, for example, because this makes sense organizationally and from a time zone perspective.
Reorganizing transportation management in this fashion makes it even more important for shippers to globalize their TMS solutions. But breaking the ties that bind the technology to domestic operations requires companies to replace a regionally focused logistics outlook with a global mindset.
To help companies make this transition, here are some pointers gleaned from our experience of developing and implementing global TMS solutions.
Review your procurement culture. Even though a global TMS is necessary, does your company still make buying choices regionally?
Work from a single global platform. This is critically important, whether the TMS is an in-house or third-party provider system. Employees should be using the same software regardless of where they are located. Business intelligence tools need to be standardized across the regions.
Think global, act local. A global platform provides a common foundation; but it must also cater for regional nuances such as languages, currencies, and network configurations in different countries. Perhaps one region prefers a software-as-as-service approach while another opts to outsource a TMS to a third party provider. Each region will have different needs around the execution of process design. It is important that the system can accommodate local as well as regional needs.
Make sure you have the right connections. It’s surprising how many companies lack basic information such as what they are spending on transportation by region—even when there are systems in place to deliver the data. Often the root cause is inadequate connectivity; a TMS is not linked to an ERP system or sub-systems such as warehouse management software. Perhaps the TMS is based on outdated technology or was developed internally and reflects existing organizational silos.
Get the communications piece right. This is key to creating a TMS solution that is truly geared to global applications. Have a clear picture of who should be involved in the design and implementation of the system in each region, and establish lines of communication that keep these parties in the loop. For more on the change management challenge see Jen Theisen’s blog post, Five Change Management Queries that Evert RFP Must Address.
A globally executed TMS is fast becoming an imperative for companies that rely on globe-spanning supply chains. But as the American Shipper report emphasizes: “Many transportation networks are planned, optimized, and executed as if they are the only transportation network that exists. Larger enterprises often divide even their internal network into multiple parts and manage them in isolation from each other.”
TMS solutions with a worldwide reach help companies to eliminate barriers like these—and the transition to such systems is not as daunting as you might think.
[i] “Falling Short: Where TMS Fails to Meet Global Shippers’ Expectations”, American Shipper, April 2015.