Transportation management systems (TMS) technology has advanced rapidly over recent years, but can the same be said for TMS users?
Some logistics teams are using the powerful analytics that come with leading edge systems such as TMC’s Managed TMS® to find new ways to improve network efficiency. Others still struggle to break free of traditional approaches to managing transportation and utilizing TMS technology.
One reason why many companies find it difficult to harness the network-changing potential of Managed TMS is that they are held back by cultural issues. In order to unlock the technology’s full capabilities, logistics professionals need to develop a strategic mentality.
As Pettit rightly points out, shippers that elevate TMS applications “from tactical to strategic solutions tend to get the most value out of the technology. But making the transition involves more than a mission statement; it requires a level of expertise that tactical personnel often do not possess.”
The transition also requires a forward-thinking corporate culture. Moving from a non-managed to a Managed TMS environment brings a step change in supply chain visibility, and this in turn opens analytical doors that were previously out of reach.
One reason why many companies find it difficult to harness the network-changing potential of Managed TMS is that they are held back by cultural issues.
A recent Managed TMS logistics engineering project ran by TMC, for example, reconfigured a network so that the shipper’s reliance on less-than-truckload (LTL) movements was drastically reduced. By modeling their network the organization changed the way shipments are routed and cross-dock operations are designed. Under the old system LTL carriers consolidated freight with other shippers to best fit the carrier’s network. In this example, TMC logistics engineers modeled data from Managed TMS, the shipper was better able to leverage their own volume, and the realized savings now hit the organization’s bottom line.
The latest TMS technology enables shippers to build models like this and potentially achieve big savings—provided they are open to the strategic possibilities. In our experience this is not always the case. Here are a few reasons why.
Organizational Inertia and Past Performance
A modeling exercise might generate a solution that runs against the tribal grain. In this scenario certain practices were discounted long ago, and transportation managers rebuff any idea that resembles these past beliefs. Or maybe it attempted a similar strategy and was unsuccessful.
The line of resistance holds even though the market environment has changed markedly since the previous experience, and/or the sophisticated analyses that are now available to the team did not exist when the original decisions were taken.
Loss of Face
It takes a certain amount of organizational courage and fortitude to accept a new idea that is a vast improvement on current practice – especially when the fresh approach promises to deliver big savings. Will senior managers question why the team followed the old, discredited practice for so long?
Managers who have bought into an advanced TMS solution – and sold the benefits to senior management – are not as vulnerable to this problem because they expect the technology to deliver quantum improvements.
If previous analytical initiatives were disastrous, it can be very difficult to remain open to new ones. A previous engagement with a consultant that failed to deliver can make the team less open to fresh ideas, for example. External consultants that do not also manage transportation are often unable to provide implementable solutions, or deliver the execution needed for success.
Lack of Communication
Large scale change such as the redesign of a distribution network has to be sold to internal groups, and notably the finance department (we will talk more about this in the next post). Logistics units that are functionally isolated within the organization, or are not adept at communicating logistics concepts to other disciplines, can find this a tough challenge.
Ignorance Not Bliss
Freight management professionals may simply be unable to use all the reports that the TMS is generating. This relates back to Ryan Pettit’s post Turning Tacticians into Strategists we referenced earlier. In some organizations operations personnel are cast as tacticians and are not empowered to analyze and interpret the data that a leading edge TMS solutions supplies. They are not power users of information. In all likelihood these practitioners are barely scratching the surface of the system’s potential.
TMC’s Managed TMS solution and power users can take transportation management into higher analytical realms, and potentially deliver huge savings. But just as the technology is tailored to the organization’s freight operations, so the logistics team has to adopt a strategic outlook that is in tune with the technology.
Next week we’ll take a look at some ways in which logistics teams can realize the potential of their investments in this exciting technology.