In my last post (Turning Tacticians into Strategists, April 28, 2011) I explored the fallacy that TMS technology alone can transform tactical personnel into skilled transportation analysts. In this post I offer guidance on the TMS tools that trained individuals should use to develop network management strategies that deliver competitive advantage.
Today’s leading edge TMS solutions are very powerful analytical engines. The range and depth of the available reports has never been greater, and the degree to which performance numbers can be sliced and diced is limited only by the skills and imagination of the user.
A typical TMS solution supplied by TMC, for instance, performs nearly unlimited types of analysis that can focus on every facet of network operations from basic metrics to exploring what-if scenarios.
The reporting suite presents a model of every component of the shipper’s transportation network, including a detailed picture of all the metrics used. The displays offer perspectives on the data that a shipper can refine through filtering. A core metric such as an unplanned accessorial cost can be reviewed relative to carriers, shipping and receiver facilities, SKUs, and even the Customer Service Representative who handled the original order.
The combination of filtering and the ability to “bookmark” specific views for later use means that any person in any role within the organization can prepare a sophisticated analytical tool which is tailored on a role-by-role basis to better support the management of that person’s part of the strategy. Moreover, the bookmarks can be shared, allowing a central analytical group to prepare specific views in support of strategic goals or risk management routines, and to distribute the goals to role players across the transportation network.
With this computing horsepower at their disposal, how do shippers pick the optimum set of analyses for their particular needs?
Clearly the choice is influenced by your tactical and strategic goals, and the way the TMS is configured to achieve these targets. Also, the objectives will change as the network evolves. A useful rule of thumb is to select analytical tools that enable you to view a problem or issue from multiple angles. It is amazing how even a slight change in orientation can expose new insights.
Looking at your network from a customer’s perspective is a valuable exercise. Changing the point of view in this way can highlight issues that were not previously apparent. Moreover, you might be able to score priceless service points with a key customer by revealing issues in their network that need to be addressed.
But first, there are some analyses that are mainstays in any TMS toolbox; meat-and-potato items that focus attention on common tripping points in a distribution network. Here is a list in no particular order that I have put together based on TMC experience
Carrier performance at the facility level.
- The high-level performance of a carrier can vary wildly based on factors outside of their control. Reviewing carriers at a facility level and benchmarking facilities against each other, provides visibility into potential facility-level issues that wouldn’t normally show up in a blanket carrier performance review.
Routing guide execution
- Changes to the routing guide depth and the resultant impact on rates (deeper usually means more expensive) should be reviewed regularly to spot potential issues well before the costs of disruption bust your budget. When a change in behavior is found, start digging in. Correlate to facility, carrier, lead time, and SKU to find the starting point for a conversation with your carriers.
- When a shipper transports goods to the receiver this is often the final “touch” in transactional customer service. Likewise, customer behaviors (lead time for orders, regional synchronization of orders) can have significant impact on the rate curve and resultant freight as cost of sale. Routinely review customer interaction metrics to ensure that goods are priced appropriately and that orders are being serviced appropriately all the way to the receiver’s dock.
In addition to these standard items, here are some analyses that are especially effective in terms of the information they can yield and relevance to network efficiency, again in no particular order
Price performance versus budget or procurement exercise. Are you achieving anticipated savings and/or transportation prices?
Transportation cost drift associated with specific SKUs, facilities, employees, customers. Is there wide variance in your transportation costs? For example, are you spending more when certain individuals book the space or when specific carriers are involved?
Freight commitment. Are your carriers moving the volumes they signed up for in designated lanes? Are you giving carriers the volumes that you promised when the contracts were signed?
Rate curve review. Is your rate curve holding steady despite fluctuations in the transactional marketplace? Any macro-level change in this core metric can yield tremendous cost impacts if not addressed immediately.
Consolidation Base Lining and Capacity Utilization. A common reason for purchasing a TMS is to better consolidate freight or pursue other modal strategies such as truckload to intermodal transport conversion. A wide variety of factors can influence or degrade performance of those strategies over time. Regular review of performance relative to expectations can help to identify when something is changing that could incur cost. Issues such as lead time compression, carrier service failures, and a shifting product mix can be disastrous to sophisticated savings strategies if not identified and promptly addressed.
Giving thought to the analytical tools you need helps to clarify what type of TMS solution is the best fit for your organization. Also, defining these capabilities – and updating the list in line with your changing network – is essential to ensuring that you have the necessary skills to maximize the return on your investment.
Deploying a TMS analytical tool without a clear purpose is a sure way to get lost in the forest of possibilities that the technology now offers.
Do you agree with the list of analyses I have presented in this post? I would appreciate any feedback you can provide on the analytical methods you prefer to use.