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

8 Reasons to Leverage the Strategic Power of a TMS

8 Reasons to Leverage the Strategic Power of a TMS

8 reasons to leverage strategic power of tms

As a number of market leaders have shown over recent years, modern supply chains are much more than delivery channels for products.

Today, ultra-efficient, innovative supply chains are an integral part of the competitive strategies that differentiate many successful companies in the marketplace.

Transportation management system (TMS) technology can play an important role in supporting these strategies. And as the technology continues to advance, its strategic potential can only increase.

These possibilities may or may not be on your radar screen. The day-to-day tactical challenges of managing a freight network might seem light years away from the strategic planning that goes on in the higher reaches of your organization.

But the data collection, analytical, and communications features of modern-day TMS solutions have strategic applications that the industry is only beginning to explore.

Here are eight compelling reasons why logistics teams should unlock and promote the strategic capabilities of their TMS tools.

1. Play to proactive strengths.

A distinguishing characteristic of market leaders is that their supply chains have moved from being purely reactive to proactive. Proactive supply chains set the competitive pace that rivals are forced to follow. TMS suites can strengthen pace-setting strategies by, say, identifying new logistics solutions that lower costs and improve service quality.

2. Deliver one version of the truth

Companies and associated IT systems are often fragmented, particularly when an enterprise is decentralized and/or created through a series of acquisitions. TMS solutions offer a single, consistent source of performance data; they are a valued resource for executives who are swamped by numerous and often conflicting sources of information. TMS-driven control towers that function as management hubs for freight networks in multiple geographies are especially effective in this role.

3. Harness TMS analytics

Advanced TMS solutions can slice and dice data in countless ways. This versatility enables logistics teams to generate reports for a wide range of audiences—including senior executives and other departments who require specific types of information. For example, the CFO’s department might want logistics scorecards tweaked so that they highlight certain financials. Also keep in mind that future analytics packages are likely to extend the range and depth of management reports.

4. Become part of the drive to control costs

Keeping a lid on costs is an important strategic goal that has gained more weight in the aftermath of the global financial meltdown. TMS technology—arguably the most important logistics management tool available to companies—can make a major contribution to identify and exploit cost-cutting opportunities.

5. Play the risk management card

The importance of mitigating and eliminating risk has captured the attention of the C-suite, and today’s complex supply chains are increasingly prone to a wide range of disruptive threats. TMS solutions should be a part of corporate risk management strategies. For example, the technology is already being used to manage volatile freight markets and weather-related disruptions (for more on this see Glenn Koepke’s post, How to Use a TMS to Ride the Market Rollercoaster).

6. Shed light on demand

How to accurately forecast market demand is one of the toughest challenges facing management teams, and senior executives are well aware that current forecasting methods are flawed. TMS technology is not a solution to these problems, but it can help corporate leaders better understand demand patterns by providing a clearer picture of freight flows at the local, regional, and global levels.

7. Gain a seat at the table

Positioning TMS solutions as a vital source of market data and analyses that managers across the organization can tap into, raises the status of the logistics function within enterprises.

8. Capture future opportunities

As markets continue to evolve, there will be even more scope for strategic applications of TMS technology. Take, for example, the rapid growth of e-commerce. Traditional retailers are redefining their business models in order to compete with online players. TMS-driven logistics solutions that enable retailers to deliver product more efficiently in any channel are a vital part of these competitive strategies.

In combination, these eight reasons provide a strong rationale for exploiting the strategic potential of TMS technology. For corporate leaders, they represent a persuasive argument for using logistics as a strategic resource.