In a recent post (Discovering Your Hidden Talents as a TMS User) I explored the three learning stages that shippers go through to become accomplished users of transportation management systems (TMS). In this post we look at how the demands of managing multi-country freight networks can shape the learning process.
Many experienced multinational players apply their TMS skills to the management of cross-border freight flows without too much difficulty.
But organizations that are less experienced in the global arena, and those that are not set up to manage globally even though they ship product across national borders, find the transition more challenging.
Let me explain what I mean by the latter example.
A company might have operations in multiple countries, but each center manages their logistics operations independently. Perhaps there are regional offices in Europe and the Middle East that oversee the network in those parts of the world. As a result, logistics practices are fragmented, and it is not easy to track the end-to-end movement of goods across multiple countries.
This fractured approach to the management of international freight flows is not uncommon even though globalization is a well established trend.
For example, business consultants, The Hackett Group, recently published the latest edition of their Global Operating Model book which analyzes the performance of more than 100 companies. The book identifies a “strong acceleration of the trend towards globalization of business.”
Yet most companies are unable to quickly access the information they need to truly understand their global performance and are “flying blind,” says Hackett. In a recent study the firm found that, “less than half have near real-time visibility into customer information and business volumes, and even fewer have the same level of visibility into supplier spend, working capital, financial performance and forecasts, and risk.”
When used effectively, a TMS solution can bridge information gaps in the global network and help shippers develop more cohesive approaches to managing cross-border freight movements.
For instance, shippers can identify and analyze hidden costs that they do not encounter when moving product domestically. An example is when customs authorities impose fees for surprise cargo inspections. Unexpected penalties for incorrect paperwork can also inflate transportation budgets. The TMS can be set up to analyze these expenses by creating event files for each incident.
TMS solutions can be trained on network blind spots such as supply/demand imbalances. Let’s say product imported from China lands in a U.S. redistribution center where it is shipped to regional distribution centers (DCs) for final delivery to customers. There are many shipment touch points along the way. The lack of transparency makes it difficult for the shipper to gauge whether they are importing enough product or over-ordering. The TMS can establish checking routines that verify the accuracy of supply and demand information.
Supply chain visibility becomes even more granular when the shipper employs local TMS-configured control towers in relevant regions of the world to monitor freight flows.
The TMS can also support efforts to eliminate national silos. A shipper in the food business decided to tackle the company’s fragmented freight management system by creating multinational teams responsible for buying specific products internationally. The teams leveraged the company’s worldwide procurement volumes. In projects like this one, a TMS can help companies evaluate distribution strategies for the items they want to procure.
Critical to the capabilities described above is a TMS that is based on a single platform. The system’s configuration is the same in every part of the world, making it easier and quicker for the shipper to learn how to use the system’s tools.
International shippers follow the same three-stage learning process outlined in the previous post. But they learn to ask and answer different questions when a global dimension is added to the TMS.