A TMS (or Transport Management System) is a niche subsection of supply chain management that focuses on the optimisation of transportation. It is a system that creates and enables digital interaction between order management systems and warehouses. This integration facilitates transportation planning, execution and follow-up to enhance efficiency. A 4PL transport management model, as run by Barloworld Logistics, plans and executes distribution from multiple source locations to multiple destinations utilising multiple service providers. Transport planning and management is centralised into a supply chain centre of excellence supported by a robust technology platform managing everything from daily administration to analysing data and providing business intelligence in order to enable an environment of continuous improvement.
The centralisation of the transport planning process allows for optimisation across the entire supply chain, achieving potential savings of up to 20% of total transportation costs. This means that a company spending, for example, R100 mil per annum on freight transportation, could potentially accrue as much as a R20mil cost saving through the implementation of smart transportation facilitated by a TMS. Although such financial gains create obvious value for an organisation, it is the further benefits offered by a TMS, that once combined with the financial aspect, truly highlight the value of such a solution.
Collaboration – it may sound strange that a system that decreases resources can improve collaboration, however, when a platform solution such as a TMS is introduced multiple, disparate departments have access to the same information. For example, warehousing supervisors can staff shifts based on the predicted demand out of the warehouse, using the very same information that the inventory manager uses to determine ordering cycles, all generated from the demand planning schedule within the TMS system. A central repository of information facilitates decision making, and universal access to supply chain information improves company efficiency as a whole.
Inventory and cash flow – a TMS solution impacts reliability, allowing for higher levels of just-in-time deliveries. This then impacts the replenishment strategy within the warehouse. It’s supply chain 101 – the more efficient the delivery, the less inventory required. The less inventory held within a warehouse, the lower the capital invested in stock. Extrapolating this example – the less cash invested in inventory, and potentially the smaller the warehouse, the more cash available for use elsewhere in the business.
Big Data and analytics – Big Data is often touted as the solution for all business woes, but the collection, and analysis thereof, can be particularly daunting. Most TMS systems have built in analysis functions, allowing the system to not only gather data, but interpret it. The pursuit of efficiency and optimisation is often facilitated by data-driven decisions, particularly as supply chains become more complex. For example, a TMS system is able to conduct complex analysis on route optimisation based on real data collected over a period, in order to provide insight into how to decrease fuel spend.
Changing needs within a growing business – the ability to up-scale, or down-scale, redeploy or repurpose resources within the transportation system, allows companies to capitalise on opportunities presented to them rapidly. Reverse logistics, for example, is an oft overlooked part of a supply chain – a TMS not only gives insight into the volume of product returned, but allows an organisation to consolidate return shipments, or utilise vehicle capacity on return journeys. As a business grows, it is vital that the correct systems are in place to support burgeoning demand without disproportionately escalating costs – a TMS platform creates a “plug-and-play” solution where new product lines are simply added to existing solutions.
Increasing complexity, digitisation and ever evolving supply chains demand smart solutions. Ultimately TMS is geared to help you reduce costs and risks but also increase integration, service levels, visibility and supply chain flexibility. The bottom line? A TMS solution is in the business of developing a competitive advantage for your business.
Do you want to be cost competitive and minimise risk for your company?