TMS Visibility: See. Observe. Then Do.
We’ve all heard the expression “seeing is believing,” which means you need to see something before you can accept that it really exists or occurs.
You might also be familiar with W. Edwards Deming’s famous quote, “In God we trust; all others must bring data.”
In many ways, both these sayings relate to supply chain visibility, especially when it comes to transportation management. Intuitively, many companies know they have plenty of opportunities to reduce costs, improve service levels, and increase productivity; but without seeing the full, end-to-end process in action, and without the data to prove it, they are unable to pursue these opportunities effectively.
Recent advancements in technology, however, are helping companies see their transportation operations with more clarity. Numerous providers of real-time freight visibility solutions are leveraging GPS, application programming interfaces, mobile devices, cloud computing, and other technologies to track orders, shipments, and trucks in transit. With this real-time data and visibility, companies can quickly and accurately answer the most common questions they receive from customers: Where’s my order? Where’s my shipment? When will it arrive?
Even better, companies can use this data, coupled with algorithms and machine learning, to provide customers with predicted estimated times of arrival (ETAs) and to proactively notify them of any changes or delays.
Visibility by itself, however, is not enough. Yes, seeing is believing, and having access to data you didn’t have before is powerful — but only if you do something with it, which is where a transportation management system comes in.
Seeing vs. Observing
Seeing is not the same as observing.
“Observation is where real learning comes from,” writes Forrest Hangen in a Medium blog post. “When we observe we see something on a deeper level. Seeing is the physical process; observing is seeing + our own thoughts. When we observe something, we make connections in our mind and develop a deeper understanding of something.”
A TMS enables observation — or to use a more common term, analysis. It takes the data from real-time freight visibility solutions, combines it with other relevant data (from ERP, WMS, OMS, POS, etc.), and by applying business intelligence and analytics to it, gives users a deeper understanding of what is happening across their transportation and distribution networks. It also helps them to identify where the biggest problems and opportunities for improvement exist.
“There are certain inefficiencies in the supply chain that can be directly attributed to a lack of visibility,” says Gregg Lanyard, Director of Product Management at Manhattan Associates. “A TMS puts large amounts of real-time freight data into context, creating insights that lead to greater intelligence and reductions in cost, risk, and service failures.”
Users might observe, for example, that shipments originating from their Chicago distribution center depart late 15 percent of the time. Is it because the carrier arrives late? Is it because the load is not ready when the carrier arrives? Is the root cause really a scheduling and staffing issue at the distribution centre?
They might observe that transit times from one DC to a customer location vary by day of the week, or that detention charges are incurred more frequently if a shipment arrives at a customer location in the afternoon versus the morning, or if one carrier makes the delivery versus another.
The reason companies want visibility is not just to see and observe, but to do something with the data and insights collected. It’s the doing, the actions taken to improve their transportation and logistics operations, that ultimately delivers value.
Doing Delivers the Value
A TMS excels at the doing. It is powered by optimisation engines, business intelligence and analytics, automated workflows that span other trading partners and applications (such as a WMS and OMS), and exception management capabilities (among other capabilities).
- Enabling proactive action — Companies can reschedule, resequence, or reroute pickups or deliveries, and can proactively notify customers of delays and updated ETAs, which gives them time to readjust plans and reallocate resources.
- Enabling “management by exception” — Companies can focus time and resources on what’s not occurring according to plan in order to proactively resolve or minimize its impact.
- Enabling faster Procure-to-Pay and Order-to-Cash processes — For example, companies can leverage electronic Proof of Delivery (ePOD) and geofencing to initiate invoicing and payment process.
- Enabling smarter capacity matching — By integrating with a TMS and applying freight matching and predictive algorithms, along with business rules, brokers and shippers can match available loads with capacity much further in advance and more efficiently.
Because transportation doesn’t exist in a vacuum, the value extends to other processes as well — such as better labour planning and utilisation at the warehouse, the ability to allocate orders to inventory in motion, and the elimination of waste and inefficiencies from dock scheduling and yard management processes.
“Companies need to look at visibility holistically, as the impact of increased visibility goes well beyond transportation,” says Lanyard. “Improving the flow of goods inside the warehouse starts with optimal, data-driven transportation decisions outside the warehouse.”
The demand for transportation visibility will only increase in the months and years ahead, as customer service expectations (such as On-Time In-Full) become more stringent. But the path to success will remain the same: see what you couldn’t see before; observe (or analyze) what you’re seeing to uncover opportunities for improvement;and then do something (take action) to implement those improvements and deliver the value.
Adrian Gonzalez is a trusted advisor and leading industry analyst with more than 20 years of research experience in transportation management, logistics outsourcing, and other supply chain and logistics topics. He is the founder and president of Adelante SCM, a peer-to-peer learning, networking, and research community for supply chain and logistics professionals. Adelante's services include Talking Logistics, an online video talk show and blog featuring thought leaders and newsmakers in the supply chain and logistics industry.