BY CLIFFORD F. LYNCH
fastlane
the Year of the Ox
IN THE YEAR OF THE OX, 2009, BEING A TRANSportation manager is not for sissies. Right on the heels
of a period of unprecedented fuel-price volatility, the
economy has plunged to depths not seen for several
decades. I think it’s appropriate that in the Chinese calendar, the current year is associated with an animal that
represents order and fearlessness—qualities that logistics and supply chain professionals will need in abundance as they struggle to manage through tough times.
Although this industry has repeatedly demonstrated its resilience, it would be naïve to suggest there are
not serious problems facing shippers. Rising costs and
lower revenues have become major concerns for
many companies, and the result has been tremendous
ongoing pressure on logistics and supply chain managers to monitor and manage expenses. They are finding that they’re expected to do more with less while,
at the same time, maintaining excellent levels of customer service.
History has shown that in this business, when the
going gets tough, we usually turn to technology and
seek some order in our lives. This period is no exception. In order to protect their companies’ costs, service,
and positions in the marketplace, increasingly today’s
transportation managers are relying on technology as
a necessary measurement and management tool.
One such technological aid is the transportation
management system (TMS). Transportation management systems are hardly new; they’ve been around
since the 1980s. But advances in technology have led to
enormous strides in sophistication, functionality, and
effectiveness, and today, they have become a critical
requirement for the successful management of a transportation function. According to Adrian Gonzalez,
director of ARC Advisory Group’s Logistics Executive
Council, the TMS market surpassed $1 billion in 2007,
“reflecting the growing desire of companies to gain
better visibility and control of their transportation
processes and spend.” It appears that it was a similar
story in 2008 and that the trend will continue in 2009.
While some companies have developed their own
systems, others use software developed by supply
chain solution specialists. For those that go with an
outside supplier, selection of the system itself can be a
daunting task. A TMS can be complex and expensive,
and there are hundreds of vendors to choose from.
Users can purchase these systems outright, or they
can opt for the “software as a service” or on-demand
delivery model. (With the latter, the user accesses the
system only when necessary and “pays as he goes.”)
Most users will agree, however, that a good system
will have two main components—transportation
planning and transportation execution. Most users
also would agree that the data capture is the major
challenge to implementing a useful system. And these
are not rudimentary systems. They are Web-based
applications for organizations seeking an enter-prisewide solution, managed through centralized
administrative tools.
Not all companies will
require an extensive and
expensive TMS. Those that
don’t may find that one of
the “cafeteria plans” is more
suited to their needs. Under
this type of arrangement,
the vendor offers its TMS in
modules. A company can
simply purchase what it needs and add on as necessary.
Available modules provide systems for such functions as carrier selection, information management,
load planning/optimization, modeling/benchmark-ing, order and bill of lading management,
posting/tendering, and rate management.
Whatever TMS is selected, the primary objectives
should be to increase visibility, improve service levels,
and reduce transportation expenditures. While using
a TMS won’t improve the economy, it can help a company manage its transportation more efficiently.
Those born during the Year of the Ox like to have
everything in order in times of trouble. A TMS can be
a good tool to help us manage through a distinctly
unpleasant environment.
Oxen believe in security.
Clifford F. Lynch is executive vice president of CTSI, a supply chain solutions firm, and author
of Logistics Outsourcing – A Management Guide. He can be reached at cliffl@ctsi-global.com.
