BY BEN AMES, SENIOR EDITOR
TRANSPORTATION MANAGEMENT SYSTEMS
Technology
FOR DECADES, TRANSPORTATION MANAGEMENT
system (TMS) software has been an effective tool for helping
shippers and third-party logistics service providers (3PLs)
cut freight costs, plan routes, and select and manage carriers.
But these days, many companies are discovering new uses
for their TMS applications. They’re turning to the software
to handle a wide variety of tasks, such as managing capacity
in a constrained market and making cost/service tradeoffs,
all with the end goal of improving customer service.
As for what’s behind the trend, it’s partly because the economic sands keep shifting under the users’ feet. Changing
economic conditions can alter a company’s concerns and
priorities from year to year, said Frank McGuigan, CEO of
Frisco, Texas-based 3PL Transplace.
For example, in 2017, the shipper community’s top
priority was timely delivery, as suppliers sought to avoid
penalties levied by Wal-Mart Stores Inc. as part of its “on
time in full” delivery requirement, McGuigan said. But
in 2018, one of the most capacity-constrained markets in
years, companies are more worried about ensuring that
their freight moves under contract, rather than via a carrier
found through the spot market, where rates can soar to
unpredictable levels, he said.
That trend means that TMS users are shifting their focus
from metrics like on-time delivery to ones like primary
tender acceptance, which is a measure of how often ship-
pers are able to book loads with their intended carrier.
“Otherwise, you’ll be looking on the spot market, where the
service level is not as managed because you’re not used to
doing business with them or because you’ve gone through
a broker,” McGuigan said. At a time when companies are
struggling to meet rising service demands, that’s a risk few
shippers are willing to take.
TMS BALANCES COMPETING DEMANDS
When it comes to ways users are leveraging their TMS to
boost service, there’s more to the story than simply securing
contract capacity. A number are also using their TMS to
make cost/service tradeoffs. One market segment that has
proved particularly adept at that is the third-party logistics
community.
Today’s 3PLs often find themselves caught between the
conflicting transportation needs of different customers. To
resolve that conflict, they’re increasingly likely to use a TMS
to prioritize the variables that matter most to each client,
instead of simply picking the lowest-cost option on the
market, said Duncan Hopwood, director of engineering at
Redstone Logistics, an Overland Park, Kan.-based 3PL that
uses a TMS platform from Shelton, Conn.-based software
vendor 3Gtms Inc. “If all you’re offering is a rate play [to
compare and minimize costs], you’re not creating any value
for the customer. You also need to provide planning and
process automation” that offers the flexibility required to
balance partners’ needs, Hopwood said.
For one client, Redstone used its TMS to balance two
competing demands—reducing labor costs and improving
Today’s TMS deliver more
than freight savings
Transportation management systems have traditionally been used to slash freight
costs. But shippers are now finding the software can do much more than that.
