The Costs of Not Having a TMS

The 1990’s were full of great evolution in manufacturing and supply chain. Many of the tools in use today originated from this time of innovation, including the transportation management system.

The TMS has flourished as one of the most helpful solutions in supply chain management. The system streamlines management by connecting systems, serving as a one stop shop for fleet management. This work was previously done manually and was a time-consuming task.

The need for a TMS:

While these systems were originally built for big operations, advancements have allowed this powerful tool to become a viable solution for small to mid-size enterprises as well. As supply chain complexity has increased exponentially, companies need to adapt evolving technologies to remain competitive in the logistics sector. As evidenced by an Arc Advisory Group report, which found that 37.5% of TMS users improved freight savings by more than 10%. A study by Escalent found that 44% of fleet decision-makers are actively shopping for telematics solutions

Here are a few reasons why a good TMS could be right for your company:

  • Increasing complexity of Supply Chain operations, especially after COVID-19
  • Expanding customer expectations
  • Customizable offerings for each customer
  • Resource scarcity in trucking
  • Growing need for efficiency and visibility

While companies waiting to implement a TMS are falling behind by managing manually, they’re also hurting their bottom line and frustrating managers and employees.

What are the costs of NOT having a TMS?

  • Inefficient Planning

An estimated 20-35% of truck miles in the US are driven empty. While trucks are still moving and deliveries are getting done, could it be better? Are companies running on optimal cost? Are customers and employees happy? Ever changing business scenarios are adding pressure on planners, owners and all stakeholders involved. Usually unaware of the constraints and changes, planners are reacting rather than proactively planning. This is generating big hole in the net profits.

  • Visibility

This is the biggest gap in the logistics. Not only real time tracking of shipments, but also bidding and demand generation to minimal documentation, the control tower approach is important. This cuts layers, costs, and increases the efficiency of overall operations. When you can make a long-term plan for vehicles and drivers, you can maximize asset utilization and minimize deadhead. Trucks that are not empty are, on average, carrying just 57% of their capacity.

For a carrier consider they have trip going on from Dallas to Tennessee, if they do not have visibility of the precise ETA, fuel info, driver ELD information, and payment schedule, the carrier would not be able to plan next trip from Tennessee and onwards. However, with smart TMS they can plan multiple trips simultaneously while maximizing asset utilization as well as increasing service levels.

  • Productivity

Idle trucks, unnecessary documentations, changing lane rates, driver unavailability, fluctuating capacities, the list goes on. All this leads to non-productive assets and non-value-added (NVA) activities. Manual decision making is lagging and eating up productivity.

  • Untapped Potential

Why settle for less when the same resources can harness better profit? Fleets are missing opportunities through deadhead miles, non-optimal routing, and poor time management. There’s countless opportunity to improve operations and ensure growth.

  • Intangible Losses

Manhours spent on fruitless decisions are frustrating. Drivers not getting favorable routes and hours leads to attrition. Trust and reliability issues with stakeholders can lead to loss of business, to point out few intangible losses, which eventually leads to lost revenue.

There are countless opportunities with a good TMS. Businesses are adapting to overcome and gain good position in market, why would you lag behind?

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