Transportation decisions not only affect profitability and product availability, but also customer satisfaction. Indeed, transportation costs in a company represent around 60% of total logistics costs, so optimizing transportation in the supply chain is key.
Nowadays, many companies are looking for reducing freight expenses. So in order to do so they apply transportation management systems (TMS), which help firms to move freight in an efficient and cost effective way. We would like to discuss the several benefits it offers:
- Deliveries efficiency
It is very useful for companies to have a TMS which includes reports and analysis. This way the company is able to observe the consequences of the transportation decisions taken. For example, a company wants to choose the cheapest carrier, but maybe it is not the most efficient choice in case the carrier does not deliver the products on time. Thus, the company having the reporting capability of the TMS, can observe the percentage products delivered on time depending on the carrier contracted. This way the company can finally select the most efficient carrier. So it reduces the level of delays, increasing customer service.
- Warehouse efficiency
When it comes to warehouse efficiency, the more a company uses the TMS the lower is the time needed to manage the freight. Thus, the organization has more time to manage other duties, such as warehouse tasks. Moreover, the best option is to have a TMS combined with a WMS (warehouse management system). This way having a more global view of the supply chain, enabling even taking more efficient decisions.
- New Delivery Capabilities
Having a great Transportation Management System (TMS) is key to optimize the way your shipments work. Moreover, having an efficient TMS can improve processes and reduce costs. Last but not least, TMS can allow you to easily create a system to control all the processes of all the multiple locations and it can be managed by a single person. There are a lot of new ways of delivery such as “same-day delivery”, in which you can get the product in the following hours after the purchase of the product. It is a clear competitor of those products that you buy directly on the store. An example of a person who would make the most of this delivery would be someone who needs a product (say, a luggage) and he needs it for today (as he has to take an airplane that day). However, this person doesn’t have the time to go to the luggage’s stores of the city and the store next to his house is not available.
- Inventory Reductions
It is logic. When a TMS gives a company the confidence that their customers are receiving their shipments on time, it allows that company to have less inventory in the warehouse as it can be easily planned before the inventory the company has available. Furthermore, it reduces costs and it gives more stability to the company.
- Cash flows improvements
Last but not least, by employing outsourced accounting services, a company can save from 2 to 5 percent of their total payments, by looking into detail at duplicate payments or inaccurate charges.
REFERENCES
Transportation management system, wikipedia:
Freight TMS Transportation, Adam Robinson, 2013:
Same-day delivery: The next evolutionary step in parcel logistics, Ludwig Hausmann, Nils-Arne Herrmann, Jan Krause, and Thomas Netzer, 2014
The path to supply chain management, Lean Cor, 2017
Carla Casas and Sandra Quesada
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