Efficient, cost effective transport management is as much about retaining customers as it is about logistics
As the business environment becomes progressively more digitised and information becomes a critical asset, organisations need to approach transport management from a digital perspective to ensure that it contributes not only to their own sustainability but that of the supply chain as a whole.
Most organisations understand that transport costs in isolation account for 5 - 6% of revenue. Very few realise that transport management has an additional, usually negative impact on operational costs because ineffective transport management impairs effective inventory management.
Inadequate inventory management adds cost throughout the supply chain. So, if you’re not managing your own transport effectively, you’re going to be less than welcome in the supply chain. And that prejudices your sustainability.
While managing your transport appears to be a logistics and distribution issue only, it is actually a significant differentiator when it comes to retaining customers. Being able to deliver the right order to the right client at the right time makes you a preferred supplier - and that has a positive ripple effect on everyone up and downstream of your organisation.
To achieve this in the modern era of business, however, it’s important to understand that your key asset in transport management systems is not your trucks - It’s data! And not just data about transport. Every part of your business has an influence on transport – and inventory – and every action taken in your transport division influences the rest of your operation. Transport management is a strategic discipline and must be tackled holistically.
Efficiency and effectiveness often elude transport divisions and managers because many of the variables that influence transport are outside the control of an individual business. Fluctuating fuel costs, the complexity of commercial transportation, and disparate transportation businesses within a supply chain, each with its own trading partners and preferred carriers and, as a consequence, its own enterprise planning systems, all make precision in transport management extremely difficult.
However, the more visibility you can achieve across the supply chain, the more control you can impose not just on your own transport functions but on those up and downstream of your organisation. Even better, if that visibility is real-time, then you can achieve profound accuracy, speed, and flexibility even in very complex environments.
First, though, you need visibility into your own order lifecycle. This confers the ability to plan, consolidate, and optimise all shipments – inbound and outbound, domestic and international – while taking into account real-world constraints and costs. Integrating transport management with other business processes also makes it possible to for all levels of the business to collaborate and, therefore, achieve visibility into every aspect of the business.
In a complex supply chain environment, a Transport Management System(TMS) is the single most effective way of achieving such a comprehensive view of transport management and how it impacts your sustainability. By enabling integrated storage, fulfilment, and transportation processes with no data redundancy and reduced integration risk, a TMS reduces transportation costs and improves logistics readiness, flexibility, and efficiency. It allows all inbound and outbound domestic and international freight to be managed in the same environment with traceability and visibility of orders, shipments, items, and logistics processes. It makes carrier communication, capacity bookings, tariff management, and billing adaptable to any organisation’s needs and powerful analytics measure important process metrics.
What is important about systems (such as SAP TM) is that they don’t just automate what you’ve done before. Simply transacting in order to get the shipment to the supply chain is no longer enough. To differentiate your organisation, you need to do more than your competitors - and use your data to become competitive in a digitised world. You need, for instance, to eliminate process redundancy by centralising, integrating and sharing data.
Digitising your transport management means you can
schedule the most freight for the least cost while honouring service
constraints. In the process, you reduce freight spend, increase both owned or
subcontracted vehicle and capacity utilisation, meet customer expectations on
service levels, and reduce working capital and operational expenses. There is
no downside.
Contributed by: Jeetendra Fakir, Business Unit Manager, Britehouse
Supply Chain Management
