Transportation management system: Unlocking its full potential

Transportation is a crucial element in the business process for a number or companies. In fact, transportation is typically the second largest supply chain cost for businesses, behind only the direct cost of goods. Fortunately, there exist some ways to make transportation yield the largest benefit it can possibly provide to your organisation.

One of the primary ways to manage this spend has been through transportation management systems (TMS). However, the nature of TMS is changing rapidly, for the better, thanks to advancements in cloud technology. EBN spoke with Ajesh Kapoor, VP of transportation management solutions at GT Nexus to get some insight of the role of the TMS solution in today's highly globalised era and how organisations can get the most out of these systems.

Let's start with the basics. Briefly explain what TMS is and why it's important.

TMS is a subset of supply chain management concerning transportation operations. A TMS system is used to plan and track freight movements, handle procurement and visibility across all modes of transportation, select the appropriate route and carrier, and manage freight bills and payments. The underlying purpose is to optimise a transportation network.

Companies have used traditional TMS software for many years, and it has delivered efficiency and cost reductions, albeit within specific pockets of the business. Specifically, many companies have traditionally approached TMS in silos both inside and outside of individual organisations and regions, which has created small pockets of efficiency and savings but hasn't realised the full potential of cost reduction and performance optimisation across the entire global supply chain.

The next level of value requires a move across silo walls. This holistic view will not only maximise efficiency and savings but will serve to reduce blind spots hidden by silos and ultimately enhance the customer experience. A holistic approach will also serve to keep companies nimble and help them adjust for sudden events that occur almost constantly in today's complex and globalised supply chain.

What is fuelling the need to evolve beyond the traditional TMS?

Two major shifts are changing the face of global transportation management as we know it. First, supply chains are becoming increasingly complex, relying on partners and data beyond the four walls of the enterprise. Second, the very definition of global transportation management is broadening and expanding well beyond traditional TMS capabilities. This is due to the rapid global expansion and increasing complexity of the supply chain, which is causing TMS to evolve to become more globally-minded.

Thinner margins and ever-increasing demand volatility are also big factors. Companies can't rely on potential new sales to maintain growth and profitability, so optimisation of major cost centres are at the top of the C-suite's list.

How is TMS evolving to address some of the challenges associated with today's global supply chain?

The technology is finally in place for TMS to be used to its full potential, which is allowing access to an end-to-end supply chain layer that all existing applications can plug into, delivering a single platform for sharing and viewing all data, regardless of region.

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