Order, transportation and inventory management should be fully in sync; modular solutions need to play well together; end-to-end means just that; and who needs an update message during a crisis?
Visibility First and Foremost
In survey after survey, supply, operations, production and logistics managers all put it at the top of their priority lists. The word itself, however, means different things to different people at different stages of supply chain maturity.
At the most basic level visibility is a window into the entire procure-to-pay cycle. In short: Where, in real time, is my stuff, from raw materials and components through manufacture, distribution and fulfillment across the product life cycle? That includes not only who has custody of inventory at the moment but the precise geographic location, condition and status of both product and shipment.
A more sophisticated definition entails the real-time, dynamic assessment of supply chain performance and potential. Based on the data and analytics generated from internal operations, external partner reporting and relevant third-party situational data providers, a network can begin to sense operational vulnerabilities and related risks and recommend efficiency and service improvements to boost performance. It can also sense opportunities to improve customer satisfaction, attract and retain a stable workforce, simplify product design and manage costs, in turn accelerating return on investment.
Where do order, procurement, production, inventory and shipment data converge to create potential value across the end-to-end supply chain? In an often taken-for-granted storehouse of critical information that hasn’t changed much in decades: the transportation management system (TMS).
Evolution Isn’t a Straight Path Forward
“It’s not that many years ago that people were arranging and managing transportation with just a telephone,” says Rob Schaefer, vice president, North America sales for Atlanta-based supply chain software developer and service provider Manhattan Associates (MA). But as market opportunities expanded overseas and as more manufacturers adopted lean, just-in-time practices focused on minimal inventory and time-definite delivery of materials and parts, supply chains graduated to spreadsheet software and, eventually, proprietary enterprise resource planning suites.
Early TMS software like SAP TM or Descartes, launched in the 1990s, was an add-on to ERP, typically customized for specific buyers and needs. “The problem was that when TMS was introduced, it couldn’t do everything,” Schaefer explains. “It might have been written to handle your outbound, or your inbound, or your truckload but not your parcel or LTL. You ended up with multiple pieces of software that didn’t talk to each other; you might plan your shipments in a TMS, and that then went to a dispatch system and then a routing piece of software, and you had no visibility into any of it once things were in motion.”
Modern supply chains demand more — an end-to-end logistics workflow, inbound through the warehouse to outbound to the customer, managed with a single, integrated software platform that shares information instantaneously with all parties involved.
Inbound, that would be full SKU-level shipment visibility and tracking from a supplier vendor’s premises, and visibility through an integrated warehouse management system (WMS) into receipt, handling and storage, to simplify truck appointment scheduling and optimize warehouse labor configuration in the warehouse to match inbound workflow.
Outbound, it means visibility into the status of inventory and orders moving through the warehouse, to catch and correct disruptions or delays early — an order discrepancy, damaged goods, a final pallet not fitting onto the truck — and to notify affected partners so they can adapt. Visibility is also key to dynamically updated ETAs and transparency in customer communications — a must-have in today’s direct to consumer universe.
Evolution has, until recently, been challenging: customization and integration could be costly and involved weeks — or months — of downtime and testing; it was never certain how an update or modification of one component would work with all of the others. In addition, many small and mid-sized companies still make do with manual processes and spreadsheets. More sophisticated firms have embraced modular cloud software-as-a-service solutions layered over an existing TMS, but even those can require frequent patches and updates as they learn to play nicely with the underlying platform or other modules.
What’s called for is a unified, end-to-end platform, with a modular SaaS model, says Schaefer. “You have to rewrite it all, re-architect the entire solution, to take full advantage of what’s possible in the cloud,” he explains. “It’s not as simple as saying I’m just going to move my on-premises software to the cloud and suddenly all the disparate parts will start talking to one another.”
Integration Benefits
Increasing supply chain complexity, more demanding customer expectations, and more difficult value tradeoffs around sustainability, regulatory compliance and risk management will force a re-evaluation of the conventional TMS. Schaefer believes that full integration of modular solutions will become a must-have for operators, because:
• TMS updates can be automated, syncing instantly in with WMS and other modules, with minimal testing and no advance planning or downtime needed.
• Customers can quickly add or modify instantly configurable capabilities to scale or adapt as needed to changes in market conditions or the customer base.
• A truly unified management system encompassing orders, inventory, transportation, the yard and the warehouse ensures that all internal and external partners have access to the same workflow, exceptions and analytics, at the same time, in real or near-real time.
Integration within a microservices architecture, which reduces the size and interdependency of platform modules, is an added benefit companies might look for, because it offers agility for client IT teams to build their own customized solutions, whether to manage resiliency challenges — a sudden demand spike, a sustained peak period, a workforce shortage — or to get an early jump on new market opportunities, without fear of unintended systemwide consequences.
That latter capability is particularly important in light of lessons learned during Covid about the need for real-time response capability as disruption occurs.
Welcome to the New Normal
According to 2020 research by Adobe, e-commerce maturity advanced by the equivalent of six years during just the first five months of the pandemic. That is now part of the standard operating environment as customers’ expectations around time-definite, on-time/in-full, omnichannel delivery have extended from small, frequent parcel shipments to B2B just-in-time freight and larger consumer durables like home furniture and appliances.
But e-commerce and related resiliency are just the beginning of the new complexity. As global trade fragments into regional blocks and sanctions multiply over China trade, Ukraine, tariffs, local content rules and more, companies will be relying on TMS/WMS data to manage documentation and logistics, and to develop and implement nearshoring/reshoring strategies.
In the domestic U.S. market, the TMS/WMS will be instrumental in collecting and interpreting external market demand signals and linking those to shipment and inventory flows to align demand with truck and warehouse capacity. Analytics will help with the intricacies of carrier selection, bid development and contract negotiations as the freight cycle turns, to avoid chaotic — and costly — truckload and LTL spot markets.
Finally, merging sustainability and commercial objectives in supply chain planning adds both significant complexity, but also opportunity, for businesses chasing long-term growth, Schaefer argues. Governments may be slow in adopting meaningful regulations to reduce carbon emissions, but most public-serving businesses no longer have that option— given the realities of climate change and the brand impacts with consumers and investors — of doing nothing.
A large share of the processes, calculations and analytics behind measurement and reporting of so-called “scope 3” emissions reporting from external suppliers, logistics providers and facilities, for example, will reside in the TMS/WMS, assisting with supplier, 3PL and carrier selection and management.
“I’m not only loading rates into my system, I’m loading things like sustainability, on-time reliability, invoice accuracy and so on in addition to rate per mile,” Schaefer says. “So I can use that scorecard in the optimization process based on metrics like sustainability or reliability for that lane.” The data also supports building better loads to consume less fuel and generate fewer emissions. “Having three-quarter full trailers on the road isn’t very sustainable,“ he adds. “Having a unified TMS/WMS system helps to build better loads for each truck.”
For retailers and manufacturers looking to simplify customer returns or build new revenue streams in after-sale service or reuse/recycling, the same system capabilities can manage reverse logistics to extend product life cycles.
Schaefer cautions that software alone can’t fully address the challenges facing modern supply chains; solutions are only as effective as the underlying datasets and internal processes. Companies need to expand their data sets by integrating functional and regional silos and formalizing supplier and vendor reporting to capture dynamic shipment location and status data, inbound and outbound. They need to make that data actionable with better connectivity and deploy analytics to make sense of much larger data volumes with many more variables.
But as companies undertake that journey, they shouldn’t overlook or take for granted the role and importance of the TMS and WMS on which the rest of their solutions depend.
Resource Link: www.manh.com/solutions/supply-chain-management-software/transportation-management-system.
