Logistics companies are often criticized for being slower to adopt new technology as compared to other industries. Whether or not this is completely true, it is accurate that every company has a tight IT budget. New operations systems can eat away a large part of that budget. Performing a cost/benefit analysis can help determine if investing in a new technology will be advantageous to your organization.
TMS applications today are priced so that a logistics company is able to leverage the available technology in their operations. The benefits of a TMS include lower transportation costs and great efficiencies throughout an organization, including better routing decision-making and better communication with suppliers.
Make faster routing decisions
One of the benefits of technology is the ability to make faster and more accurate routing decisions. There are several considerations when choosing a shipping carrier, but most often, routing decisions are based on who was used in the past, or out of habit. Logistics cost management entails getting the lowest cost carrier for your shipping needs. This can create a lot of legwork as every shipment is unique.
Freight rates can be complex, with the factors that make up the total cost of a shipment differing by carrier. LTL rates involve a complicated calculation of base rates, tariffs and a discount—in addition to fuel surcharges, transit times, and accessorial add-ons. Choosing the carrier that gives the best balance of cost and service would require hours of research and manual calculations. Technology, however, ensures the correct carrier is chosen every time, for every shipment.
Why is this so important?
Transportation is a very dynamic marketplace, which means doing things the way they’ve always been done can be cost-prohibitive. Technology takes the decision making out of people’s hands, ensuring the optimal routing and carrier selection is always made based on objective data. Without technology to support the logistics department, even more manual work is necessary even after the carrier is chosen.
Logistics professionals spend much of their day on the phone, looking for carrier availability, tracking shipments, and coordinating pick-ups. Many begin their day by checking the day’s loads and then use the rest of the day to find carriers. Logistics technology can cut down on much of this arduous task by automating the process to find the best available carrier.
Once carrier selections are made, loads are assigned to the designated carriers by the system, with all of the information needed to make the pick-up. If a carrier refuses a shipment through the TMS, the next best carrier is contacted automatically.
Why is this so important?
Better communication leads to efficiency. Equally as important is the impact logistics technology has on accuracy. Having key shipment data, like a rate confirmation and other details documented, helps ensure things happen on time. It also eliminates any questions after the fact when questions about costs and service expectations come up.
Leveraging technology enables your company to use logistics operations as a competitive advantage. Being able to make better routing decisions and creating an automated system for communication with carriers leads to a more cost-effective organization. Stay tuned for our next blog article, which will cover more benefits of TMS logistics technology.