Transportation Management Systems (TMS) can be transformative tools. If correctly selected and implemented properly, a TMS can deliver 5% to 10% a year in freight savings and related efficiencies, according to many estimates.
That’s the exciting part. The not-as-exciting, though essential, part comes in deciding how to develop and implement such a system. Some companies build and manage their own TMS. Others outsource the process to a managed transportation specialist, or to their 3PL partner. Though strategic paths may differ, each road has two common signposts: One, a TMS is a significant investment in time, capital and manpower, and two, it is tricky to get right.
In our 15+ years of advising prospective TMS users on vendor selection and implementation, we have a good idea of what works and what doesn’t. In broad strokes, a successful integration involves the early input of key stakeholders and a comprehensive implementation methodology driven by an experienced project leader. Effective teams are clear-eyed about the cultural challenges of getting folks to adapt to new and unfamiliar workflows. They are aware of the risks of “excessive customization” that can add time and money to a TMS project once the time comes for a version upgrade. Perhaps most important, they will not rush to “go live,” and will resist the temptation to capture quick benefits at the expense of not having a system fully vetted to respond to all scenarios.
Though strategic paths may differ, each road has two common signposts: One, a TMS is a significant investment in time, capital and manpower, and two, it is tricky to get right.”
In a typical TMS implementation, a TMS vendor or system integrator identifies the proper workflow integrations with Enterprise Resource Planning (ERP) Systems, Order Management Systems (OMS) and Warehouse Management Systems (WMS), all vital cogs in the process. These implementers focus on what we call the “create transactions” step, where an order is pulled from an ERP or OMS into the TMS, and the TMS tracks all execution milestones from initial planning and tendering through proof of delivery and payment. Good vendors and integrators are capable of testing and successfully validating the expected results in all of the relevant systems.
But what happens when this so-called happy path—where everything goes according to plan—hits a detour? Has the TMS been tested to react to exceptions that can occur anywhere in the order-to-delivery chain? It is hardly unusual for a carrier to accept a tender and to have no one show up. Delivery appointment times can change after a load goes in transit. Order sizes, delivery dates, and appointments may need to be modified once the order is transferred to a TMS.
Given all the potential adjustments, it is critical that TMS data be consistent with the information living in the other systems of a user’s environment. That is, should a carrier not show at a dock, the choice of the new carrier must be quickly and uniformly reflected in the TMS, WMS, OMS/ERP. What we’ve seen, however, is that many implementations don’t build in robust “updated/deleted transaction” functionality. This can result in manual workarounds that will offset the promised labor savings of a TMS. It can also create inconsistent data flows, quickly leading to the perception that the TMS data is wrong. This can reduce the benefits associated with receiving the “better information” that the system was designed to produce. In fact, we’ve encountered cases where the original and updated carrier show up for the same load because changes made in the Order Management System weren’t reflected in the TMS.
Surprises are unpredictable and unavoidable. Yet there are ways to mitigate their impact. A respected operations person, perhaps assisted by a trusted third party like Chainalytics, should be involved in the implementation design, paying close attention to the “non-happy path” workflows. Insist at the start that the test phase be given sufficient time to vet all scenarios; don’t go live until all the exception workflows are properly functioning, or a clear plan is in place to quickly address issues once the switch is turned on.
Perhaps an even better approach is to partner upstream with a company like ours who can help identify vendors whose implementation methodology can support many of the “change/delete” scenarios. In the supply chain, as often in life, an ounce of prevention is worth a pound of cure.
Roy Ananny, a director in Chainalytics’ Transportation practice has extensive transportation management system (TMS) experience — as a user, creator, consultant, and IT manager. At Chainalytics, he focuses on helping companies identify opportunities for supply chain and logistics improvements and helps them implement systems and workflow changes to deliver that value.
