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The Year of the Ox

By Clifford F. Lynch

DC Velocity, March 2009

In the Year of the Ox, 2009, being a transportation manager is not for sissies. Right on the heels of a period of unprecedented fuel-price volatility, the economy has plunged to depths not seen for several decades. I think it’s appropriate that in the Chinese calendar, the current years is associated with an animal that represents order and fearlessness – qualities that logistics and supply chain professionals will need in abundance as they struggle to manage through tough times.

Although this industry has repeatedly demonstrated its resilience, it would be naïve to suggest there are not serious problems facing shippers. Rising costs and lower revenues have become major concerns for many companies, and the result has been tremendous ongoing pressure on logistics and supply chain managers to monitor and manage expenses. They are finding that they’re expected to do more with less while, at the same time, maintaining excellent levels of customer service.

History has shown that in this business, when the going gets tough, we usually turn to technology and seek some order in our lives. This period is no exception. In order to protect their companies’ costs, service, and positions in the marketplace, increasingly today’s transportation managers are relying on technology as a necessary measurement and management tool.

One such technological aid is the transportation management system (TMS). Transportation management systems are hardly new; they’ve been around since the 1980s. But advances in technology have led to enormous strides in sophistication, functionality, and effectiveness, and today, they have become a critical requirement for the successful management of a transportation function. According to Adrian Gonzalez, director of ARC Advisory Group’s Logistics Executive Council, the TMS market surpassed $1 billion in 2007, "reflecting the growing desire of companies to gain better visibility and control of their transportation processes and spend." It appears that it was a similar story in 2008 and that the trend will continue in 2009.

While some companies have developed their own systems, others use software developed by supply chain solution specialists. For those that go with an outside supplier, selection of the system itself can be a daunting task. A TMS can be complex and expensive, and there are hundreds of vendors to choose from.

Users can purchase these systems outright, or they can opt for the "software as a service" or on-demand delivery model. (With the latter, the user accesses the system only when necessary and "pays as he goes.") Most users will agree, however, that a good system will have two main components – transportation planning and transportation execution. Most users also would agree that the data capture is the major challenge to implementing a useful system. And these are not rudimentary systems. They are Web-based applications for organizations seeking an enterprise-wide solution, managed through centralized administrative tools.

Not all companies will require an extensive and expensive TMS. Those that don’t may find that one of the "cafeteria plans" is more suited to their needs. Under this type of arrangement, the vendor offers its TMS in modules. A company can simply purchase what it needs and add on as necessary.

Available modules provide systems for such functions as carrier selection, information management, load planning/optimization, modeling/benchmarking, order and bill of lading management, posting/tendering, and rate management.

Whatever TMS is selected, the primary objectives should be to increase visibility, improve service levels, and reduce transportation expenditures. While using a TMS won’t improve the economy, it can help a company manage its transportation more efficiently. Those born during the Year of the Ox like to have everything in order in times of trouble. A TMS can be a good tool to help us manage through a distinctly unpleasant environment.

Oxen believe in security.

 

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