By Clifford F. Lynch
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
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
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.