SCT firmly believes that a competitive LSP must invest in the TMS capabilities to match their customer priorities and differentiate themselves from the competition. Deep consideration of industry best practices is central to adopting a technology-driven organizational strategy that will support competitive differentiation and drive customer acquisition and the ability to become the established carrier of choice.
LSPs need a Transportation Management System (TMS) to manage complex, multi-client logistics operations efficiently and cost-effectively by providing a unified platform for shipment planning, carrier management, real-time tracking, automated billing, and comprehensive reporting. They can be extended to differentiate client relationships with real time customer portals. Benefits include:
- Cost reduction through optimized routing and automation
- Increased efficiency via real-time visibility and automated tasks,
- Improved customer satisfaction with better service and reporting
- Enhanced scalability to manage growth and diverse client needs
The capabilities required for transportation management in a logistics services provider environment depends heavily on the organization’s scale and complexity. It may include any combination of the following, listed in order of supply chain complexity.
- Transportation Execution – Provides real-time visibility of where shipments are, tracks carrier performance (on-time delivery, service levels), and sends alerts and initiates contingency planning if shipments are delayed.
- Planning & Optimization – Selects the best carrier, route, and mode (truckload, LTL, parcel, intermodal, ocean, air), consolidates shipments to reduce costs by applying business rules to required shipment schedules and/or inventory replenishment needs.
- Freight Audit – Automates freight bill audit and payment, ensures correct rates, accessorials, and surcharges.
- International – global trade helps businesses navigate the complexities of international commerce by automating and managing import/export processes, ensuring compliance with trade regulations, optimizing supply chain operations, and reducing associated risks and costs. These systems handle tasks such as tariff classification, customs documentation, and compliance checks, providing financial and operational visibility for international trade.
- Asset Management – Carriers or shippers with dedicated trucks or trailers. It extends the planning and execution functions to include real time GPS tracking, driver scheduling and management, mobile driver applications, and asset management.
- Rating and Billing – Logistics services providers must invest in robust tools to calculate contract and spot rates and track profitability.
- Visibility Portals – Logistics services providers must invest in robust tools to calculate contract and spot rates and track profitability. Increasingly, they are looking to differentiate through investment in portals for their customers to see real time dashboards and reporting through a dedicated portal.
Value in a logistics services provider TMS environment is typically derived from optimization capabilities and improved relationship management that drives more business with strategic clients. International and asset management requirements embed cost and complexity into these environments, but can also amplify the value of a more robust planning system. SCT sees achievable ROI as a dependency of the level of complexity:
- Basic operations (< $60M in freight spend) see benefits from simple routing and carrier selection logic, with manual consolidation processes adding value.
- Improved tracking and reporting contribute to a typical savings of 2–5% of total freight spend.
- 10-30% savings in labor costs associated with staff productivity improvements.
- 5-20% uptick in revenue associated with additional bookings of freight due to increased responsiveness to spot requests and exception management.
- Advanced operations can see an improvement of:
- 5–15% of total freight spend leveraging optimization engines for load consolidation and route optimization as well as carrier selection
- 10-30% savings in labor costs associated with staff productivity
- Improved freight audit processes contribute to a typical savings of an additional 2–5% of total freight spend, in addition to soft benefits associated with improved carrier relationships through improved ease of doing business and expedited payment processes.
- Reduced compliance fine exposure from improved customs tracking, growing to 3-10% of global duty and tax spend if employing duty tax and optimization methods.
- 10-35% uptick in revenue associated with additional bookings of freight due to increased responsiveness to spot requests and exception management.
