Global Logistics and Supply Chain Strategies - October 2008 - (Page 34)

It’s High Time to See that Your Business’s Success Is Closely Tied to Transportation BY THOMAS FOSTER Despite skyrocketing fuel costs and rising transportation rates, the majority of manufacturers and retailers have failed to invest in transportation management systems that can save money and optimize supply chains. I f there is one complaint shared by every manager at every company today, it is the impact that high fuel and transportation costs are having on their businesses. Budgets and bottom lines have been gutted by these costs that increase every day. So if these costs are such a critical issue, why do nearly two out of three companies across every industry lack the technology or processes to manage its transportation efficiently? “It is amazing to me that more companies do not appreciate the deep connection between their transportation operations and the rest of their business,” says Brad Wyland, a senior researcher at the Aberdeen Group, who just published a report examining this question. “Best-inclass companies certainly make the connection and have invested in transportation management solutions that help manage their businesses and leverage the information to collaborate better internally and externally. Laggard companies are just beginning to look at TMS opportunities, but they are at least two or three years behind the curve. They are paying a high price in the meantime.” Wyland’s report, entitled No Excuses! Why Optimizing Transportation Management is Within the Reach of Every Company, examines what transportation managers are doing--and not doing--to deal with the rising cost of fuel and surcharges while trying to provide better visibility to freight and cost status to internal and external partners. Based on a global survey of transportation and logistics professionals, the Aberdeen report reveals that only 39 percent of companies are using any kind of TMS technology and that most companies still rely on manual processes and spreadsheets to handle all day-to-day shipping operations, contract negotiation, carrier performance measurement and other aspects of transportation management. It is not a coincidence that 40 percent of the companies reported poor transportation service. The price of failing to invest in TMS technology is high, according to the Aberdeen study. So-called laggard companies that usually have manual systems and poor processes must expedite 27 percent of their shipments to meet customer requirements. They also experience less than 90 percent on-time deliveries. Very clearly, manual systems are no longer capable of controlling transportation costs or service quality let alone support information sharing and visibility among departments. Information that is reported weekly, monthly or quarterly--the norm with manual systems--is not actionable. TMS technology not only helps optimize 34 OCTOBER 2008

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Global Logistics and Supply Chain Strategies - October 2008

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