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Kimball International, others use transportation management systems to better execute shipments
TO CUT COSTLY DElays, manufacturers are turning to transportation management systems (TMS), which according to a number of industry experts, have the potential to yield substantial cost savings.
It has been estimated that on average, 3.5 percent of a manufacturer's sales costs and 40 percent to 60 percent of total logistics costs are devoted to transportation. "A TMS optimizes shipment plans, including freight consolidation, mode/carrier selection, and dedicated fleet routing and scheduling, all of which directly reduce operating costs," says Bill Nulty, senior vice president of products at CAPS Logistics, Atlanta, a TMS vendor. "Other system benefits include improved service due to more accurate and timely shipments, and the automation of manual processes."
The best TMSs have strong strategic- and tactical-planning modules, which allow extensive "what-if" capabilities to optimize the design of a transportation network; as well as fleet size, fixed/master route design, consolidation strategies, optimal shipment size/frequency, and territory design. Boston-based AMR Research breaks out transportation management software into three basic categories: network planning and modeling applications; transportation resources planning and management (TRPM) applications, which perform tactical planning; and transportation administration and management systems, which are operational execution applications. TRPM systems perform some of the same operational tasks as transportation administration and management systems, including load-- building and tendering, but are able to plan and execute enterprisewide.
"The optimal TMS allows a transportation manager to configure the 'rules' for performing shipments applicable to the company's entire customer base [i.e., optimal parcel carriers for each region of the country, discounts applicable to each carrier and region of the country, and carriers available for expedited service, including next-day and two-day delivery]. The TMS subsequently manages the dynamic characteristics of each customer order [i.e., final destination, shipment weight, delivery date requirements] to make an intelligent rating decision within seconds," says Ken Mullen, manager for logistics software vendor The SummitGroup, Mishawaka, Ind. "A TMS can alleviate manual `ship-rate shopping' and guarantee that the shipper is using the least-cost carrier defined within the dynamic parameters of the order."
By implementing a TMS, companies such as Kimball International, Kohl's, and Alfa Aeser are getting more accurate estimates of the time and cost it will take to deliver goods...