Transportation is often the largest supply chain cost for a company. While there are many approaches to reducing this expense, such as redesigning the network or running a carrier bid event, the implementation of a transportation software can reduce costs across modes and provide better visibility and service to the organization through broad functional capabilities. Generally, transportation software is used to manage capacity, optimize shipments, enable rate shopping, support execution, improve asset utilization, manage in-transit visibility, reduce fleet miles, improve customer service, and often support invoice generation, receipt, and settlement.
Studies have shown that transportation softwares yield six to eight percent savings on transportation costs, yet it is only being taken advantage of by 35-45% of companies. Historically, an implementation was very costly and took a long time to pay back the upfront investment. This costly and slow ROI prompts most companies to focus on implementing or improving other supply chain execution (SCE) software, such as an order management system (OMS), warehouse management system (WMS), labor management systems (LMS), and enterprise resource planning (ERP) software, while considering transportation as “the cost of doing business.” Transportation happens “outside of the four walls,” so building the business case is more difficult.
While software selection can be a daunting task for some companies, below are several “dos” and “don’ts” that will ensure the project goes smoothly. Here are some tips to make the selection process as painless as possible and set your organization up for success from implementation to capturing the business case.
Spend the proper amount of time getting executive buy-in across multiple functional areas beyond transportation. Transportation challenges are typically the symptom rather than the problem. Include IT leaders who will play a large role in the operation and maintenance or support of the system once it is implemented.
Prioritize your requirements based on the business case. Focus on the higher return and lower risk items first, and let complicated solutions take a lower priority for additional phases.
Conduct internal, on-site visits with the user base to build out the requirements documents. Make sure to conduct the “three actuals” assessment: see the actual people doing the actual process in the actual place.
Keep the bidding vendor field small. You should have four to six software vendors, so the process does not get overwhelming. Software vendors invest a significant amount of time and money into demonstrating their capabilities, so they need to feel as though they have a realistic opportunity for the process to be worth their time.
Leverage existing software vendors providing other SCE applications in your organization to help reduce licensing costs and integration requirements.
Conduct scripted demos with the potential vendors. All vendors should be required to follow the same scripts to ensure consistent scoring among the vendors. The scripts should have five to 10 mission-critical flows that are tied to the critical requirements.
Be detail-oriented in scoring and weighting the demonstrations. Vendors who score higher against the business case drivers specific to your organization should be favored compared to those scoring higher in other areas.
Make sure potential partners are a culture fit with your organization. How well vendors work with companies often relies as much on culture as it does the vendor’s functional and technical capabilities.
Don’t make this a year-long project. Aim for an eight-week project, though it could take 10-12 weeks to complete.
Don’t ask vendors to respond to thousands of requirements questions.
Don’t rule out a multi-vendor solution. Certain tools will be stronger for transportation management system (TMS) functionality versus shipment execution, vehicle routing and scheduling systems (VRS), and fleet management systems (FMS). There are also lots of smaller imbedded software and technical integration partners to system providers (such as SMC3, mileage engines, API vendors, visibility providers, GTM capabilities, etc.).
Don’t assume current ERP, WMS, and OMS vendors will provide the best transportation solution. Certain vendors have purchased transportation software vendors, so it is not necessarily a single platform and tool.
Don’t assume a hosted deployment of on-premise and SaaS have the same implementation requirements and benefits.
Don’t expect the vendors’ initial implementation estimate to be 100% accurate. Even estimates based on thought-out requirements and an education of exactly what the organization needs in a TMS will not be perfect. It takes time for vendors to truly learn organizations and get a good sense of existing systems. There are always other factors that could impact estimates.
Geoff Milsom is Senior Director of Transportation Consulting at enVista, where he leads transportation consulting practice, primarily focused on transportation strategy, system selections, implementations and modeling & analytics for global shippers and third-party logistics companies. Geoff has successfully implemented transportation strategies and systems for many companies including CVS Health, Belk, Sephora, Nestle, Kraft, RR Donnelley, Peet’s Coffee & Tea, Tempur-Sealy, Corsicana, Sprouts, Wegmans, Giant Eagle, C&S, the NSA, Lutron, Trinity Industries, Gavilon, Koch Industries, Michels Corporation, Dohmen Life Sciences, ArcBest, Lasership, Port Jersey / Continental Logistics, Ranger Logistics, Covenant Transport, and DSC Logistics.