Convergence of Supply Chain Systems
Would a Convergence of Execution, Planning, Tracking, Alerting, Auditing, and Reporting platforms be of benefit to you?
Convergence of enterprise systems is not new. In the ‘90s accounting point systems converged to offer integrated ERP systems. Anyone that was involved in launching an eCommerce site twenty years ago may recall the numerous unintegrated systems required to launch a site. Even marketing systems have converged through major players like Adobe’s suite of marketing automation offerings. While the Transportation Management Systems (TMS) industry has evolved significantly over the past five years, many shippers are still struggling to manage multiple software products as they plan, multi-mode ship, track, audit, and report. While the TMS convergence is maturing, we believe that this trend will continue.
Migrating your heterogeneous environment to a single converged system may or may not be the right approach for you at this time. (Even if you do have the desire, may not have access to the capital required.) Regardless of whether you prepared to take the leap, you may find value in the following six observations regarding TMS convergence trends and the value these trends may provide a shipper’s business.
Figure 1: ScanData’s Full Parcel Lifecycel
1 - Convergence Across Modes
Often organizations will have a TMS dedicated to a particular mode. Freight, LTL, parcel, and courier delivery modes each having their own “optimization and execution system.” There may be rules engines or a planner manually allocating orders to a particular shipping mode. With good processes and experienced planners, this method may work well, but the costs to deliver are high and certainly there are optimization opportunities missed. With a TMS that is able to handle all modes and optimize a large set of orders one is able to 1) house all shipping data in one Execution system for future data analysis, 2) optimize throughout the shipping process (if an order needs to change modes after planning due to a variable change), and 3) potentially build more dynamic rules used in mode selection.
2 - Convergence of Planning and Execution
Historically, orders were often released to the WMS to (hopefully) be optimized within the four walls of the warehouse. Given a large enough order pool and the available technology, the evolution of the Warehouse Execution System (WES) has made the ability to optimize the picking process through waveless releases. Companies are now looking to improve more and integrate their TMS with the WMS to optimize and group their outbound orders – not just in picking and packing, but also utilizing carrier pickup times and ship point locations. By taking a large order set, an advanced Parcel TMS can group orders into DDUs that can be combined to ship in larger quantities such as LTL or FTL. These batches can then be processed through the WMS for picking and then the TMS groups these orders for larger delivery. The savings through density can be significant per unit for your shipping cost at minimal cost to warehouse operations.
According to Gartner’s Top 25 in Supply Chain 2020, 90% of companies that made the list this year were implementing or upgrading their supply chain planning and visibility. These companies are creating efficiencies through their use of technology to tighten the gaps in their outbound fulfillment and providing increased customer experience.
3 - Convergence of Execution and Tracking Visibility
With decoupled systems, the process of gaining a full picture of an organization’s deliveries can be cumbersome and inaccurate. Often shippers will have to manage the data flow of what was shipped (data housed within the Execution system) and what is in transit (data housed within the Visibility system). Latency, malformed data, system integration failures, and human capital are just a few of the organizational burdens that shippers have to deal with when trying to sync up the two systems to have a full picture of their whole parcel ecosystem in order to track, alert, troubleshoot, and report on delivery status and performance metrics. With a single system accountable for both execution and tracking, a shipper is able to have visibility to the status of each individual order and aggregate performance – without having to deal with the burden of data integration, troubleshooting integration failures, or edge cases. In addition, the reduction of potential integration latency allows for more timely alerting and delivery troubleshooting.
4 - Convergence of Execution Auditing
Reconciling order data and carrier charges can be a complex task, especially if multiple system data sets are involved. Auditing firms provide value in handling this complexity and help the process or merging data and finding insight in the data across shippers, transportation systems, and the carriers themselves. With the evolution of the PTMS, variance reporting, invoice tracking, and weight checks are all housed within the database of the PTMS and easily reportable within the system, or exported to a third-party BI tool. This amalgamation of complex data points allows Logistics or Finance departments a more holistic understanding of their true cost of shipping. Chargebacks due to incorrect weight, class, or mode can be disputed and resolved with carriers as well as points of negotiation at contract time.
5 - Ship-Point Convergence
Outbound Order Fulfillment often requires utilizing multiple Ship Point types that could include Distribution Centers, Fulfillment Centers, Manufacturing Centers as well as Stores, Dark Stores, Drop Ship Vendors, and 3PLs. If this sounds complex, it could be. Often shippers are using a different PTMS for each ship point type, and in some cased like drop shipping, the vendor’s PTMS is acting as the Execution system. If one were to centralize, the data flows across ship points and integrates the systems so that the flow of orders can be optimized, and reporting from carriers can flow back in a bidirectional exchange of data. All this data needs to be used to make real-time changes, act on historical data, and plan for future developments.
A true Multi Ship-Point Parcel TMS will be tightly integrated with both your OMS and downstream Warehouse Management Systems along with drop shipping and ship-from-store systems. This integration will shop your orders to identify the best Ship Point, and work with your WMS to optimize printing/picking/packing (and of course create waves if that is your thing) to provide the least cost shipping solution. A PTMS will be the source of truth for all your shipping data and will take in all the order information and translate the carrier updates.
6 - Full Convergence
Full data access is elusive for many companies and with the advent of each new technology and acronym the need for more systems increases. By integrating these systems in the backend, data can flow from previously unconnected systems to increase operational efficiencies, customer satisfaction, and managerial accountability. An example of this is to integrate your outbound PTMS’s ability to provide up-to-date tracking with a CRM platform. You will have one system to provide the alerting to your customers and your staff to proactively reach out (either by phone or email) regarding packages that have been delayed.
70% of companies on Gartner’s Top 25 Supply Chain have established COEs for supply planning, logistics, strategy, and IT. These COEs are heavily involved in implementing the use of AI and advanced analytics to create a leaner organization from so many different systems. While maybe not on the same scale as a Fortune 10 Organization, any company can utilize their systems to take advantage of their data to make substantive changes.
By centralizing all your order activity into an Enterprise Transportation Management System, you will have the power to analyze all your order information and carrier information by a multitude of data points. The holistic health of your Distribution Supply Chain can be analyzed for underperforming DCs, Vendors, Carriers, or lanes. When dealing in volumes, small incremental changes have big impacts.
We realize this piece is very high-level, and if you’d like to drill down on any of our recommendations, reach out to us with questions or comments. We also welcome opportunities to deliberate or dispute our insights and recommendations. No conversation is off limits.
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