Your Transportation Management System Can Help Manage the Amazon Effect

Lots of supply chains are dealing with the “Amazon effect,” which has led consumers to demand lightning-fast (and free) delivery times, last-minute order changes, and 100 percent order accuracy.

While initially seen as just a retail problem, these expectations have been extended to the B2B world as well.

Managing the Amazon effect requires a host of solutions, but a transportation management system (TMS) is often overlooked.

A TMS is critical for the execution of an order, and this is especially true as order cycles shorten and shipment sizes shrink.

Any transportation manager would agree that if these customer behaviors aren’t properly managed, they’re going to drive up costs.

If you’re concerned about the demands and expectations around your orders and deliveries, part of the answer may literally be at your fingertips.

But please note that not all TMS systems will be able to handle the scenarios and options I describe below. Only a Tier 1, multi-modal TMS that was designed in the last several years will have the architecture and flexibility to respond in such a dynamic environment.

Real-time planning

A TMS can bridge the gap between the order management system (OMS) and warehouse management system (WMS). By optimizing within the constraints of customer service, it can help consolidate customer orders and find the best mode and carriers to keep costs as low as possible while giving route planners the opportunity to dynamically optimize right up until the freight leaves the warehouse.

This includes choosing the best cost/service option for all transportation modes, from parcel to LTL, along with multi-stop TL, pool distribution, FTL and intermodal - while using real rates and services times for all modes. Allowing planners to hold onto freight as long as possible, but still keep releasing freight for shipping as needed, is especially important if trying to consolidate same-consignee freight as well as building multi-stop TLs.

A TMS can also shift from being a planning engine to an execution and visibility tool that monitors freight in transit: it knows which orders are on which shipments, along with service times for all modes. It can use logic and workflow to proactively monitor freight and automatically get status and location information from carriers – as well as alert and respond automatically. In fact, I know of some shippers that ping their TMS to get the best mode selection and ship date requirements pre-WMS.

Leveraging pool distribution

More and more shippers are seeing order sizes shrink, which makes routing all the more critical. In advanced scenarios, a TMS allows planners to optimize multi-stop TL freight and build pool distribution (this where a tight integration with both the OMS and WMS is important).

Pool distribution is a long-standing mode of transit that is seeing growth again. Like zone skipping for LTL freight, pool distribution provides a faster and cheaper method of delivery with more visibility and control. It’s faster than straight LTL, as you use TL to get the freight to the local terminal and avoid LTL carrier terminal transfers.

With the right TMS, you can handle multi-leg moves and the associated cost/invoice allocation, which allows you to choose the best pool point and determine which shipments should be picked up or delivered. Routes are kept simple so you can break apart very complex orders and route them each separately. This is what gives you the all-important tactical savings; it lets you get creative about how you distribute freight and show your customers their savings.

Optimizing your distribution network

Thanks to e-commerce, many companies are finding that they need to be more than just a fulfilment company. That could mean light assembly, restocking or some other type of specialty tracking service that’s required for better customer fulfillment as you create your own differentiators. For niche distributors that operate regionally, a TMS is invaluable. It can find the best partner distributors to act as the delivery agents, along with helping to acquire the freight and pay distributors.

When it comes to the Amazon effect of faster shipment demands, smaller orders, or other customer expectations, don’t ignore your TMS. A modern TMS with the right design can operate dynamically and in real-time to help you maximize routes, deliveries, and your customers’ experience.

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