Extra effort: Better transportation management starts with a business case

Dedham, Mass.-based ARC Advisory Group has repeatedly adjusted upwards its forecast of the transportation management systems (TMS) market over the last two years, primarily due to rising fuel prices that are sparking interest in improved transportation management. Yet despite knowing what TMS industry best practices are, few companies are implementing them and achieving best-in-class stature, according to a new study from Boston-based Aberdeen Group.

12/05/2007


Dedham, Mass.-based ARC Advisory Group has repeatedly adjusted upwards its forecast of the transportation management systems (TMS) market over the last two years, primarily due to rising fuel prices that are sparking interest in improved transportation management.

ARC says the TMS market crossed the $1-billion threshold for the first time in 2006.

“Companies that got by in the past with spreadsheets realize that the increased cost of oil threatens service-level failure unless they implement some form of TMS,” says Adrian Gonzalez, ARC director of research.

ARC says on-demand or SaaS [Software-as-a-Service] solutions comprise the fastest-growing segment of TMS due to lower upfront costs and dedicated IT support. On-demand solutions also typically provide a ready-made networked community of connected parties that many transportation managers need to work with.

For one, enterprise systems vendor Infor 's SCM Transportation Management 9.0 is offered as a subscription, an on-demand service, and a licensed onsite product. Several new features allow effectively managing inbound and outbound transportation of products from order inception to delivery. Chief among these are embedded optimization, routing compliance, and additional freight payment features.

Infor SCM TMS 9.0 also greatly expands global trade compliance support, extending integrated coverage support from 50 countries to 120 countries via a trade data partnership with Management Dynamics , a provider of global TMS solutions.

“The main two enhancements have to do with expanded international trade compliance support and fully integrated transportation planning optimization,” says Eric Nilsson, senior director, product management, Infor. “The optimization engine handles aggregation, consolidation, and pooling of transport movements. We’ve effectively integrated the planning component with the execution piece so that you have it all within one platform.”

Getting started
Despite knowing what transportation management industry best practices are, few companies are implementing them and achieving best-in-class stature, according to a new study from Boston-based Aberdeen Group .

“I was surprised by the discrepancy between knowing and doing,” says Ian Hobkirk, Aberdeen's senior analyst for supply chain execution. “It goes back to building the business case more broadly. Transportation planning often is decentralized, and departments don’t have resources to connect the dots, to see the value in having broad visibility to all costs of current processes,” he says.

Aberdeen recommends:
• Quantify costs of manual processes across all departments to gain executive support.
• Benchmark performance against best-in-class companies.
• Consider on-demand deployment models to reduce strain on internal resources.
• Consider managed services to compensate for lack of staff expertise.

For The C.F. Sauer Co ., a Richmond, Va.-based manufacturer of consumer goods and food products, the business case for choosing a transportation and logistics management suite from JDA Software was to reduce overall transportation spend by 7 percent to 10 percent.

To meet this business objective, C.F. Sauer is leveraging JDA Transportation Planning, JDA Carrier, and JDA Freight Payment solutions to achieve increased truckload optimization, improved response to changing freight capacity needs, and enhanced invoicing and freight payment practices.

According to Curtis Baster, C.F. Bauer's manager of transportation and logistics, “Following a thorough evaluation of other software providers, we selected JDA’s best-in-class transportation solutions to help us maintain control over freight expenses, enable the verification of freight charges from carriers, monitor carrier performance and compliance, and provide appropriate data for contract negotiation.

"It was important for us to work with a provider that understands the transportation needs of companies our size, and JDA really stood apart from the competition in that respect," Baster continues. "We tend to take a‘lean’ approach to our operations and implementations, and we also believe strongly in extensive end-user involvement in these types of projects, which is consistent with JDA Software’s implementation methodology.”
C.F. Sauer went live with the JDA solutions at its Richmond plant on Nov. 12. The solutions will be rolled out to the company’s remaining four plants in Greenville, S.C.; Kansas City, Kan.; Sandston, Va.; and San Luis Obispo, Calif.

Says David Johnston, senior VP of supply chain, JDA Software, “With increasing global operations, rising fuel cost, and focus on carbon footprint reduction, today’s businesses must find more cost-effective methods to manage and control their transportation operations. JDA’s Transportation and Logistics Management solutions enable companies of all sizes to manage complex transportation movements and create a transportation plan that drives out cost and supports sustainable operations.”





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