Don’t be a Victim of the Transportation Management System (TMS) TRAP
Posted: October 29, 2019 | Newsletter
TMS has been the hottest subject for the last 10 years. These are systems that manage carrier contracts, Least Cost Routing, load tenders, tracking and tracing and Freight Bill auditing. Some Shippers implement them independently (recommended) and others implement a 3PL version. All of these are important areas to manage, but there are other ways to manage them that does not require a TMS system and certainly does not need to be managed by a 3PL; signing up for a free TMS is a bad idea.
Case and point is that two weeks ago, Convoy® recently announced its TMS platform for free. The catch is that the system is pre-configured with Convoy’s network of carriers. Convoy charges the carrier which in turn is passed onto the Shipper. This is an expensive option for a “free” tool.
Even worse is the “Free” TMS offered by 3PLs. The 3PL has contracts with carriers and the Shipper transacts with the 3PL. Essentially, the Shipper is trapped as they are integrated with the 3PL and have no other choice but the 3PL carriers at their rates without accountability. Furthermore, the Audit functionality is rendered useless as the 3PL audits themselves.
There is another approach which lessens the needs for a TMS. First, make pricing simple. A consultant can develop this for the Shipper and this would enable additional benefits without using a TMS.
1) The TMS manages complex rating methods, accessorial charges, classes, weight breaks etc. Complex pricing methods are not required! Making a simpler pricing program negates the need to manage a complex one.
2) Routing based on least cost rating. If pricing is simple and business is awarded, then there will be no need for a TMS to determine the carrier.
3) Load tendering using a TMS. This is predicated on points 1 & 2 above. So, if routing is based on an award, then there is no need to execute load tenders and acceptance to multiple carriers.
4) Tracking and tracing using a TMS: Carriers have great tracking and tracing capabilities and this can be integrated easily without a TMS.
5) Freight bill auditing: An independent freight auditor would be able to execute rate audit without bias and supply historical data for analysis.
Before signing up for a “Free” TMS, first explore the options aforementioned as they may remove the need to have one at all. Call CPC today for a free assessment and start optimizing transportation before falling victim to the TMS trap.