Smooth out the inbound with TMS

Inbound transportation management is simple, right? Pick the optimal routes and carriers to efficiently deliver goods, and keep stakeholders informed of exceptions.

In practice though, today’s inbound processes are complicated. Shippers might not be fully leveraging available optimization logic with transportation management system (TMS) solutions, or a TMS may lack adequate visibility tools to keep things on track. Users might not give proper attention to TMS master data, and suppliers or carriers may be lacking when it comes to best practices like helping generate detailed purchase orders (POs) and advanced shipment notices (ASNs), or other electronic data interchange (EDI) status updates. As a result, inbound processes can be messy, which has led some major retailers to impose fines on suppliers who are late or inaccurate with deliveries.

While there is much involved in smoothing out inbound logistics—from design of the network to better inventory planning—better use of modern, capable TMS software is part of the answer for smoothing out the flow of goods into distribution centers. The ability of a TMS to manage by exception is one of the best ways for TMS to make life easier for DC managers, says Tony Wayda, a senior director and principal with consulting firm SCApath.

“The main thing you can get from a TMS to help with the inbound is better visibility, and along with that, data for compliance reasons,” says Wayda. “You also want a system that allows you to manage by exception. You want the system to proactively inform you: These are the shipments and goods that are in jeopardy, so that you can take appropriate action.”

While TMS solutions have become better at exception management, says Wayda, visibility also relies on strong relationships with suppliers and carriers to provide the updates that are a system’s source for timely insights. Partner relationship management and compliance efforts are a “constant battle,” acknowledges Wayda, but they are worth it for a more precise handle on what is running late, giving DC managers time to react. “You have limited dock space, and limited labor, so you certainly want to optimize those processes,” says Wayda.

Especially in today’s omni-channel world, control over inbound processes requires detailed visibility on a DC’s inbound shipments and in-transit status, says Chris Cunnane, a senior analyst with ARC Advisory Group. “It’s really all about visibility into freight—understanding where it is and when it’s going to arrive so that you can plan effectively at the DC,” he says. “With good visibility, you don’t have trucks waiting around to unload with merchandise needed to fill pressing orders while other trucks with less time-sensitive inventory are unloading. Visibility helps with the labor management aspects as well. So the biggest thing a TMS can provide to improve inbound logistics is that visibility aspect.”

According to Cunnane, TMS suppliers have placed more focus on improved exception management features. But TMS vendors also point out that to gain maximum benefits from the software, users should fully leverage the planning algorithms within a TMS. And, say observers, TMS users must constantly work with partners on issues like EDI communication, and on updating TMS master data whenever new products, routes or carriers are added.

TMS solutions smooth the flow of inbound goods through a combination of planning and execution capabilities, especially through features for in-transit visibility and exception management.

Execution insights
Mitch Wesley, CEO and founder of TMS provider 3GTMS, agrees that visibility features within TMS are key to smoothing the inbound, but they need to work by exception and be effective at correlating loads, estimated time of arrival and order promise information. “There are a lot of people who talk about visibility, but if you can’t relate which orders and which products are on a load, you’re not able to provide as much value,” he says.

Exception management tools within a TMS should be able to highlight which loads are running late as well as highlight any late shipments that will foul up order promise dates, says Wesley. “That is where the biggest value lies—in being able to easily see: Here are the orders on this load that are running late, here is the new ETA, and is the ETA later than the requested delivery window,” he says. “Managers can’t wade through hundreds of status messages to know which ones are important.”

In practice, TMS solutions rely on the ability of the user organization to obtain timely, accurate EDI from carriers and suppliers, says Wayda. For example, suppliers can respond to and modify EDI “850” messages to provide details about incoming goods, while carriers have various EDI “214” status messages to send. A good TMS can accept these messages and track how well carriers perform. “Most of the clients I’ve worked with have a weekly or monthly scorecard they send to carriers,” says Wayda.

For organizations that deal with small carriers or suppliers who lack sophisticated systems for handling EDI, some TMS vendors offer Web-based portals that allow a partner to generate ASNs or status updates. TMS vendor MercuryGate International, for example, offers portal features that include viewing and accepting of tenders, ship status updates, invoicing, route request, routing instructions, viewing of POs, and sending of ASNs. “These capabilities reinforced with exception management ensure proactive issue resolution, enabling a smooth inbound flow,” says Vikram Balasubramanian, senior vice president for product development for MercuryGate.

Despite the availability of features such as portals, getting partners to provide details such as ASNs with carton-level details remains challenging, says Scott Fenwick, senior director of product strategy for Manhattan Associates. “It’s not so much the technology, it’s that generating the information is viewed by some as additive labor and additive cost,” says Fenwick. “The challenge then becomes one of change management, and somewhat, of vendor management. So you have to make it worthwhile for both parties from a collaboration perspective.”

Fenwick says there is no easy answer to getting partners to comply with information requests, with some organizations using penalties, other incentives, or a mix of both. “I’ve seen a mix of the carrot and the stick approach,” says Fenwick. “From a supply chain practitioner point of view, the benefits of sharing this data far outweigh the effort required to generate it.”

Another constraint on fuller benefits from TMS, says Greg Lanyard, Manhattan’s product director for TMS, is many organizations, for a variety of reasons, do not have ownership over inbound freight, and thus don’t control the transportation management. That may be changing, adds Lanyard, with more organizations moving toward greater ownership over inbound freight and thus being able to more fully leverage TMS’s planning logic. “So one of the priorities we’re seeing is companies taking greater ownership over that [inbound] freight, so they can fully manage it and optimize it,” says Lanyard.

Dock scheduling
A natural touch point between TMS and warehouse management system (WMS) processes is dock scheduling. Some TMS suppliers offer dock appointment scheduling, but so may some WMS providers. Some large vendors that offer both TMS and WMS, such as Manhattan, can offer appointment scheduling as an option to either a TMS or WMS implementation. Either way, knowing the equipment available at specific dock doors helps assign the right door to the right incoming load, while being able to manage and track the labor involved is essential to efficient warehouse management processes.

Yard management system (YMS) functionality also helps bridge the TMS and WMS worlds. Fenwick says Manhattan has seen an “uptick” in interest in yard management functionality. “Companies are looking for better tools to get those trailers in and out as quickly as possible,” says Fenwick.

Dock appointment scheduling should be cognizant of “location level constraints” so the software automatically assigns the correct resource to the appropriate load, says Derek Gittoes, vice president of supply chain management product strategy with Oracle. “Appointment scheduling can be automated to understand, for instance, that these are the particular dock doors and bays that I have and what kind of freight can be managed at each,” Gittoes says. “Certain doors can handle temperature-controlled goods, for example, while others are for more general merchandise. And, the software should know the expected throughput for unloading tasks, so the appropriate amount of time is allocated to appointments.”

WMS supplier PathGuide Technologies recently introduced an inbound transportation management module with appointment scheduling in part because many customers were struggling with manual or semi-automated methods for dock scheduling, says Greg Laycock, vice president of research and development at PathGuide. Many companies still use white boards or daily meetings to manually manage dock schedules, and as a result, lack insight into trends, says Laycock.

Dock scheduling should be able to generate metrics that DC managers can use to scorecard carrier performance and dig into the root cause of delays. Laycock says PathGuide’s module tracks unloading performance, while notations can be made by users to help explain the cause of deviations, such as the truck was late, or goods were tipped over or damaged. With whiteboards or spreadsheets, adds Laycock, users have difficulty quantifying performance and drilling down into the root cause of deviations.

“You need real insight into who are your good carriers, and who are your worst performers,” Laycock says. “It gives you better negotiating power when you are having issues.”

Leverage optimization
Perhaps the biggest benefit TMS can provide to inbound processes is in automatically selecting optimal routes, stop combinations and carriers. While carrier selection and route planning has long been a core reason for having a TMS, 3GTMS’s Wesley believes some organizations aren’t fully leveraging the power of TMS algorithms.

“There is a massive amount of savings potential in really using these algorithms,” says Wesley. “And not only that, you tend to hit your delivery dates better because an algorithm is able to keep focused on requested dates.”

The problem, says Wesley, is that too many TMS solutions are used in an overly stripped down way, asking carriers to bid off a single tariff, for instance, rather than letting them bid on the tariff where they can be most aggressive and cost efficient, and letting the TMS logic compare bids. Or, a TMS user organization may not be leveraging the ability of TMS logic to consider options like multi-stop routes or pool consolidation points.

“It’s no more work for a good TMS to rate everyone on different tariffs than on the same tariff,” says Wesley. “That’s the beauty of these algorithms, at least the ones we’ve created: You are free to create a lot of cool options for filling orders efficiently.”

TMS vendors have focused on ways to streamline master data maintenance. Oracle, for example, has come up with an Excel-based feature that allows users of its TMS and any carrier partners to update data in a spreadsheet, and then upload the changes into the TMS. “Most carriers like to be able to manage those rate details in spreadsheet form themselves,” says Gittoes. “So we are trying to make it as easy as possible to capture and maintain that data.”

For any TMS to work well on either the inbound or outbound, users need to update master data as new carriers, transportation lanes or products are added, says Wayda. So while visibility tools are perhaps the main way that TMS can help smooth the inbound, TMS solutions need accurate base data to work to generate accurate, optimal plans and recommendations. As Wayda concludes, “Accurate base data is one of the areas where people tend to fall down on effective TMS implementation—they don’t realize the time and testing it takes to get rates into the system and ensure that they are accurate.”

Companies Mentioned in this Article:

• 3GTMS
• ARC Advisory Group
• Manhattan Associates
• Mercury Gate
• Oracle
• PathGuide
• SCAPath