Improving Supply Chain Operations Through TMS Optimization

Implementing a Transportation Management System (TMS) marks a significant milestone for companies aiming to enhance their supply chain operations. However, the journey doesn't end at implementation.  

Organizations can continue to extract value from their TMS investment, meet cost reduction goals, and drive ongoing supply chain improvements through strategic analysis and optimization. 

After the experience of determining that a company needs a TMS, documenting your requirements, working through RFPs, contracting and implementing a system, what’s next to ensure you are getting the best “Bang for your Buck” from your TMS?  

How is your ROI vs. Plan? What can you do to meet cost-down initiatives not just this year but the next one, as well?  

The ongoing value and support of a TMS system typically doesn’t end with implementation, but how do you continue to find opportunities now that you have it?

One of the primary reasons to implement a TMS is often described as “visibility”.  At first glance, visibility sounds like tracking and tracing shipments. Looking deeper, it’s often the “system of record” functionality that provides access and visibility to the best longer-term continuous improvements.  

In theory, now you have indexed location data, linked to execution dates and times, mode and carrier selections, and ultimately the costs incurred to service your shipments and customers. This unlocks the ability to quickly summarize your data in a meaningful way, enabling you to identify areas of opportunity. What was your lane frequency, average shipment cost and size by mode, total spend by location or carrier?  

In the short-term, analyzing these results can help you create leverage with your vendors and carriers. Beyond negotiating for the lowest cost, you can now see the volumes in question and understand the predictability of those volumes and the revenue you are negotiating.  

You also now have reliable information to do larger-scale network benchmarking versus the market to evaluate your approach to sourcing and fulfillment. 

 

Potentially, the most impactful opportunities are within the concepts of “What If?” scenarios and network optimization. If operational execution is the primary function of a TMS, the second function is to facilitate this type of strategic analysis. 

The larger and more complex a network is, the more likely an initial TMS solution is limited by the business rules used to confine systematic decisions allowed by the software. The desire to quickly stand up the system and generate ROI, coupled with the lack of reliable historical data, frequently makes justification for changes to long standing business processes difficult to navigate. Armed with more comprehensive data and the appropriate analytical tools, decisions can be made with much higher confidence.  

Due to a lack of a change management approach, or to avoid potentially negative customer service or sales impacts, order criteria are often hardcoded limiting the decision-making ability of a TMS.  Making changes to these standards frequently requires a business case and cost justification. In order to have these conversations effectively, being armed with data describing implementable results is paramount. 

Some examples would include: 

• Mode shift between Parcel and LTL 

• Must Use or Do No Use Carriers 

• Private Fleet vs. Common Carrier 

• Predefined Service Levels (ie-2 Day when Ground could meet the same standard) 

 

If you want to get the most out of continuous improvement, the methodology matters, and it pays to consider several key steps and factors:  

• Perform Discovery – Assess current business processes to understand existing workflows and constraints 

• Identify Opportunities – Pinpoint areas where adjustments can drive efficiency and cost savings 

• Build Business Cases – Develop justification for proposed changes, including cost-benefit analysis 

• Consider Change Management – Address potential risks and ensure smooth implementation 

• Implement – Execute the plan, measure results, and refine strategies as needed 

Data-driven TMS optimization starts with analyzing your network fundamentals - lane frequency, costs, and carrier usage patterns. This baseline understanding enables effective carrier negotiations backed by volume data and predictability metrics.

Regular network benchmarking against market standards helps identify improvement areas, while systematic review of business rules can reveal opportunities in mode selection and service levels.

Finally, running "What If" scenarios allows you to test and validate potential changes before implementation.

These strategic analysis methods help organizations move beyond basic TMS functionality to drive continuous improvement in their transportation operations. The key is using your system's data strategically to inform decisions and optimize network performance.

If your organization doesn't have the bandwidth or expertise to conduct these types of projects, consider seeking expert assistance. Professional guidance can help you execute analysis, identify benefits, develop recommendations, and create implementation roadmaps. This approach ensures you're maximizing the value of your TMS investment and driving continuous improvement in your supply chain operations. JBF can help guide you through this process. It’s what we do best.  

This article originally appeared on Talking Logistics.