A TMS solution has an impact on different levels of the business, from customer experience to operational efficiency, the later remaining the top benefit of TMS implementation.
But how is this translated for your business? Let’s dive into a few areas where companies can further benefit from a TMS solution and maximize ROI.
Cost reduction and cash-flow improvements
According to the ARC Advisory Group, a business saves, on average, 7.2% on costs following the implementation of a TMS. With a TMS, you can source for better rates, but can also optimize routes and reduce empty loads, further reducing freight expenses.
Thanks to the on-time delivery of goods and immediate DPOs, the payment cycle shortens positively impacting the cash flow of a business. Easier access to documentation results in more accurate billing and fewer delays in the receipt of payments.
Improved efficiency and productivity
A TMS allows you to do more in less time, providing your business with one platform to execute, manage, and analyze your logistics.
Putting an end to manual work, you can significantly reduce the amount of time spent in organizing your supply chain, as well as the number of errors that can happen. Supply chain managers can devote more time to analyze and make improvements, instead of conducting administrative tasks.
Greater visibility across the supply chain
A TMS solution provides the necessary data to control and improve transport processes, especially when the freight is in transit, resulting in greater transparency.
Visibility provides better insights on the supply chain: pickup and delivery times, costs, transit times, fuel efficiency, truck capacity in use, or loading times are only some of the metrics you will be able to analyze with a TMS.
Increased customer satisfaction
The improvement of customer service and satisfaction is a result of better predictability and real-time information about the shipments, and the correct usage of the data to provide on-demand and personalized service.
Indirectly, your net promoter score can be positively impacted in the long-term, resulting in new partnerships and business opportunities thanks to satisfied customers.
Improved shipper-carrier relationship
A TMS offers the possibility to communicate with all parties involved in just one platform, with real-time updates and more streamlined communication. Thanks to this, you will see a reduction in carrier complaints, which will help you get much-needed carrier capacity in high-demand moments.
Warehouse efficiency and inventory management
A TMS can help you decrease the time you need to work on warehouse duties, by automating some of the tasks and reducing errors. It also provides you with greater visibility on the products stored.
Improving transport execution and ensuring on-time delivery with a TMS impacts inventory flows and your replenishment strategy. Having clear visibility on the delivery of your goods allows you to forecast and plan accordingly, reducing safety stock levels and preventing backorders, together with their corresponding costs.
While some of the benefits mentioned above may be quickly reflected in your business, like freight cost reduction, it may take a while longer to see improvements in customer satisfaction or the order-to-cash flow. Every company operates differently and has different metrics, so there is no ‘magic’ formula when it comes to calculating the ROI.
The decision to implement a TMS also carries an initial investment that should not be overlooked. However, most customers witness an excellent ROI after implementing a TMS, whether through cost reduction or other benefits such as visibility. ARC Advisory Group indicates in a recent study that, for many, about 10% of the savings are absorbed by the TMS implementation and maintenance.
Level Up Your TMS Knowledge.
Browse our Library of Free EBooks, Whitepapers and more!