The Transportation Management System (TMS) has enabled organizations to gain a stronger foothold over their shipping processes and address friction in a notoriously fragmented and complex part of the supply chain.
Offering a single source of truth and a unified platform for shipping information and freight management, the TMS provides opportunities to enhance shipping processes by connecting directly with freight carriers and analyzing shipping performance.
But the full potential of digital shipping data cannot be achieved when information remains held within the TMS. Integrations with freight carriers and their own systems are key, but TMS solutions provider Kuebix sees promise in adding another spoke in shipping data connectivity.
On Wednesday (July 10), the company announced that its platform now integrates with a range of enterprise resource planning (ERP) systems, because according to CEO Dave Lemont, the shipping and logistics professionals are far from the only ones that could benefit from gaining visibility into this data.
A TMS will take a shipping order received by a customer and coordinate that information with a freight carrier. Once shipment is complete, that carrier will send an invoice back to the TMS, demonstrating the importance of data flowing in and out of the TMS from other platforms.
While it’s key for logistics teams to have that insight via the TMS, “there are lots of other people in the company that need to know that information,” Lemont explained. “Purchasing people, services people, financial people,” who traditionally rely on the ERP to obtain the data they need to complete processes.
A two-way flow of data between the TMS and ERP means that ERPs generating a shipping order can automatically integrate that information into the transportation system, a process that traditionally requires manual data entry with plenty of room for error. Often, Lemont, shipping orders with dozens of line items will be keyed into a TMS without complete information.
In the other direction, once a TMS receives an invoice, that platform can analyze the bill and send it to the ERP once it’s ready for payment.
Lemont noted that this can be a particularly challenging process without such an integration because of the frequency of billing discrepancies that occur (he estimates that these discrepancies can occur on up to 12 percent of invoices). When a TMS receives a shipping order, it captures data related to an agreed-upon rate for shipping. When invoiced, if the bill is significantly higher than that previously agreed cost, logistics and shipping management personnel traditionally have to go through each document to identify that discrepancy — or, Lemont said, organizations simply pay the bill with a higher price because they do not have the time or resources to analyze the discrepancy and renegotiate a lower bill.
While a TMS can automate the freight invoice auditing process, integrating with an ERP can automate the invoice approval-to-pay process, yielding faster payments to carriers, and cost savings for organizations able to more easily identify extra charges.
“The round-tripping of order information going into our system, and financial information going back out, is very important,” said Lemont.
The TMS has opened doors for shipping teams to consolidate data and analyze it for performance details. Understanding which shippers are reliable, and which frequently deliver late, is crucial to boosting the efficiency of an organization’s overall shipping processes.
But unlocking that TMS data and connecting it to an ERP system further expands the data analytics opportunity, noted Lemont, particularly when it comes to finances. Not only can that data connectivity automate the invoice-to-pay process, it allows for analysis of financial data as it relates to freight invoices — and allows organizations to elevate their shipping performance management strategies.
“Maybe I’m making a great profit on what I sell to the customer, but I may be losing margin when I ship it,” he explained, adding that the connection between TMS and ERP systems enables the identification of cost saving opportunities, like when to shift from frequent Less-Than-Truckload shipping to less frequent single truck shipping. Analytics can shed light on key performance metrics like cost-per-pound, cost-per-product and other data points that reveal the true cost not only of making and selling a product, but of getting it to where it needs to go.
“By using analytics, companies can really see, ‘What are we doing? What are we doing that could be done more efficiently? How can we consolidate loads, or use a less expensive carrier in this lane?’” Lemont continued. “I don’t think they have a way to analyze that data unless you have an ERP integration.”