There are two common responses to the current problem. Whenever the freight costs go significantly over budget, companies think of doing one of two things:
- Call in the major freight contractors, apprise them of the situation and badger them for a rate cut on threat of losing the business
- Revive the talks about investing in a new fangled TMS (Transportation Management System)
If your company is considering either of those two responses above I would ask you to pause for a while and consider some additional information which will save you considerable amount of time and money.
Most TMS Save Money - You Can Even Custom Build Your Own
On the face of it, thinking logically, there is only one drive for transportation management systems - reducing costs. That is why there is a common assumption that no matter what TMS you choose, you will come ahead with savings. The system is expected to pay for itself within a few years, if not months.
These systems are expensive, and have a learning curve. We have built many such systems using common tools for our clients. In each case they delivered cost savings well in excess of what the client paid for the system.
Bulk of transport dollars are wasted in many companies
Having said that, I would also like to point out that a bulk of transport dollars are wasted in many companies of moving goods that should not be moved, or carried in the inventory in the first place. If you handle that problem first - your transportation costs will plummet significantly.
We cover this question in full detail in several blogs because it is a rather deep discussion worthy of its own contemplation.
Try These Freight Control Strategies First
We encourage you to read the following blog posts before we continue this discussion:
- What is the Most Effective Strategy to Massively Slash Shipping Freight Costs?
- Why Logistics Companies Get Away With Extra-ordinary Practices and Pricing?
- What Is The Easiest Way To Cut Warehousing Logistics Cost To Minimum?
Once you have read these three posts carefully, you would already have a number of ideas on making changes in your logistics and transportation arrangements.
Now you are ready to consider the right TMS for your operation
Read the following 2 blog posts before you actually invest in a TMS:
- Critical Functionality Of A Good Transportation Management System (TMS)
- Three Dimensions Of Transportation Optimisation
Now you are well equipped with the requisite information to start choosing the right TMS and implementing it into your business.