The e-retailer heads into the holiday shopping season behind a 30% increase in fulfillment spending and a widening net loss. North American sales increased ...
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Retailers must also assure that all of their suppliers are capable of participating in a web-based system, though Laube and others say this has been easy to accomplish. Stage worked with Shippers Commonwealth to get all suppliers connected to the web application within a few days. Because participants need only a browser and limited training to use the hosted application, suppliers as well as carriers can quickly take part in the system by updating their shipment data on the web. Transportation management systems usually come with carriers already listed in a connected database.
Even many truck drivers will input data on route status through a web-connected laptop or PDA, though other drivers as well as some small suppliers still phone or fax data to an agent or company employee who enters the data to the web. Training materials for supplier participation is e-mailed to them and the systems can be learned within a few hours, experts say.
Before it implemented its web-based transportation management system for inbound freight, Stage Stores communicated with suppliers through a weight-volume matrix, under which it would direct them to ship via certain types of carriers according to the weight of the shipment. Small deliveries would ship through parcel services like FedEx or UPS, and larger shipments would go through either less-than-truckload or full-truckload carriers. But with hundreds of suppliers, Stage rarely benefited from the most efficient mix of shipments. “Without the web, it would be impossible,” Laube says.
Now, with its web-based transportation management system, Stage can view all available shipments from 213 vendors on a web page and find the best mixture of consolidated shipments, saving on shipment costs while exerting more direct control over which shipments are flowed into its distribution center and when. That gives Stage instead of its suppliers the opportunity to save on shipment consolidations and volume discounts. For example, if it views on the web that three suppliers in the same region each has a shipment that could ship via less-than-truckload, or LTL, it will find a carrier that will consolidate all three on one truckload. The RedPrairie system on Shippers Commonwealth’s server uses algorithms to recommend the optimal routes and carriers for shipments from multiple suppliers, Laube says.
Integrating WMS and TMS
An added benefit, aside from cost, of consolidating LTL shipments into full-truckload shipments is that it results in fewer trucks crowding a distribution center, making it easier for drivers and dock workers to keep shipments moving. “So the idea is combining the two, getting more products to stores more frequently without actually sending more trucks on the road more often,” Bluemner says.
Stage realizes significant savings in cutting down on LTL shipments this way, though Laube, citing corporate policy, declines to specify the savings. RedPrairie notes that, in general, shippers that rely on a large number of LTL shipments can save about a third of shipping costs by consolidating shipments on full truckloads.
Moving forward, more retailers are expected to begin integrating transportation management system and warehouse management system to provide even more visibility into what can and will be shipped. Stage, which implemented a web-based warehouse management system earlier this year, has cited transportation management and warehouse management integration as one of its next projects.
“Now, our distribution center managers manually go into our TMS to see what shipments are coming in and to plan their payroll,” Laube says. “We’ll automate the flow of that information into our WMS, enabling our distribution managers to get automated reports on what’s coming in.”
She adds that it took Stage and Shippers Commonwealth only a few days to implement its web-based transportation management system with more than 200 suppliers, and that she expects a similarly quick integration of the WMS and TMS applications.
“If you’re buying a transportation management system or a warehouse management system, you need to think about whether your vendor will also be able to offer TMS and WMS integration,” Gartner’s Woods says.
T is for “transportation”
Although there are a lot of benefits from automating and web-enabling transportation management systems, retailers shouldn’t lose sight of the word that leads that rubric: Transportation.
TMS applications can include, or integrate with, carrier sourcing systems to help retailers choose the most efficient shipping methods and routes. Retail chain Linens ’n Things uses a hosted sourcing application from CombineNet Inc.’s CombineNet.com to slash the time it takes to procure carrier services, says Bob Endemann, executive director of transportation.
“Prior to CombineNet, we used manual methods to conduct our bidding, which required three to six weeks of work per event, not including the data preparation,” Endemann says.
The CombineNet application lets a retailer create a bidding page for particular volumes of goods that need to be shipped on certain routes, such as three loads every week of apparel from an importer in New York to a distribution center in Chicago. The bidding page can also present special criteria set by merchandise managers; for example, that orders of glass-topped cookware ship only on air-ride trucks. In addition, the system accommodates conditional offers from carriers, who may modify an offered contract by seeking greater volume or more destinations in exchange for a lower rate, a CombineNet spokesman says.
CombineNet also presents the retailer with data on past rates it has paid on the same or similar shipments, helping it to decide on an award. Once the award is made, details are automatically sent to the retailer’s transportation management system, where the director of transportation forwards the award to the chosen carrier.
Linens ’n Things structured a recent bid in three rounds to accommodate price and non-price criteria, including rates, routes, run schedules, delivery volumes and locations. Within two weeks-compared to the usual three to six-it had the data it needed to make a final carrier selection, Endemann says. “The system has already delivered unprecedented results in one sourcing event alone,” he says.