How transportation management systems mitigate supply chain risks for manufacturers

According to Interos's Annual Global Supply Chain Report, supply chain disruptions cost large organizations an average of $182 million in lost revenue per company every year. These disruptions are spread across multiple event types, including Finance, Operations, geopolitical events, cyberattacks, and ESG issues. Despite the disparate sources of these disruptions, a common thread links them: a lack of supply chain visibility.

With such tremendous financial repercussions, manufacturers must find ways to mitigate supply chain risks. Enhancing their supply chain visibility through implementing a Transportation Management System (TMS) and integration software is essential to mitigating risk, streamlining operations, reducing costs, and creating a data-rich environment that empowers timely decision-making. 

Common Supply Chain Risks and Challenges for Manufacturers

A robust supply chain is the gas that propels the manufacturing industry's engine. When it falters, the entire company can suffer. Let’s explore some of the most common causes of supply chain disruption and how implementing a TMS and integrated ecosystem of logistics technology tools can help business leaders anticipate, avoid, and/or address these challenges.

Lack of Visibility to Shipments

Many manufacturers often don’t know the specific locations of their shipments while in transit, only when they are scheduled to arrive. The right transportation management system can help by providing real-time tracking, data-driven insights, and proactive risk management.

Real-time tracking helps manufacturers monitor the exact locations of their shipments. This data allows them to access the current status and anticipated arrival times. The enhanced visibility helps spot delays before they become disruptive, supporting efficient production schedules and preventing downtime.

Cargo Theft and Damage

According to CNBC, companies lose $15 billion to $30 billion annually due to cargo theft. Manufacturers also suffer substantial losses due to damaged raw materials in transit. Secure transportation management can help them cut these losses as they offer:

Many manufacturers don’t realize their shipments have been stolen until too late. They only discover a problem when they don’t receive it on the expected date. Utilizing GPS tracking and integrated Real-Time Transportation Visibility Platforms (RTTVP) can help you overcome this challenge by providing real-time monitoring of shipments.

GPS and RTTVP technology create visibility to shipments in transit and can be leveraged to send notifications when shipments veer off the desired route, experience unusual delays, or experience other anomalies that may indicate cargo theft. In the case of suspected theft or delay, shippers that utilize visibility tools can swiftly communicate the shipment location to law enforcement, locate the goods, and ensure prompt resolution.

Optimized Inventory Management

One of the most significant supply chain challenges manufacturers face is managing inventory. They often have different types of stocks, such as raw materials, work in progress, and finished goods. Holding this inventory is usually costly and comes with risks such as damages and obsolescence. Manufacturers can mitigate these risks by integrating their TMS, Enterprise Resource Planning (ERP) platform, Inventory Management System (IMS) and Warehouse Management System (WMS). Doing so creates a holistic, information-rich environment that can help you optimize inventory levels, avoiding overstock and stock-out situations.

Compliance

Manufacturers are required to follow specific legal standards when transporting goods. These standards are often stringent for manufacturers handling food, beverages, and pharmaceuticals. Violating these legal requirements can lead to heavy fines and penalties.

A TMS can help manufacturers mitigate these risks. It can help with real-time tracking of goods, preventing the risk of tampering. It also provides accurate transportation records that manufacturers can present to relevant authorities in the event of inspections or recalls.

Benefits of a TMS

Implementing a TMS can deliver benefits beyond simply reducing costs and streamlining operations. Here’s how a TMS can positively impact partner relations and customer satisfaction.

Enhanced Relationships with Partners

Utilizing a TMS can help to ensure timely deliveries, which allows manufacturers to build trust and confidence with their partners. A TMS can also make sharing data easier, improve communication, and foster collaboration between you, suppliers, and distributors.

Improved Customer Satisfaction

Leveraging a TMS can help ensure timely deliveries through shipment visibility and real-time tracking, empowering you to be proactive rather than reactive when communicating with your customers. Utilizing a TMS can significantly reduce lead time, improve customer satisfaction, and give you a competitive edge.

Increased Scalability

Your technology stack should flex with your needs as your company grows and changes. Many manufacturers have implemented a “lite” version of a TMS only to discover that it could not meet their changing needs as they grew organically and/or via acquisition, entered new markets, etc. Leveraging a TMS and integration software can help you scale to meet the demands of your growing business while minimizing the need for additional headcount.

Essential Features of a Robust, Secure Transportation Management System (TMS)

A robust TMS can help streamline your supply chain and unlock a wealth of opportunities. All you have to do is to look for a system with the following features:

• Route optimization: Your system should be able to use real-time data and advanced algorithms to account for factors like road conditions, traffic patterns, and lead times when selecting optimal delivery routes.
• Automation: Utilizing a TMS significantly reduces the need for manual entry, improves data accuracy, accelerates throughout loads, and minimizes the risk of miscommunication with customers and carriers. 
• Analytics and reporting: A TMS should be able to process historical data and apply it to give accurate insights into key performance indicators (KPIs) to help you optimize operations.
•  Integration capabilities: Your TMS must be scalable to allow for data integration and exchange between various applications, such as ERP and warehouse management systems, and your supply chain partners.

The Power of Real-Time Tracking: Strengthening Supply Chain Visibility

According to KX and the Centre for Economics and Business Research (CEBR), 80% of companies have seen their revenue increase as a result of real-time tracking and analytics. The rise in revenue is attributable to the power of real-time analytics in strengthening supply chains in the following ways:

Offering Instant Insights

Real-time data powers both predictive and prescriptive analytics, offering instant insight into the supply chain. With these insights, you can proactively resolve issues before they become a significant disruption.

You Get Data-Enhanced Accuracy

Rather than relying on estimates (or guesstimates), real-time analytics gives you accurate data and forecasts to help you better manage your operations.

Access to data on shipment location, expected lead times, and potential delays offer invaluable insights into the supply chain’s performance. Manufacturers can analyze this data to identify recurring issues or trends. With this information, they can adjust supply chain management strategies to improve production and operational efficiency.

Providing Increased Adaptability to Change

Market conditions, weather, and geopolitics change constantly. Real-time data allows your management, operations, and sales and marketing teams to respond quickly and decisively to change, helping your business remain competitive amid disruptive changes.

Conclusion

Transportation is a critical link in the supply chain, which can significantly impact overall organizational efficiency and profitability. Investing in a partnership with a Logistics Service Provider (LSP) that can help you implement and operate a TMS is a potentially transformative step that has helped manufacturers reduce costs, streamline operations, prevent delivery delays, and increase productivity. In an increasingly competitive global marketplace, now is the time to consider partnering with an LSP to take advantage of the many benefits of TMS and integration technology.