5 min read

TMS adoption is rising - but is success guaranteed?

By Nick Poels on Jun 30, 2020 3:33:12 PM

TMS adoption is rising

How people, processes, and technology converge to create successful TMS implementations.

As companies around the globe rethink their logistics strategies, transportation management systems (TMS) are rising to the top as an important investment priority for many of these organizations. “Many logistics functions are looking at technology to automate their logistics processes, strengthen their logistics functions to mitigate the impact of disruptions, and build a roadmap to become more digital,” research firm Gartner states in a recent report.

While the drive to use TMSs to optimize transportation networks may be on point, too many companies fail to realize the key benefits that were part of their original business cases for the software. In most instances, this happens because companies underestimate the human aspect of transportation management, and the fact that TMS implementation success depends heavily on user adoption.

Put simply, managing transportation is a human endeavor that’s backed by technology, and not the other way around. If this new technology doesn’t make life easier for your people, teams, and partners—and if they don’t embrace this new technology—your TMS implementation will fail. 

Focus on How the TMS Works
(Not Just What it Does)

Throughout the TMS selection process, too many companies focus only on the “functionalities” spreadsheet—listing out all of the features and functions that they want the TMS to provide. What many of them don’t realize is that managing transportation comes in different flavors and complexities, depending on the type of business, industry, company culture, or modes.

One TMS vendor might tick a simple requirement like “supporting incident management,” without any further thought given to just how accessible that functionality is; whether or not it’s integrated into workflows and intuitive to use; and if it’s linked to the events that you want to use as incident triggers.

These details can’t be covered by a simple checkbox. One way to avoid this problem is thinking past spreadsheet-based RFPs and by inviting all stakeholders for in-depth demos. This can be done even in these days of social distancing and working remotely. For example, a few weeks ago we gave a live demo of our modern TMS to a large industrial manufacturing company that invited 64 people from different business units across the globe to attend.

It was a 2-hour session, where one of my colleagues was doing the live demo, while I was answering questions on the Teams chat. This is a great example of how one company understands that supply chains are run by humans, and that you need buy-in from operational people before choosing a TMS that matches your diverse and complex operations.

It Takes People to Manage Transportation Effectively

As a discipline, transportation management requires good alignment across people, processes, management infrastructure, and technology. Here’s how these critical components fit into the overall picture:

  1. People: “Digital approaches that work with people, rather than around or against them, tend to achieve more impact while proving easier to implement and more sustainable over time,” McKinsey points out in a recent report. A TMS is about presenting the right information to the right people at the right time in a way that enables good collaboration and cross-functional decision-making for your team members.

  2. Processes: According to a recent McKinsey article, companies spend too much time and effort developing highly detailed plans that describe exactly how their supply chain processes should work. Others attempt to outsource this task, essentially copying their plans from generic “best practice” templates. When it comes to implement, this approach often results in what McKinsey calls “organ rejection.” While process is necessary, it’s not a good platform for transformation. It’s important to not only analyze, document, and plan your processes, but to also involve all stakeholders—both internal and external—in those processes. Ignore this step and watch how quickly your new TMS implementation is rejected.

  3. Technology: It plays a vital role in every digital transformation, but technology only contributes to 25% of the overall change. Companies often see technology as the end-all for digitalized transportation management, and the solution to all of their problems. Take this narrow technology perspective with your own TMS project and you’ll risk “digitizing the current firefighting.” As one customer service manager who joined one of our recent chemical roundtables said, “If my people aren’t firefighting, they feel like they are not doing their jobs.” We need to stop firefighting and start fire prevention. This is where technology can help to prevent or detect fires in an early stage so that people can take action before they escalate.

  4. Management structures: Maintaining a perfect flow of goods in the supply chain requires a well-oiled machine that’s operated by a multidisciplinary team. That means your management structure must be aligned across all functions and hierarchies. When segmenting your customer base, for example, you might offer your most important customers a premium logistics service. But if the transportation procurement team’s performance is only measured on reducing freight spend (i.e., choosing the cheapest carriers every time), you’ll fail at delivering the premium service that you promised.

An Iterative implementation Approach for a Continuous Journey

In the past, companies used the “waterfall” approach to get from their current states to their desired states. For example, lean projects were clearly defined and developed with the goal of reducing as much non-valued-added waste as possible.

Waterfall-model-Royce-1970Waterfall Model - Royce, 1970

The problem is that digital transformation lacks a clear destination of desired end-state. With consumer preferences, consumption habits, and customer requirements changing daily, companies need holistic approaches that balance people, processes, management structures, and technology. 

Forced to continuously adapt to the changing market dynamics—such as full supply chain shifts, mergers and acquisitions, and management changes—companies need to align their logistics and business strategies in a very deliberate and cohesive way. In this dynamic environment, you need a partner that can help you throughout the entire journey, and that doesn’t pack up and leave when the TMS implementation process is over.

“You need to bring together cross-functional teams of supply chain, business, and technology specialists to work on a new process, together with new roles, new performance indicators, and a new management system,” McKinsey points out. 

Here at SupplyStack, we’ve been advocating for this approach for years. Our modern TMS implementation at DHL Service Part Logistics was rolled out across three countries with a multidisciplinary team from DHL and SupplyStack. We were heavily involved with the implementation, integrating the TMS with the regional IT landscape, establishing systems based on user requirements, and training employees on how to use the system.

After the successful implementation and using our “implementation blueprints,” DHL SPL scaled our modern TMS across its operations in more than 65 countries on its own. This is just one example of how a strong partnership with the right TMS provider can pay off in dividends over time.  

Finding the Right Partner

Investing in a TMS from the technology standpoint won’t deliver on the implementation’s full potential. Getting it right requires a holistic approach, and thorough review of processes, capabilities, and management systems—all through the human lens. Don’t rely on exploiting the boundaries of your human capital to navigate the challenges of moving freight. Instead, learn and understand their challenges and take them along with you on the journey of improvement. 

Nick Poels

Written by Nick Poels

CEO at SupplyStack