Collaborative TMS is a new logistics model for supply chains that helps combine transportation management with supply chain management, providing higher visibility for all. Collaborative TMS creates tremendous value and reduces/avoids surprises for the end-to-end supply chain. Its value is based on the premise of complete information sharing and end-to-end planning, where 3PLs act as partners instead of mere service providers. Here is a breakdown of what a collaborative TMS is capable of and how it will help your organization become the shipper of choice for your customers.
Collaborative TMS from the shipper’s perspective
Collaborative TMS is a revolutionary system that involves five essential business activities: collaborative business planning, order forecasting, order generation, freight order confirmation, and payment processes. Since the involvement of the carriers is high, they become partners to the business, and the responsibility is then shared.
The Collaborative TMS process can be divided into planning and execution.
Collaborative TMS Planning
Unlike the Standard TMS, Collaborative TMS requires detailed planning from all stakeholders well in advance. The planning stage involves the shippers and carrier partners working together. They plan and define the relationship and share expectations. It includes freight transportation, exception management, and agreeing with key performance indicators (KPI).
Once the relationships and terms are set up, the next step is aggregative planning. This entails aligning resource and equipment requirements for the scheduled shipments for the longer horizon. Providing order and shipment forecasts helps the carrier manage the resources appropriately. For the near term, the carrier obtains insight into the changes in intended volume, if any.
Collaborative TMS also helps in effective exception management for both parties. When a manufacturer, distributor, or carrier generates exceptions, they are handled collectively in Collaborative TMS. The carrier has one to four weeks depending on the forecasting horizon.
Collaborative TMS Execution
The execution phase of the Collaborative TMS distribution cycle comprises four stages: shipment tendering, distribution, payment, and a review.
Execution is intended to create order/shipment bids based on the order forecast that has been determined during the planning. It then identifies any exceptions based on the most current capacity availability, pickup, and delivery requirements and resolves them collectively. Physical distribution and visibility of shipment status are part of the execution. Shipment status is monitored regularly and shared throughout the distribution cycle, and any exceptions are recognized.
There is also a feedback mechanism that enables review and ongoing improvement. It also involves collaborating to address any payment exceptions created during the execution. Finally, there is a review phase, where the performance is measured against the KPIs established in the planning phase.
All this contrasts when compared to Standard TMS. There the relationship is only about sending the shipments via the cheapest, best possible, and available freight. The information sharing is done just a few days in advance. There is no high-level visibility of the future in Standard TMS beyond a couple of weeks.
Implementation challenges of Collaborative TMS
While there are many great benefits of using a Collaborative TMS, these can only be realized if the systems are set up efficiently. The IT setup is critical and must link the carrier and the manufacturer/distributor to collaborate. The IT challenge for Collaborative TMS is that the vendor and platform are agnostic. It ensures that any trading partner coming into a collaborative partnership is not hampered by technological constraints.
Benefits of Collaborative TMS for shippers
Individual shippers & end-to-end SC advantages are derived from using Collaborative TMS. Building business strategies with their clients to fulfill distribution requirements is the most significant benefit for 3PL providers. Building strategies helps them become long-term partners. While better transportation transit times, insight into shipment status, and transparency in the payment process help manufacturers and distributors. Overall, SC competitiveness and value are derived from long-term partner engagement in Collaborative TMS implementation.
Other significant advantages include lower expenses, higher revenue, better service, higher end-customer happiness, better asset utilization, lesser surprises, and higher margins for all stakeholders. Therefore, partnerships that benefit all the stakeholders are always preferred and will help your organization become the preferred long-term partner.
If you are looking for great Collaborative TMS solutions, Turvo is the right partner. Turvo provides the world’s leading Collaborative TMS application designed for the supply chain. Turvo connects people and organizations, allowing shippers, logistics providers, and carriers to unite their supply chains. It helps to deliver outstanding customer experiences, collaborate in real-time, and accelerate growth. The technology unifies all systems, providing one end-to-end solution to execute all operations and analytics while eliminating redundant manual tasks and automating business processes. Turvo’s customers include some of the world’s most considerable Fortune 500 logistics service providers, shippers, and freight brokers. Turvo is based in the San Francisco Bay Area with offices in Dallas, Texas, and Hyderabad, India.