Do you have the change management process in place to support the move to a TMS?

Logistics Technology ROI Depends on Behavior Change

Leaders seeking ROI on investments in logistics technology must manage behavior changes across their organizational hierarchy.

The best logistics technology offers you the ability to standardize and automate business processes, optimize transportation procurement and improve communications across your network.

Accessing those outcomes is likely to require some level of change, and we all know change is rarely easy. Whether we are talking about a new flavor of coffee, a simple shift in routine or a new technology tool, humans are naturally resistant to “different.”

With the right approach to managing a change into a new technology environment, you can minimize the impact on your people and your partners. At the same time, you can maximize the ability of your TMS to implement your business goals, manage those goals, and enjoy the results that drive ROI across your business.

Let’s highlight aspects of our proven process that helps business executives manage change across key stakeholders in a TMS implementation: the leadership, operational management – and your business partners.

Start at the Top, Drive Technology Adoption

Top-down sponsorship is big in any project. When it comes to implementing new transportation management technology, it is even more important. Leadership must articulate and communicate an ROI message that conveys how logistics technology empowers the organization to achieve its business goals.

The work begins when you start exploring the right TMS for your business. Involve the team members who will use the tool day-to-day. These are the people doing the work, help them understand the benefits – a “why” behind the change that is relevant to them.

It gives you more control to help automate repeatable processes, and, in doing so, it gives your team back additional time to be more strategic in their activities.

The why for the organization: you are able to control your business strategy, define your strategy in business rules and put those rules in a system that allows you to execute based on those rules.

Once you communicate the “why,” seek the input for your team.

Your logistics users know the challenges they encounter regularly, and they know the capabilities that will make their jobs easier. Seek their feedback. This creates a sense of ownership in a tool you need them to adopt – instead of discord around a burden mandated for use.

Utilization is paramount. So, too, is standardization, which is a significant benefit of a TMS. Does every user at every location accomplish the same tasks with the same steps? If not, there may be a level of SOP you can capture and implement throughout the design of your operational rules utilized within your TMS.

Then, set expectations that the program will be monitored and measured, including successes and failures. Keep the line of communications open. Encourage users to voice their challenges and concerns. As you refine the technology based on input, you foster greater openness to change. That goes a long way toward making sure your system is easy to use, while you drive compliance in support of the “why.”

Along with compliance measurement comes downstream reporting that is critical to your executive communications with leadership stakeholders. Often when these leadership layers back a logistics technology investment, they do so expecting specific, quantitative return.

Level-set expectations early: ROI is coming, but not until information moving through the TMS arrives in reporting. This is what illustrates savings and transportation performance.

Least cost summary and other downstream reporting coming through your TMS helps measure compliance to routing rules set in place.]

Understand and Manage Technology Expectations

The tactical team is changing their work processes – from the old way to the new way – but functionally, not a lot should change for them. Built correctly around the right business processes, a TMS creates an immediate benefit for these users. Quick results ease a lot of change pain.

The work creates a different challenge for your operational managers. When theyenact the change they will need to have all those conversations about the “why,” earning adoption and compliance. The most challenging aspect is only having a partial adoption rate across your cross-functional user base.

If portions of your team do not adopt the tool, there is a risk for them to vocalize that to executive sponsorship. That is a big reason the users at this level must feel like they have a role in implementing the application. Creating a positive fact-based feedback loop to leadership based on the success of the program will be critical.

At the same time, your operational team must set expectations and bridge the gap to leadership by communicating downstream without creating pushback.

Operational leaders also must maintain alignment between tactical activities and strategic goals, where results are realized more slowly. While the first load booked in a TMS saves time for the tactical user, as I mentioned above, gathering information and building a data case for cost savings and efficiency gains is a longer process.

Just as a level-set for ROI timelines is important with leadership stakeholders, maintain a measure of patience with operational managers tasked with justifying the TMS. Once the best business rules are captured and applied into your organization, your technology platform will provide operational managers with reporting they need to demonstrate the value of the logistics technology to you.

Logistics of External Change: Carriers and Vendors

Be prepared to manage change with carriers and suppliers.

Your current transportation providers may raise red flags when a new party enters the conversation, especially if you enter a relationship with a technology partner. Naturally, they want to keep your business, and they may cite artificial concerns about lost relationships or diminished service.  

The reality is, using a TMS means you execute your carrier routing dynamically based on the best cost and service. These terms dictate the relationships your business should maintain.

Meanwhile, your suppliers and other vendors will need to start providing information into the system and give you a new layer of visibility. This introduces change for your partners and their daily process. Some are resistant. Some are not.

For both your carriers and your vendors, communication is important. It often requires a new process to convey expectations, including additional standardization, to all your partners.

Your vendors may need to sign in to the system to report receipt or shipment, using all the correct reference numbers. Do you communicate these new needs in your purchase order, through the TMS or a direct letter?

Your carriers may be required to input freight movement updates manually. If they do not, they will be accountable. How does that communication occur, and who manages it? While you want to limit the amount of effort required for external users, someone still has to own the compliance management.

Along with these conversations comes the compliance monitoring piece. Any TMS inputs require a level of measurement and compliance that will drive adoption – whether it is internally, or with your carriers and vendors. To maximize the value of TMS in your business, you not only need compliance within your four walls, but also with your carriers and vendors.

Minimize the Impact, Optimize the Logistics Technology

Logistics technology can deliver benefits to your business. Combining that technology with change management support from an expert partner helps you get to those benefits faster and easier.

We have a proven process that includes different levels of stakeholders throughout the implementation. We not only capture your business rules and initiate improvement where appropriate, but also we allow your teams to be part of the overall deployment of the TMS.

We work with you to identify the “why,” help you communicate that across your organization, and implement the compliance tools required to insure adoption. Validate your business case for TMS with customized reporting that combines information from your TMS with our independent freight audit and payment solutions to paint a clear picture of performance.

We also work with your supply chain partners to make sure that they are supporting your initiatives and your success. For your carrier partners, that means protecting the relationships that provide best cost/service. If you need additional providers, we foster those relationships, coordinate meet-and-greets, and make sure expectations are outlined clearly before the first load moves. Importantly, our executive relationship with transportation providers across North America provides a secondary point of escalation that produces faster results than a terminal manager or regional sales rep.

You face a disadvantage if you have a TMS, but lack relationships with your carrier base or have an audit function to validate the compliance of your contracted pricing and routing rules. Because Transportation Insight is able to provide the additional service offerings, and we are involved in supporting the success of your business, we can help shape and affect change management in all the areas related to the technology. And since we have worked across a multitude of customers and industries, we know the best practices that work in many domains – including yours.

Deploying logistics technology into your business does not have to be a huge undertaking. We can help you ease the change by fostering relationships at the foundation of your success. Contact us today to put the power of partnership behind the behavior changes that give you the most return from your TMS solution.

Transportation Insight’s logistics technology offering is backed by experts who help your organization implement best practices, manage behavioral change and give you time to focus on other priorities.

7 FAQs Answered with Supply Chain Visibility

“They have better visibility into the structure of their supply chains. Instead of scrambling at the last minute, they have a lot of information at their fingertips within minutes of a potential disruption. They know exactly which suppliers, sites, parts and products are at risk, which allows them to put themselves first in line to secure constrained inventory and capacity at alternate sites,” concludes Arizona State University professor of supply chain management Thomas Y. Choi.

Peeling into the physical layers (where is my shipment?) and virtual layers (which customer/SKU combinations are profitable?) of supply chain visibility, business leaders can uncover data evidence to drive network decision-making. Combined, information gathered through both layers of visibility answers questions that improve cost control and service to customers.

Where and when?

At its most basic, supply chain visibility gives you physical location of a product in the supply chain. This can include where an inbound shipment is, where you have inventory, or when a shipment will arrive at a customer. When you have this type of visibility, you can make decisions around production scheduling, facility/customer alignment and proactive communication to customers for delivery expectations. Visibility allows the awareness needed to provide the highest level of customer service while maintaining cost control.

Where are the suppliers?

Understanding your suppliers’ geographic location is critical not only to executing a robust network design but also in mitigating risk. Understanding the production and shipping locations of your suppliers during a period of disruption allows you to execute contingency plans developed during modeling exercises.

For instance, when an overseas disruption affects a foreign supplier, maintaining a geographical awareness of primary supply chain partners is vital. Combine location information with advanced understanding of alternative sources and you can facilitate a rapid crisis response that protects customer experience and prevents other breaks in the supply chain.

Where are the customers?

Your customers and their demand drives everything about your supply chain. From the locations of your distribution centers to the shipping options available to meet customer service requirements, having a detailed understanding of the concentration of demand means you can work backwards to develop efficient and reliable options to keep them happy.

Take for example an emerging market in a different region of the country. Customer expectations for delivery are very high. Not providing a high level of service is not an option. Options exist to leverage expedited freight but may make the price point too high or erode the margin on the product. A partner warehouse may be a good option to position inventory to meet service levels without investing in owned brick and mortar.

Where is the inventory?

Your physical assets connect the vendor and customer locations. These assets allow you to position inventory to mitigate risk while providing the service customers expect. Having complete visibility to where and how much inventory you have is critical to making smart sourcing decisions:

  • From which location can I fulfill the order?
  • Is it cheaper to consolidate or split the order?
  • Can I drop ship?

Understanding all of the inventory options available enables you to leverage your vast web of connections throughout your supply and customer base to delight your customers.

Can I access all my data?

Your supply chain generates a tremendous amount of data. Accessing all of it is not easy, especially when you are working across multiple vendors, customer segments, product categories or transportation modes. Consolidating your information across disparate systems and sources is the first step toward gleaning actionable improvement opportunities from your supply chain data. The more access to information you have, the more it can impact your bottom line.

An expert partner with significant technology capabilities can compile disparate data in an accessible repository and provide it in personalized dashboards, as well as apply experience-inspired analysis. Accessing that analysis in the same platform as operational data and tactical execution activities is critical to supporting quick, evidence-based decision-making.

What is cost to serve?

For each product and customer, executive leadership needs to understand cost to serve, which reflects all the activities and costs incurred as movement and conversation occurs from vendors through your network out to the customer. Cost to serve metrics provide actionable information by enabling visibility into the profitability of individual customers and products, and finding a fulfillment configuration that balances service and margin.

By utilizing actionable data derived from historical shipment information and running what-if scenarios with regional data and characteristics, you can develop the most responsive and efficient supply chain that meets customer demand for the best cost.

Why is my cost going up/down?

Leveraging robust score cards can provide insight into the factors that are driving your financial performance. Not all drivers are completely controllable. You cannot make your customer order from a different location or change what they want to buy. There is an old adage “you cannot change how other people act, only how you react to them.” The same holds true for the supply chain.  Develop plans to react to supplier performance and customer behavior to set up your company for success.

It is absolutely critical to have an unbiased party developing and interpreting the scorecards and information produced. You want objective viewpoints that highlight all options available to contend with dynamics in the marketplace. Not only do you want a view into your data but also what is going on within the market. In the new environment, it is more critical than ever to leverage every bit of available information across the marketplace.

Combine Layers for Master Vision

Physical visibility to shipment, service and costs can be accessed through very basic solutions that exist in the marketplace, some at low or no initial cost. Customization often requires additional investment, and visibility is black and white based on data made available by vendors, clients or carriers. A basic Transportation Management System provides tactical visibility to all of the connections in the supply chain, and it can enable cost savings.

Virtual visibility to all the activities that drive cost, service and reliability allows you to delve into the “what” and “why” around supply chain performance systematically and regularly. This requires investment in people, process and technology. The return on that investment: an enhanced ability to react to supply chain changes that impact performance. You also improve service to partners and customers.

Visibility does not just happen, and it is not free. Corporate alignment from the top down is required to achieve a complete solution. You want knowledgeable resources with broad experience to help guide you.

We created Mastering Your Supply Chain: Layers of Visibility to give you greater clarity into your end-to-end network. Read it today and uncover information you need to drive competitive advantage.