Whitepaper

4 steps for smart evaluation of your transportation management

About the whitepaper:

Digitalization is a journey that companies need to embark on to achieve operational excellence. In
the context of transportation management, digitalization helps companies to displays complex, (in-
ternational) networks in a transparent manner and optimize them. This whitepaper discusses which
key benefits can be achieved by implementing a transportation management system and offers a
4-step evaluation process to design value before designing a solution.

About the author:

Jakub Ctvrtnicek

Senior Consultant - Logistics & Supply Chain

Jakub is is an avid advocate for digital transformation with more than

20 years experience as a business, process, and technology con-
sultant in the FreightTech industry. Jakub’s focus is on transportation
(SAP® TM & SAP® BN4L) and trade compliance (SAP® GTS) solu-
tions and providing consulting in best practices on business as well as
technology transformations. Jakub also consults and architects solu-
tions for broader supply chain and logistics on AI / GenAI and block-
chain concepts.
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Introduction
For many years now, there has been talk about the need to digitize the supply chain. Since the
outbreak of the COVID pandemic, the urgency has become even greater. The main focus has been
on transportation. Companies that managed this transition were expected to gain the upper hand in
business and increase their much-needed resilience. Many channels have reported that either TMS
(Transportation Management System) or SCV (Supply Chain Visibility) or both these solutions
are the ultimate remedy in the right direction. And this has definitely proved to be true!

Based on the author’s expertise in logistics and transportation and trade compliance, this whitepaper
offers 7 simple areas to explore for added value from any type of TM implementation. Moreover,
it discusses how to design this added value in 4 steps before you commit to any solution or
transition project.

Key benefits of digitizing your transport management

Visibility and Predictability
Many companies move to full-scale transportation management system (TMS) mainly to increase
visibility throughout the supply chain. Key information available at your fingertips gives you a
competitive advantage. This includes: Knowing how many of my products are scheduled, how
many are in transport (in motion), when they will arrive at my facility or to my customer, what the
expected landed cost is, how many of my products are in risk of delay.

This also includes capability of AI enabled predicted estimated time of arrival (ETA) – an intelligent
arrival forecast with a weighted confidence level.

Automation of Processes
In the past, any software meant the automation of human work, but this aspect is not the only
advantage for a TMS rollout. The mere fact that processes like customer order entry, transport
planning, carrier tender, and price benchmarking or invoice verification can be carried out “with the
push of a button”, does not only mean instant automation of time-intensive tasks prone to human
errors, but also allows downstream risks or issues to be identified immediately. Your employees
can concentrate on more value-added activities, such as spending time with the customer or
understanding complex offerings, rather than performing mundane tasks. Also, GenAI solutions will
bring further automation of complex tasks like invoice verification or event risk recognition.
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Monitoring of External Partners

The past 2 decades have been characterized by a massive wave of outsourcing. In the case of
logistics operations, this trend has shaped the whole industry. In response, many companies and
shippers today lack the ability to control and monitor the performance of their logistics service
providers. Instead, they can only rely on the data supplied by these providers.

By establishing TMS, a control layer is introduced that independently provides data for visibility
and for control of company’s contracted logistics service providers and their time, quality, and cost
performance.

Cost Savings & Cost Predictability

This benefit might as well be at the top of the list and for many shippers it certainly is. Industry
analysis and experience shows that implementing a TMS solution of any kind helps shippers
to reduce freight spent by around 5 to 15%. This alone is a good business case.
The savings are simply achieved through all of the benefits mentioned above: By monitoring external
partners, the shipper can determine real service levels and is in a position to ask for different rates.
Thanks to the automation of planning, operations make use of the maximum capacity of containers,
trucks, or allocations. And thanks to strong automated invoice verification, you only pay for what you
actually use from your service provider. It is worth taking a look!

Environmental & Trade Compliance

An equally important benefit, or rater a must-have, is environmental compliance and legal / trade
compliance. Transportation is one of the largest CO2 emitters today and it is imperative that
companies not only monitor CO2 issued by their transports, but also prove that everything was done
to choose the greenest option to get from A to B.
It is equally important to ensure that the shipper’s export or import movements do not violate legal
regulations, export licenses, required documentation, and custom duties. This is where we get into
the area of trade compliance. Some basic checks and controls can be carried out at the TM planning
level to avoid future problems.

Analysis & Insights

It is one thing to monitor movements and inventory and control my service providers. It is another
thing to have a deeper analysis of your own supply chain data to gain new insights (e.g. which
product takes the largest percentage of transport, what time of year is prone to delays, do I have
loading ramps that are underperforming, etc.)
Designing the right level of insights is the key to informed decision making on strategic level. Do
this process right with the right partner from the beginning.
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Predictive AI & Generative AI abilities

Supply chains are the most suitable area to harvest the value of generative AI. We can already see
the first strong use cases – such as the reliable reading of shipping documents (receipt, delivery,
booking confirmation, bill of lading) that arrive either through emails or simply as photos. Now AI
enabled intelligent document processors can function like a human, understanding the changed
fields within the same template and placing them into context. The improvement in automation is
already huge and there are more use cases coming at high speed.

4 Smart steps to design value for your TMS journey

Many customers come to our consultants with the statement ꞌWe want to implement TMS or a
Track& Trace solution.ꞌ and as the devil's advocate, we ask ꞌWHY?ꞌ
If the customers do not have the answer, or the answer is just ꞌbecause we were told so by our
managementꞌ or ꞌbecause our SAP LE-TRA solution will expire soonꞌ, then we know that these pro-
jects are doomed to fail.

The reason is that it is very essential to design value before designing a solution.
Our best practice approach follows 4 major steps:
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Transportation Business Analysis

Logistics / Transportation strategy needs to be linked to the company’s business strategy. It is
essential to find the answers to the following key questions:

• What is your company’s long-term strategy and business model: B2B/B2C and Make to
Order/ Make to Stock?
• What is the role of transportation in this strategy? Is transportation a cost center for the
company or is it a strategic tool for differentiation?
• What is the nature of traded products - is it time sensitive, perishable, export-regulated,
heavy/fragile, expensive? What is its impact on inventory holdings?
• What is the availability of such product at the customer?
• What is the availability of materials/components - how does inbound logistics look like?
• Transport insourcing vs outsourcing?
• What are the volumes of transport, its modes, its complexity?
• If the “do nothing” approach is taken – is this acceptable?

The output of this step is your future logistics and supply chain strategy. A good partner can help
to evaluate or even shape it.

Architect Value / Business Case

In this phase, we need to zoom into the particular value deliveries where savings will be achieved or
new value will be generated, for example:

• Savings on forwarding fees

• Savings in amount of hold hinventory
• Savings in productivity
• Gaining new access to new customers ˗ inventory availability
• Reaching better transit times and E2E cycle times
• Finding fragile spots in supply chain via analytics

It is crucial to find out which of these are low hanging fruits and which are long-term
targets.

Requirements Definition
Create a list of functional requirements with their weighted importance. Keep in mind how the
transition would be split into phases. Remember that there is no single solution on the market that
fulfills all requirements: Compile this list as an unconstrained functional outlook.

Research the FreightTech Market and TMS vendors. Weigh up wisely between best-in-class solutions
and novel / start-up players, global as well as local. Keep in mind during these conversations that it
is not the solution only, but also the partnership prospect that shapes your evaluation.
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Senior Management Agreement

Summarize the business case, functional requirements, and outcome of your market review along-
side 2 or 3 main strategies and journeys with cons and pros, costs, timeline, but also your valuable
personal opinion. Present this to the board or senior management.

Conclusion
Keep in mind that doing this homework before you set sail on your digital transformation journey is
essential to its success. Plan how to succeed also in Transportation. Eventually, the transformation
may not even be large or disruptive. With a good preparation it will be a natural change for your or-
ganization. And don’t forget that there are consultants who have done this many times under
various scenarios and are able to assist.

About concircle:
The concircle group is a technology consulting and software development company headquartered
in Vienna, Austria with subsidiaries in Germany, Switzerland and Slovakia. The company imple-
ments sophistiated digitization solutions for well-known international industrial companies together
with its partners. concircle‘s service offering ranges from digital supply chain, through digital enter-
prise core and digital manufacturing, to test automation.

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