Logistics organizations, like so many others, are being asked to do more with less in today's business environment and leveraging transportation management systems (TMS) is becoming a deciding factor between who sinks and who swims in today's era of constrained capacity. But TMS is a broad umbrella and the most savvy logistics organizations today are optimizing the pieces beneath that umbrella that will produce the most benefit for their individual organization.

As the goals and priorities of a logistics organization (based on market trends and constraints) change, so do the priorities for functionality and TMS tools. What used to be the "killer app" for a shipper five years ago, may not be the magic bullet today. Setting goals and selecting technology based on those goals is the winning formula.

Outdoor and camping products maker Coleman Co. in Wichita, Kan. has been a longtime TMS user, in one form or another. Nearly 10 years ago, the company began using a software program from Logility, but more recently, Coleman's logistics organization decided it needed to upgrade some of the functionality it was using to better meet its business needs, especially in managing outbound shipments from its manufacturing and distribution sites in Kansas, California and Texas.

Sam Murray, director of global transportation for Coleman, says the company had four primary objectives in upgrading its TMS system: become more consistent in its use of low-cost carriers, better aggregate and pool shipments, automate some of the manual processes involved in tendering and booking loads and lastly avoid penalties from retail customers for missed delivery windows.

"We wanted a mechanism whereby we were assured that our lowest cost carriers in a certain lane were being tendered the loads whenever possible," Murray says. Clearly, the spreadsheet method was not cutting it.

Coleman upgraded its Logility system, selecting functionality to achieve those goals. While it was technically an upgrade, Murray says the project was more like a new product implementation because of the level of changes.

"We had looked at some ERP tools, but decided they were not transportation-specific enough," he says. "In essence it was like starting from scratch. We were familiar with Logility as a provider and there were some similarities in the operating functions, but beyond that it was totally new."

Murray says the major lesson learned during the implementation of the upgraded system was the value of a cross-functional team in implementing. That means representatives from every organization that might be impacted by the use of a TMS—finance, customer service, distribution, and accounting—not just logistics and transportation.

"You need committed people to make the launch work and you need backups for those people so they can spend time on the implementation without affecting the day-to-day operations," he says. "It was six months until we went live. Get the right people involved, with backups so you can run your day-to-day business without interruptions."

But the benefits of the technology are worth the effort. The pooling of longhaul LTL shipments has been a major cost reduction made possible through the TMS system. "For example, if we're shipping multiple LTL shipments to a dozen customers in Southern California from Wichita, we'll consolidate them onto a truckload shipment from Wichita to an LTL pooling facility in Southern California where they're broken out and shipped shorthaul to the customers."

With the data available from the TMS, Murray can clearly identify which carriers turned down which loads in which lanes. From there, Coleman can better manage exceptions and match up the right shipments with the right carriers (for improved price and service, in most cases).

"Our relationships with our carriers are more open and both sides can better understand the expectations," he says, adding that many of Coleman's best carriers were already dealing with other shippers who were automating functions. "The larger carriers were already Web-savvy towards the Web-based load tenders. The ones that weren't could be trained in an hour via a webcast and they caught on quickly."

Back in 2001, Dial Corp., a Scottsdale, Ariz. division of the German company Henkel, decided it needed to implement technology to better manage its domestic volumes, which includes about 130,000 truckload shipments a year. But before the company went deep into TMS provider evaluations, it established some core functionality—the "must haves"—that it wanted to see up front.

"We had a list of requirements including 'need to haves' and 'nice to haves' in mind," says Rob Shafer, manager of carrier alliances in the logistics organization at Dial. Shafer says his organization wanted the TMS to help in managing contracts, writing specific business rules for freight tenders, and provide a means for brining carriers into the electronic age.

"We were looking to eliminate manual processes because at that time, we were still living in a phone and fax world," Shafer says. "At the end of the month, we reported on how we did vs. our route guides and typically we didn't do well. We lived in a he said/she said environment—the carriers were saying they never got tenders and our coordinators were saying the carriers didn't have equipment."

And beyond that Dial wanted to get more visibility into managing capacity, particularly flex capacity, during peak periods. And the bottom line was it needed to be self-funding.

Dial weighted the functionalities and priorities in an RFP and sent it out to 31 TMS providers, receiving 18 responses. From that list, Shafer picked seven that had the functionality to manage its business and did deep-dive evaluations on those seven and eventually signed on with Nistevo in 2002.

Shafer says there are two functionalities within the TMS system that have been more useful than originally anticipated: tools to arrange and manage capacity and the freight payment capabilities.

"About a year after we went live on the TMS, truckload capacity tightened up significantly, and using a TMS allowed us to quickly solidify carrier commitments in high-volume lanes and find flex capacity by broadcasting loads to carriers that don't normally work in those lanes. And we can use the capacity finder to find shippers sending trucks into our lanes that we can leverage, which has certainly helped in moving freight and controlling costs."

On the freight payment side, of the 130,000 loads managed by Dial, about 60% of the volume was with carriers that were not EDI-capable and providing paper invoices. The TMS' freight payment capability allows Dial to pre-audit every single charge prior to it being sent to the accounts payable department.

The impact on Dial's carrier base has been dramatic. In the past, the company managed its freight with about 240 carriers—in the first 18 months of using the TMS there was a 40% reduction in the number of carriers Dial was working with.

"You just can't manage 240 carriers. You end up spreading your business too thin and as a result, you're just not important to anyone," says Shafer. Today, Dial manages about 80% of its freight with about 40 carriers.

On Dial's functionality "wish list" is the ability to manage freight claims at a line-item level as well as a yard management system in the TMS. Shafer says yard management tools are often available in a warehouse management system, but that it would be "nice to have" in a TMS as well.

There were some internal organizational changes needed to accommodate the TMS system that Dial had not anticipated up front. In fact, the internal change management challenges were perhaps the most difficult part of the process, according to Shafer.

One of the most notable organizational changes at Dial was the creation of an "analyst" position in the logistics organization whose role is primarily to manage all the data in the TMS system, including updating or posting rates, updating contracts, carrier training, and serving as the liaison between carriers and the AP department.

"New TMS users should not underestimate the time it takes to get the rating information into the system," says Shafer.

And not surprisingly, the roles of the transportation coordinators at Dial have changed. Finding the trucks to handle its loads in the phone/fax world took much more time. By automating that process, the transportation coordinators can focus more on value-added activities.