Transportation Management

Topics: Supply chain management, Costs, Logistics Pages: 9 (2621 words) Published: November 27, 2012
In the past, transportation management was a tactical concern – a necessary cost of conducting business, which does not have much impact on profit margins. Today, rising fuel prices and increased pressures for improved service have made transportation management a strategic issue. Companies have to meet and exceed customer expections if they are to be the preferred service and goods provider.

A transportation management system (TMS) is an end- to -end software solution that is a part of supply chain management concerning transportation operations. It includes planning and optimization, execution, business intelligence, and freight payment. In addition, it also supports additional services, such as bid optimization, network modeling, yard management, benchmarking, and dock scheduling. Inbound and outbound networks too are supported on a global basis, typically helping companies to move freight from origin to destination cost effectively.

In this essay, I will be using Sargento Foods as a case study. The focus of the essay will be on analysing the existing TMS solution adopted by the firm, identifying their areas of weaknesses and recommending strategies that will help to improve the transportation system to better suit the evolving needs of Sargento Foods.

Background information
Sargento Foods Inc. is a family-owned business, employing approximately 1,300 people at four Wisconsin facilities, one in Washington, and one in South Dakota. They are one of the largest converters of cheese in the United States, offering a variety of cheese products marketed through four business divisions: Consumer Products Division, Food Service Division, Food Ingredients Division and Culinary Solutions.

Inadequacies of its existing system before the switch to Sterling TMS: Sargento was managing their distribution and logistics with a hosted TMS solution which was not able to meet their operational requirements. When Sargento Foods planned orders into shipments, the previous solution did not consider the cost, service or contractual commitments to carriers. It was not able to accurately allocate transportation costs at the order level. For example, accessorial costs were not being allocated. Recognizing the limitations of their current system, Sargento realised the need for a solution that would meet their current operational needs, as well as any changes they may face in the future.

Solution adopted by Sargento Foods
Sargento and identified IBM to be their provider and went live with Sterling Transportation Management System (Sterling TMS) in 2006, delivered on cloud, integrating with 30 carriers, shipping approximately 3,000 orders per month, and transporting 24 million pounds of Sargento products on average per month. Sterling TMS works with Sargento’s existing supply chain applications as well as IBM® Sterling Information Broker®, allowing them to improve logistics efficiency and customer satisfaction. Customers are placing orders via EDI, which are then fed into Sargento’s SAP ERP system. SAP feeds inbound purchase orders to Sterling TMS as well as Sargento’s Warehouse Management System.

Sargento uses Sterling TMS for shipment planning, execution and freight payment. They are now able to track the performance of their carriers, allowing them to identify areas where they can eliminate costs. They are also utilizing the system for visibility purposes and can now accurately allocate transportation costs to their customers. With Sterling TMS they can clearly identify where their shipments are throughout the process and confirm the right rates for the right shipments. They are also using freight payment on the back end after the shipment is completed.

Key benefits:
As Sterling TMS system is delivered on cloud, this results in fewer IT resource requirements, no upgrade costs, configuration instead of installation, faster and easier connectivity, and lower total cost of ownership using a system that spans the...
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