The Problem With Expedites That No One Is Talking About

Posted by Buck Devashish on Oct 22, 2019, 6:02:43 PM

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Today’s supply chain is incredibly demanding. No matter what sector you’re in, you’re likely up against thin margins alongside pressures to reliably and cost-effectively deliver both regular and rush orders on-time and in-full under strict time windows.

Due to a long-standing tradition of batch-processing, businesses are constantly losing money by unnecessarily rushing regular orders that are bundled with the expedite. Most Transportation Management systems (TMSs) run up against this inefficiency because they can’t control individual orders. Here’s how the order-centric TMS is challenging and revolutionizing that paradigm.

The Functional Limitations of Most TMSs

Legacy Transportation Management Systems were designed to carry out large volumes of orders in bulk across relatively static networks. Many of the most modern TMSs have come a long way since then, transitioning from big to split batches, incorporating rush orders into the core workflow, and integrating more dynamic networks.

order-centric-tms-shipping-MPOHowever, modern TMSs are still largely shipment-centric. In other words, to streamline the shipping process, they continue to assemble incoming orders into batches. When unexpected expedites crop up, there is no way for businesses to separate – or decompose – the individual orders from their batches, forcing companies to rush the full batch and incur major losses.

For instance, if a batch of orders are due next week, but another order requiring overnight shipping comes in, companies will often forfeit lower rates on the non-rush orders to accommodate the expedited item. When there’s no choice but to ship in bulk, more orders are unnecessarily expedited.

Order-Centric TMSs Optimize Expedites

Expedites are creating cost leaks because they are limited by unnecessary rigidity. The shipment-centric framework prevents order optimization and constrains a company’s ability to respond to unexpected events, expedites, and changes to individual orders.

In this respect, order-centric Transportation Management Systems are game-changers. These systems can “decompose” or break up complete shipments into various legs to isolate and optimize expedites. Rather than rigidly confine orders to batches, these systems treat every order as unique and dynamically model flows according to each one’s exact specifications and requirements.

This approach creates a kind of unique, ‘micro supply chain’ for every order, allowing businesses to fully optimize each flow and individually course correct per order. As such, micro supply chains ensure that other shipments aren’t unnecessarily impacted by issues, delays, or unexpected expedites.

Order-centric TMSs also treat rush orders as part of the regular process. Details, such as delivery requirements and other terms, are applied in real-time via automated rules. In addition to order instructions, modifications and changes are also transmitted to the TMS in real-time.
If and when exceptions arise, the system can optimize how it groups and executes shipments – including rush orders.

 

Simply put, when companies can’t control how they transport individual orders, they easily lose money. The order-centric TMS helps businesses control every customer supply chain and handle incoming rush orders easily, without any special processing, and without having to sacrifice on consolidation and other cost-optimization opportunities.

 

TMS Buyer’s Toolkit

 

MPO offers the world’s only order-centric TMS to help businesses in a range of industries optimize their complex, global supply chains and reach unprecedented levels of efficiency, customer service, and cost-savings. You can learn more about this powerful solution and how it might serve your business by exploring our TMS Buyer’s Toolkit – which includes a free download of Independent Gartner research.

 

 

Topics: Transport Management Systems, Supply Chain Optimization, Order-Centric, Order-Centric TMS, Logistics

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