TMS Software Fleet Fuel Savings

May 25, 2022

How TMS Software Can Deliver Fleet Fuel Savings

 

The constant movement of materials and goods, from supplier to customer, is why managing transportation costs is so important in a supply chain. Transportation takes up most of a supply chain’s operational costs and when fuel costs rise, achieving fleet fuel savings becomes even more imperative. Selecting an intelligent TMS software system to manage your day-to-day transportation processes can save time, effort, and money.

Meeting sustainability goals to deliver fleet fuel savings may seem unreachable when fuel prices spike. Pandemic, armed conflict, infrastructure failure, any disruption in the supply chain, either local or global, can lead to higher fuel prices, resulting in even higher transportation costs and lower profit margins.

It is in shippers’ best interests to partner with carriers on reducing fuel costs. When fuel costs rise, carrier fuel surcharges increase, and shipper’s fuel plans have to be revised upward. In addition to these directs costs to shippers, when shippers work with carriers to reduce transportation fuel costs, carriers are more inclined to offer better bids on tender and confer preferred shipper status on those shippers who take a proactive approach to the shipper-carrier relationship.

What is transportation management in supply chain management?

Transportation management is the planned interaction between a shipper’s ERP or order management system and the systems of carriers in the modes used by the shipper (truck, train, barge etc.). Given the importance of transportation to a supply chain, transportation management becomes key to managing the whole supply chain with sustainability in mind.

Yet, it’s surprising that many transportation management teams for industrial manufacturing shippers still rely in some way on manual processes and spreadsheets for load planning and tendering. Manual processes increase a team’s workload. They also make it impossible to become more efficient and effectively control costs and achieve sustainability goals.

To realize fleet fuel savings during times of uncertainty, a transportation management team will need a robust web-based transport management system (TMS). TMS software can deliver fleet fuel savings and improve a company’s triple bottom line—profits, people, planet—in a number of ways including the following:

Carrier management—TMS systems maintain profiles, rates and other data for each carrier for whom they have negotiated rates for the routes they use. Data in every completed delivery is stored by the system, including details of costs incurred. Using these data, during times of high fuel costs dispatchers can favor carriers who are more efficient users of fuel due to more efficient routing, tractors/trucks with better fuel economy, and other factors the carrier controls. Dispatchers can also weight the advantages of intermodal transport, balancing the costs of freight transfer and container utilization against the superior fuel economy of rail for example.

Carrier Communications—When a TMS offers a robust carrier communication system, carriers can notify the shipper quickly of issues they encounter in transport, including issues that may impact fuel expenditure. Notified of issues by alerts issued by the TMS system, dispatchers can react quickly to resolve problems for the carrier in ways that can save fuel.

Load optimization—A modern TMS offers shippers the opportunity to input their orders into the system and use TMS load optimization tools to create full loads and optimize lanes utilized. Fewer LTL (Less Than Truckload) loads and better lane selection for the load makes best use of available equipment. Less equipment used to deliver loads means fuel savings and cost savings in freight spend.

Dock management—Shippers can use the right TMS software to manage freight docks and rail yards. Truck carriers are offered a means to schedule the pickup according to dock times available, leading to less idle time/detention, which saves fuel.

Intermodal freight management—When the TM software can manage more than one transportation mode, such as freight and rail, dispatchers can use the system to make best use of trains for fuel economy. It is well-known that a diesel locomotive can move one ton of freight nearly 500 miles on one gallon of diesel fuel.

Process automation for greater supply chain visibility and optimization 

Transportation management teams can focus more on optimizing for greater fleet fuel savings when they automate up to 95 percent of their workload with TMS software. Artificial intelligence (AI) and machine learning (ML) increase visibility and transport efficiencies not available through manual processes and location-specific applications.

  • Switch transportation modes. Shippers can save time, reduce transport costs, and conserve fuel by seamlessly moving freight between truck and rail. 
  • Visibility and KPIs. Visibility and more granular data make it possible to optimize for the best possible routes with the fewest delays. Shippers can also optimize for load consolidation to avoid partial freight, less than load (LTL) shipments, and backhaul issues. 
  • Connect with sustainable carriers. Some carriers in a shipper’s network have sustainability practices built into their business model. They have high standards for maintaining their fleet, use the shortest and fastest routes, require drivers to drive safely and conserve fuel whenever possible, and use internet of things (IoT) devices to monitor performance.

Location-independent applications and devices

A web-based transport management system makes it easy for shippers to quickly achieve digital transformation without disrupting the supply chain.

Improved sustainability in a supply chain

Embracing sustainability in a supply chain is an increasingly common business goal. It means companies focus as much on how they impact people, communities, and the environment as they do on their profit margins. And by considering their triple bottom line—profits, people, and planet—shippers can measure their full cost of doing business.

 

What are some benefits to improved sustainability of a supply chain?

  • Profits: Shippers that pursue sustainability initiatives experience an increase in growth and profitability. Investors, carriers, communities, and individuals all want to do more business with companies that value sustainability. As Alexandra Spiliakos of Harvard Business School Online says, “In other words, ‘doing good’ can have a direct impact on your company’s ability to ‘do well.’” 
  • Environment: Supply chains thrive when companies work to reduce their carbon footprint. The most obvious resource that has the biggest impact on carbon footprints is fuel. By realizing fleet fuel savings when using TMS software in the cloud, shippers can reduce their transportation costs by at least 10 percent.
  • Social: Communities and individuals benefit from supply chains reducing waste, polluting less, and recycling more. The goodwill created by pursuing these and other initiatives means shippers can look forward to a long and sustainable future.

Web based Transportation Management Systems can automate up to 95% of the transportation management workload, in addition to facilitating a smooth transfer of data and information from ERP or other systems into the transportation section of the managed supply chain. Fleet fuel savings, reduced carrier costs and the financial impacts of repeat delivery delays can all contribute to substantial savings in operational costs.