When organizing delivery to the customers today, many manufacturers prefer to keep records of all the data in their internal ERP system and to interchange data with shipping carriers via mail. At the first, this approach seems to be effective, as it is easier for logistics managers to keep records of all the data in one system, and the company saves money (there is no need to pay for a separate TMS). But in most cases, that is not so, and in this article, we are going to tell you how electronic data interchange in logistics and the use of TMS help companies to save money, to avoid mistakes and to increase customer loyalty.
Typical process of interaction with shipping carriers during goods delivery
Imagine a company that regularly delivers goods to distributor network. After the logistics manager has received orders in the ERP system and formed trips, he must:
- Order cars in the shipping carriers for these trips (by mail, phone, etc.). If necessary, send a request for a car to several shipping carriers, get their prices and choose a shipping carrier with the lowest price (hold tenders);
- Receive the acceptance of the application for the execution of the carriage, as well as the data on the driver and the vehicle from the shipping carrier. If the shipping carrier has cancelled the trip, then offer it to another shipping carrier;
- If the car is late to the loading warehouse, promptly contact the shipping carrier to resolve the problem. Promptly coordinate with the client the rescheduling of delivery;
- Obtain confirmation from the shipping carrier that the vehicle has arrived at the customer. In case of problems during unloading, promptly contact the client to speed up the solution of the problem;
- Based on the results of the transportation, record all the key parameters of the trip for correct accounting of finances and calculation of key metrics of shipping carriers’ efficiency.
If a company works with one shipping carrier, it has few delivery trips, and there is no risk of receiving a penal damage in the form of a fine, then all these steps are easy to perform, working in mail and Excel.
The companies having several transport contractors run the risk of facing a number of problems.
Non-optimal costs for operational management of delivery
For each trip, the logistics manager needs to perform a number of actions, namely, unload the data from the ERP, prepare a letter, send it to the shipping carrier, wait for a response letter with the driver and vehicle data, load all the data back into the ERP. The number of actions is multiplied if it is necessary to hold tenders between shipping carriers or find a replacement for a refused shipping carrier.
Using a TMS makes it easy to automate all these routine operations and free up employees’ time for more important tasks.
Risk of mistakes
Here are just a few examples of mistakes that may occur:
- Forgot to send a letter to the shipping carrier, as a result the car did not arrive on time for loading;
- Didn’t see the carrier’s refusal to operate the trip, as a result didn’t manage to find a replacement;
- Missed a letter from the shipping carrier with information that the car was late for the client, as a result received a fine from the client.
All these mistakes lead to financial losses for the company, which can amount to several percent of the total logistics budget.
Lack of transparency in the process
If an employee of the company conducts all communication with the shipping carrier by mail, then in the case of any non-standard situation, he will spend considerable time trying to figure out the cause of the problem.
For example, the company’s car does not arrive at the Distribution Centre on time, and the client requires a forecast of arrival. In this case, the employee needs to find all the details for this trip in the mail, then contact the shipping carrier, take in the situation and give an answer to the client.
In such a situation, the client wants to get information here and now, but the logistics manager needs time to “find all the ends”. The situation is significantly aggravated if the trip was originally carried out by one employee, but on that day, he fell ill, and another employee replaces him.
Due to the fact that all data is scattered among several sources of information (ERP system, Excel, mail, shipping carrier system), a company employee spends a lot of time collecting all the data, validating it and building analytics for management.
The lack of transparent processes and a single workspace for all participants in the delivery significantly slows down the work and reduces the loyalty of the company’s customers.
Advantages of using electronic data interchange in logistics to interact with TC (Transport Company)
All of the abovementioned problems are solved if the ERP-system is integrated to the TMS to coordinate interaction with shipping carriers in a single digital space. For more information about the options for integrating your ERP with TMS or 3PL providers, read the detailed guide on FiduciaSoft.
As a result, your logistics manager gets the following benefits:
- All interactions with shipping carriers are completely digitalized. For any trip, you can find all the information within a minute;
- Employees spend significantly less time communicating with shipping carriers;
- The risk of mistakes in electronic data interchange in logistics is minimized. For any trip, always analyse what went wrong;
- At any request of the client about the status of delivery, employees can instantly provide all the information;
- In case of unforeseen problems during the trip, the logistics manager will find out about them immediately, and not when it will be too late to change anything;
- The system is a single source of all data, on the basis of which you can quickly build any analytics and make decisions.
Electronic data interchange in logistics for shipping carriers
As well as for shippers, for shipping carriers it is beneficial to work in the TMS of their customer. Especially for small shipping carriers that do not have their own system. They can work directly in the personal account of your TMS.
Due to the fact that the electronic data interchange in logistics between the shipper and the shipping carrier works in a single system, there is a reduction in manual labour and an increase in the transparency of processes along the entire communication chain: the company’s logistics manager – the shipping carrier’s dispatcher – the driver.
