Keeping your TMS current: Why rate maintenance is critical
- March 29, 2024
An issue that always seems to arise during and after a transportation management system (TMS) implementation is the amount of work, resources and data required to maintain accurate rates in the TMS. Unfortunately, companies often underestimate — or inadequately prepare for — this crucial task.
As you might expect, the greater the lanes or the larger the number of carriers, the more tedious it is to maintain accurate rates in your TMS.
TMS data structures are rigid and complex
TMS rate management is an intricate and tightly structured process. The task requires users to upload multiple (and problematic to maintain) comma-separated value (CSV) or spreadsheet files. Despite using tools that standardize and automate the rate maintenance process and reduce input errors, these difficulties remain. When uploading rates into the TMS, you should create a list of standard operating procedures (SOPs). These define a step-by-step process and define standard naming conventions for regions, zones, tariffs, rate offerings, services and charge codes. It goes a long way toward making the mission as stress-free as possible.
You’ll find that an ongoing challenge will be a persistent lack of the resources (and skills) needed to manage rating and routing guides. Keeping up with rates in a rapidly changing transportation environment is a never-ending project and a moving target, as local and global supply chain changes constantly affect your negotiated rates. Maintaining accurate rates in a TMS is essential for optimizing loads, following routing guides, planning multi-stops and making fleet vs. carrier decisions.
Rate maintenance is a collaborative effort
The carrier management (CM) team usually administers the rate maintenance process. That said, other groups play key roles in a successful transportation operation. Transportation planners manage day-to-day operations and help validate uploaded data as they plan loads with the appropriate carriers at the correct rates. TMS specialists also support the transportation team and look for discrepancies. Finally, the settlement team makes sure carrier invoices contain correct rates and accessorial costs.
Maintaining rates: other things to consider
When applying routing guides through loads and assigning them to the carrier with the best cost and service levels, configure your TMS system to consider these factors:
- Geography: Factors should include rates based on geographic specificity and use categories such as location-to-location rates, postal codes, zones and regions, countries or any necessary combination of these.
- Performance: Measure carrier performance based on-time pickup, on-time delivery and other essential criteria.
- Capacity and commitments: Grade according to available carrier capacity on a daily, weekly and monthly basis. Award commitments for each lane as negotiated with each carrier.
- Rates: Know the effective and expiration dates
- Available modes: Learn the type of transport (for example truckload, intermodal, less-than-truckload, parcel, ocean)
- Equipment: Know what types of rolling stock and sizes are available
In addition to the factors above, these additional criteria will help determine how you assign loads to specific carriers and at what actual applied rates.
- Latitude and longitude: Precision location data determines the accuracy of stipulated distances and in turn the precision of calculated rates.
- Itineraries and routes: Determine if intermediate stops — at hubs or depots — or other route specifics could affect customer satisfaction.
- Zones and regions: Maintain zones to include all postal codes, cities, carrier locations and facilities to make easy multi-stop load planning.
- Facility business hours and calendars: Maintaining accurate hours of operation helps accommodate pick-up/drop times, transit time calculations for each load and dock appointment availability at each location.
- Carrier business hours and calendars: Check how carriers set tender acceptance-response and expiration times. Both impact the waterfall tendering process as well as when carriers gain visibility to load tenders.
- Equipment types and configurations: Configure specific grades for different equipment types or configurations, such as 53' dry van, flatbed options, bulk tankers and others.
Your company's TMS specialist should review your configurations regularly to make sure you’re using the right rates and routes to build load plans.
Review your transportation pricing strategies regularly
Companies deal with a volatile supply chain environment, emphasizing the need to control costs and review transportation rates regularly; you simply can’t rely on annual bid event rates. With brokerage firms providing dynamic rates through application programming interface (API) connections and the nature of freight auctions, transportation rates are more dynamic — and harder to keep current — than ever.
TMS rate maintenance never ends
Efficient load plans and optimal TMS usage require maintaining proper staffing, process standardization as well as consistent updates to rates and other master data in your TMS. Only this will make sure you achieve accurate routing, carrier selection and reduced manual interactions for each load.
When managed effectively, your TMS will provide cost-minimizing options while improving the performance of your transportation operations.
Contact us and see how NTT DATA’s Supply Chain Consulting’s Transportation practice will help you integrate and streamline your operations, achieving maximum efficiency through economies of scale. Our top supply chain talent, enabled by proven, leading-edge digital assets — tools, methods and content — deliver actionable insights and measurable outcomes to some of today’s largest and most complex supply chains.