TMS Transformation Drives Supply Chain Optimization
ARGO-EFESO spearheaded the transformation of a manufacturer’s Transportation Management System (TMS), driving supply chain optimization from order to delivery. The result was $5 to $7 million in annual outbound logistics cost savings, as well as improved customer service/operating processes.
The client is a wire and cable manufacturer that was relying on decentralized and non-standardized processes, plus inefficient execution impaired by a legacy ERP/WMS systems. As a result, freight expenses had increased and service levels were diminishing.
ARGO-EFESO was engaged to design and implement transportation management system that would increase collaboration with suppliers/carriers, maximize capacity, control freight spend, lower total landed transportation cost, and better serve customers. Other goals were to improve flexibility and global logistics system visibility, as well as to ensure a scalable technology and physical infrastructure, including ways to measure and incentivize performance.
Approach & Key Success Factors
ARGO-EFESO gathered requirements and assessed the client’s order-to-delivery processes and prepared RFI and RFP for system sourcing. We also led the TMS vendor selection process, including contract and pricing negotiation. Reengineering shipping processes at corporate and warehouse included change management and developing best cost designs and sourcing.
The ARGO-EFESO team was able to significantly improve transportation availability while streamlining work processes such as order acknowledgment and entry. Real-time delivery visibility and metrics, along with weekly reports, now make it possible to monitor for each facility’s KPI’s, issues, escalations, and weekly plan.
Further, as part of the software package with vendor contract negotiations, a TMS procurement tool was added at no cost. The tool enables the client to run their LTL/TL carrier rate bids independently, providing greater capacity for scenario management and in-depth analysis. Implementation of the tool for LTL RFQ has resulted in estimated annual savings of $1.75 million.
ARGO-EFESO made rapid implementation possible. The client’s TMS was implemented at the first site in just 11 months, significantly less than the industry average of at least 18 months for TMS implementation at an initial site. The newly negotiated contract for TMS resulted in savings of over $1 million, and there was no budget overrun for the $2 million implementation budget.
Overall project savings will result in $6 million (base case) and at least $10 million (upside) while reducing savings realization time — savings that now can be put toward working capital costs.