SMS and Tms

TMS How is process improvement important to achieving transportation excellence? How might process improvement be extended to other areas of logistics planning? Companies now operate in more globalized world, characterized by heavy competition. The information age has ushered in an era, predicated on rapid information exchange. Competitive advantages obtained through process improvements are often eroded away as competitors quickly adapt. As such, it is imperative for businesses to continue to advance their process improvements in an effort to remain competitive within a more globalized world.

Globalization, in regards to transportation and process improvement has created massive opportunities for growth. The exchange of goods and services is not occurring domestically, but internationally as well. Goods are often manufactured in one country to be sold in another. Businesses also continue their expansion efforts in overseas markets. Many of American's most prominent companies now obtain a substantial portion of their revenue from markets outside the United States. Iconic American companies such as Coca-Cola, Apple, and Microsoft continue to see a shift in consumer demand from the developed world.

This overall change has created a more interconnected society and global economy. As such, Supply Chain Management and Transportation Management Solutions will become very integral aspects of the global growth of many of companies throughout the world (Kibort, 1999). Process improvement is important to achieving transportation excellence for a litany of reasons. First, and arguable most important, process improvements directly impact the profit of the company. Delayed shipments, frustrated customers, and lack of supply to fulfill demand can negatively impact profit and profit margins.

Companies that rely extensively on fixed cost assets are particularly harmed from delays in the shipment of goods and services. As such, it is important for companies to continually improve the delivery and transportation of key materials and products to their intended destinations in a timely manner. Process improvements can help mitigate the damage caused by delays in shipment (Apple, 2002). A wonderful example of process improvements and their impact on the bottom line comes from UPS.

UPS, who specializing in the transportation of goods and services around the world, continually improves its processes to provide a more seamless and customer oriented product. During the Christmas of season of 2013 UPS experienced an unprecedented amount of packages delivers through e-commerce channels. The company was overwhelmed, and subsequently shipped many products after the Christmas Holiday deadline. Consumers were understandably upset, as their packages, which were promised to arrive on Christmas, did not.

UPS, who didn't anticipate such a rapid increase in consumer shipments, was harmed both financially and through their reputation. The company reimbursed consumers millions of dollars due to the delayed arrival of their packages. Their stock price plummeted nearly 10% after the news of the delayed shipping. Consumers now didn't trust the UPS brand and their promise of quality due to this incident. UPS responded with a process improvement plan that ultimately created benefits not only financially, but also from a reputational standpoint.

The company started with utilizing a process improvement mechanism called Orion. Orion uses technology to help drivers deliver packages in more seamless and integrated manner. The technology provides UPS drivers with the best routes by which to deliver products to their customers. The technology takes into account traffic patterns, the drivers speed, weather, and more. The company states that Orion can save the company millions of dollars as drivers are more efficient.

This efficiency in regards to process improvement also reduces gasoline consumption of the part of UPS drivers, saving the company additional dollars. More importantly, the Orion system also provides reassurance that consumers will receive their packages at their intended destination in time. As noted above, this issue plagued the company during the holiday season of 2013. The subsequent changes in their overall business processes and operations however, insured the problem will not occur again.

UPS is just one of many examples of how process improvements can directly impact the competitive position of a company. By being more efficient in their operations, the company was better positioned to drive out transportation related costs, while also providing a value added service to consumers. The benefits of SCM and TMS do not always relate to cost. Some benefits can also be derived through efficiencies. The ability to ship more products with the same amount of material and labor is also beneficial to companies.

Shipment optimization creates a large value added service for companies with operations in disparate regions of the world. Shipping when done incorrectly can create large cost burdens for companies, particularly small business. Through shipment optimization, companies can avoid many delays associtated with customs duties, tariffs, compliance with international law, visibility of product shipments and more. Duty rates, customs clearance, and entry processes differ from country to country, irrespective of size.

In addition, tariff classifications, value declaration, and duty management can create confusion and increase costs for businesses looking to expand overseas. Customs and security initiatives, due in part to terrorist activity, have imposed new regulations on companies that make it more challenging to trade internationally. Process improvements such as remote filing services and entry reconciliation can help businesses optimize their shipping and transportation services to become more efficient (Anonymous, 2002). Process improvements can also expand to areas beyond the traditional shipment efficiencies described above.

Processes within many of the more technical functions of a business can also be enhanced through process improvement. Accounting, finance, sales, and other departments can benefit from process improvement. In regards to the financial functions of a business, process improvements can help mitigate fraud or theft from the company. The ability to track and subsequently audit internal financial records helps companies avoid large financial losses in the future. Process improvements can also reduce bureaucracy within the company and allow for quick and efficient decisions to be made.