Using Distribution Technology To Save Money (And Make Your Life Easier)
Using the right technology for your transportation and distribution function will almost certainly save you 5 to 10 percent off your expenses in a matter of days.
June 17, 2008
Transportation is often referred to as "logistics." Computers are great at "logistics" — people are not. I have yet to see a human being route and optimize customer orders for shipping better than a computer. Computers are designed to quickly run through millions of permutations in order to arrive at the most efficient result.
Any large company you can name would grind to a screeching halt without effective transportation and distribution software. These programs are commonly known as a Transportation Management System or TMS for short. As your nursery grows in size and you find you are shipping to multiple states for multiple clients, you will quickly realize growing your product is not the major limiting factor — getting it to the client is! This is especially true in "shipping season."
Moreover, in today's competitive landscape, and to complicate matters, you may even bring in brokered material to fill out your orders or contract grow material at other nurseries. For those that use racks to ship on, you need an efficient and effective way to know where your racks are and to get them back to your dock as quickly as possible.
An effective TMS can handle these needs with aplomb. Some growers using an inventory and sales software system may already have a "mini" transportation module built into their software. But these systems are almost exclusively designed for growers shipping short distances on their own trucks — and the functionality is limited because it was an "add on" to the inventory and sales system. However, for most small- to medium-sized growers, these "add on" modules may suffice. The easiest part is all you need to do is contact your software vendor to ask if they have a module that fits your needs.
At some point, however, as you grow as a company, you may need to look at a comprehensive and dedicated transportation system that will unify your entire shipping function — whether your material is shipped on your own trucks, common carrier, via transportation broker or even rail transport. Moreover, you need to be able to organize all the necessary paperwork to make the shipping function run smoothly. For growers with existing technology framework, this can seem a little daunting, but this is exactly what sets the larger growers apart from small growers — the willingness to go through painful change for the greater good.
Starting The Journey
Many growers' first transportation system is simply a spreadsheet and some mapping software. I still see this even as growers get to $10m in sales or more - quite amazing when you consider many growers spend 30 percent or more of their total variable expenses on transportation and distribution. So you would think an obvious place to install technology would be in this area.
Where do you start? There are hundreds of software options to handle the transportation function. Some will cost as little as $500 and others well over $1,000,000. Generally speaking, you get what you pay for and there are many considerations to be made. While many growers don't have dedicated IT staff to analyze all the options and manage a complex installation procedure, you can rest easy because there are readily available solutions that are more "plug and play" than "pay and pray."
One option is the new ASP.NET solution from Microsoft. The only full-featured TMS system designed and built for growers' runs on this Microsoft platform and is called InMotion Global (www.inmotionglobal.com) and requires nothing more than an Internet connection. If you can surf the Web, you can access the system. The pricing can't be beat - free of all upfront costs and a "pay-per-load" fee of $17. It supports an unlimited number of offices and users for no extra charges and connects you to a 24-hour freight management center for those last minute needs (and your customers can track and trace their shipments over the Internet). InMotion Global is used by some of the largest growers in the country.
At Interstate, we have found 90 percent or more of potential shipping problems can be eradicated by having the correct paperwork. Technology is also good at this "business process" function — allowing you to flow smoothly from order to truck with minimal fuss. When problems do occur, a good technology solution will fix the problem before it becomes an issue.
The funny thing about our business is "if we can just get through the spring" we seem to think we can avoid spending the money and enduring the pain of installing a transportation technology solution. But ironically, if we had the technology solution in the first place, our spring shipping season would be more profitable and easier to bear.
Tim Higham is the CEO and President of Interstate Transport, Inc., the largest dedicated logistics provider to the horticultural market. Visit www.interstate-transport.com or call 866-281-1281.