Why Your Transportation Management System is Not Enough

Virtually every freight broker or third-party logistics provider is familiar with a Transportation Management System (TMS). A TMS is essential for business operations such as the optimization of routes, the selection of certain carriers, and the planning of shipments.  

However, when it comes to improving operational efficiencies, reducing invoicing errors, and reducing days to sales outstanding (DSO) a TMS will only get you so far. Many organizations are still trying in vain to use their TMS to get a better handle on their freight audit and invoicing and are coming to the stark reality that it is not enough. They are realizing that they need more and simply throwing more people at the problem is a solution that comes with a steep cost.  

Despite the value that a TMS can provide there are several reasons why it is unable to automate the freight audit and invoicing process and cannot be successful in reducing DSO and improving cash flow 

If you are still not convinced, here are a few reasons why you will want to consider a solution that integrates with your TMS 

Complexity: A TMS is designed to manage transportation operations, not financial processes.  Freight invoices can oftentimes be complex and there is no standard format across the industry. Even with the most astute personnel, errors can be missed, which means your organization is leaving money on the table.  

Accuracy: It is commonly accepted that up to 25% of all invoices have some kind of error. A TMS is not designed to resolve these errors and resolving these errors is a time-consuming task and not efficient.  

Visibility: A TMS provides visibility into transportation operations but may not provide the same level of visibility into financial processes. Having access to real-time data is essential and can be a competitive advantage. This kind of access can only be found via automation that is purpose-built to manage the freight audit and invoicing process.  

Scalability Challenges: As your logistics business grows, so does the volume of freight invoices. TMS systems may struggle to scale efficiently without significant investments in infrastructure and resources which put a further strain on your cash flow.  

To overcome these challenges, businesses need to use specialized freight audit and payment solutions that can integrate with their TMS which then provides a full end-to-end solution. Here are some of the benefits that an automated solution powered by AI and machine learning (ML) can deliver

Improved Operational Efficiency: The one thing that can never be recouped is time and across many organizations the time spent on reconciling invoicing errors continues to grow. Our own analysis has shown that on average, 3PLs and brokers can improve their efficiency by 25% by implementing an automated system. In fact, we have seen organizations that have been able to reassign personnel to other areas of the business due to the increases in efficiency and effectiveness. 

Reduction in DSO: Cash flow is essential to the health of any business and getting paid faster will have a direct, positive impact on your organization’s cash flow. We have found that on average 3PLs and brokers that implement automation for their invoicing are able to reduce their DSO by three days. This reduction will improve cash flow and the financial health of your business.  

Profitable Growth: Growing profitably can be a challenge. Many organizations realize top-line revenue growth but struggle to increase their profitability. The organizations we have worked with to automate their freight audit and invoicing have seen a 4x – 7x growth and have been able to do so profitability and without adding additional resources.  

Transportation Management Systems are valuable tools for managing transportation operations, but they are not the most suitable solution for freight audit and invoicing. To stay competitive and enhance your logistics business, it’s essential to embrace AI and machine learning technologies.  

At Navix, we believe in staying at the forefront of technology to provide our clients with the best-in-class solutions and we have seen the quantitative benefits they have achieved and the improved profitability speaks for itself. If you’re ready to improve your operational efficiency and improve your cash flow feel free to reach out to us to learn more about how we can help transform your logistics operations.