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Chapter 3 Transportation Technology and Systems

Chapter Objectives:

After reading this chapter, you should be able to do the following:

1. Appreciate the critical role of information in transportation management.

2. Explain transportation information requirements.

3. Understand the capabilities of transportation software.

4. Describe and differentiate between planning, execution, and performance management tools.

5. Articulate the benefits of transportation management systems.

6. Discuss the critical issues in technology selection and implementation.

7. Recognize the important role of equipment technology in transportation sustainability, safety,

and cargo security.

8. Identify the disruptive technologies that will spur transportation service innovation.

Introduction

Transportation is the critical linking mechanism in the supply chain. It ensures that food, fuel,
and medical supplies are readily available at the point of demand. Also critical is information
about the in-transit freight. Transportation professionals need up-to-date knowledge about freight
location, quantity, status, and expected arrival for planning, quality control, and customer
service. Awareness of the product pedigree and in-transit temperature also are essential,
according to the Transportation Profile feature. This type of knowledge ensures that food and
pharmaceutical products are kept safe as they move across the cold chain.

Monitoring temperatures, managing flows, and meeting delivery deadlines cannot be

accomplished manually. With so much product in motion between worldwide origin and
destination points, technology is needed to maintain control and promote safe, timely, and cost-
efficient transportation. Correctly used, these tools provide remote data collection, rapid digital
communication, and decision support for transportation of products across cold chains and every
other type of supply chain.

Recognizing the value and potential of transportation technology to provide greater visibility and
supply chain optimization, organizations have invested vast sums of money to capture, analyze,
and share critical information about their freight flows. The global market for transportation
management system (TMS) software was $9.6 billion in 2016. An industry report projects that
TMS sales will reach $30 billion by the end of 2025, driven by the rise of mobile computing
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platforms, intermodal transportation, and cloud-based solutions.

Robust spending on transportation technology extends beyond software. Companies are

investing in technologies to make their transportation equipment safer and more fuel efficient.
Innovators are rapidly developing and testing drone technology and autonomous vehicles for
freight movement. And, everyone is looking to harness emerging technologies like the Internet
of Things (IoT) for transportation visibility, control, and decision making.

Information Requirements

Supply chains rely upon three flows—product, money, and information. Nowhere is the
information aspect more relevant than in transportation. With so many transportation activities
occurring after a shipment leaves your facility—intermodal transfers, border crossings, re-
routing, and final delivery, to name a few possibilities—it can be very difficult to maintain
control. You need accurate, timely information to stay connected to the freight. That
information-based visibility is key to maintaining cross-chain knowledge, assessing situations,
and taking appropriate corrective actions when a vehicle breaks down, port congestion becomes
severe, or a driver goes off-route.

Quality Standards

Information quality is a critical characteristic of the vast amounts of data flowing across a
transportation network. Value trumps volume, and transportation professionals must be sure that
they are basing decisions on correct information. A twist on the seven rights of logistics
definition provides clarity about what transportation information must achieve—getting the right
information to the right partners, in the right quantity, in the right format, at the right place, at the
right time, and at the right cost. Change any “right” to “wrong” and transportation decision
makers will find the information to be of limited quality and value.

To ensure that actionable knowledge readily flows between shippers, carriers, and customers,
information must display a variety of key characteristics. Chief among these attributes are
accuracy, accessibility, relevancy, timeliness, and transferability. Also important are issues of
usability, reliability, and value.

Accuracy—Transportation information must depict reality. A true picture of freight status and
location that is free of errors facilitates logical decision making.

Accessibility—Accurate transportation information must be available to supply chain

professionals who have a legitimate need for it, regardless of their role, location, or employer.

Relevancy—Transportation professionals must have access to pertinent information for analysis

and decision making. Irrelevant data and unnecessary details must be avoided as they hide
important details, waste time, and distract decision makers.

Timeliness—To be relevant, transportation information must be up-to-date and available in a

reasonable time frame. Timely data flows from a highly synchronized information system allow
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you to monitor network conditions and respond quickly with corrective actions to avoid
additional problems.

Transferability—Information also needs to be transferred quickly between locations and

systems in the transportation network to facilitate accessibility and timeliness.

Usability—Information is useful only if it can drive effective decision making. Up-front efforts
must be made to define information requirements and capture appropriate data.

Reliability—The information contained in transportation reports and transaction data sets must
come from trustworthy internal and external sources. The data must be accurate, unaltered, and
reasonably complete to support the intended uses.

Value—Achieving these seven quality standards is neither an easy nor a cost-free proposition.
The hardware and software needed to capture and disseminate transportation data can be
expensive, though costs are coming down thanks to innovations like cloud computing.
Transportation professionals must target information technology investments that enhance
knowledge and generate tangible benefits.

Multidirectional Flow

The engagement of multiple stakeholders in transportation planning and decision making drives
a need for multidirectional information flows across the network. Internal information sharing
supports cross-functional collaboration and organization-wide performance optimization.
Transportation planners must be privy to demand forecasts, order fulfillment schedules, and
customer service commitments to secure adequate capacity with quality carriers.

Information must flow seamlessly between a company, its suppliers, and its customers.
Information sharing promotes integrated decision making and process synchronization.
Transportation providers must also be kept in the information loop regarding upstream and
downstream customer requirements. This knowledge allows the service providers to marshal
needed labor and equipment resources. A failure to communicate with service providers can lead
to fulfillment delays and customer dissatisfaction.

Likewise, the transportation providers must support customers’ information requirements.

Visibility and analytics provide timely insights that assist customers with decision making. The
On the Line feature reveals that technology can provide insights that differentiate a
transportation provider from its competition.

Decision Support

With rapid delivery service becoming the norm in many supply chains, access to transportation
information must expand. Managers at every location connected to the transportation network
require information to excel in their roles. This intelligence is needed for strategic decision
making, tactical planning, routing decision making, and execution and transaction processing.

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Strategic decision making focuses on the creation of long-range transportation plans that are
aligned with the organization’s mission and strategies. The required information is often
unstructured and may differ from one project to the next.

Tactical planning focuses on cross-organization linkages and transportation activity coordination.

Information must be readily available, support mid-range planning processes, and be in a flexible
format that can be modified by the participants for use in their systems.

Routine decision making leverages operational level information for rules-based decision
making. The input data needs to be standardized so that the information system can generate
appropriate solutions.

Execution and transaction processing uses fundamental information from supply chain databases,
customer profiles, transportation routing guides, and related sources to complete fulfillment and
delivery activities. As discussed earlier in this section, the information must be accurate, readily
retrievable, and useable so that it can be processed automatically in a timely fashion.

Ultimately, all three information requirements must be met to drive efficient and effective
transportation decisions. Quality information must readily flow to essential stakeholders across
the transportation network so that they can take appropriate short-, mid-, and long-range actions
in support of supply chain excellence.

Transportation Software

The importance of information in transportation cannot be understated. Transportation

professionals need easy access to data in a usable format, accurately analyze the data, and
properly apply the output to their decisions. That is an arduous task, given the volume and
variety of transportation data that is constantly being created.

Fortunately, transportation professionals no longer need to manage these tasks with pencil,
paper, landline telephones, expert intuition, and hope. Powerful software is readily available to
help both transportation providers and freight shippers make key decisions, pro-actively manage
freight flows, and simultaneously achieve optimal cost control and excellent service
performance.

Transportation Management Systems

The planning and flow of materials across the supply chain are handled by a Transportation
Management System (TMS). The core set of business needs handled by a TMS include: routing
and rating, executing the shipment across multiple modes, tracking and tracing loads, and freight
settlement. This simple booking, execution, and payment perspective focuses on freight
management, but a TMS can be much more than a transaction-focused tool. Leading edge TMS
suites provide hybrid planning–execution–evaluation capabilities and a wide array of
functionality to generate numerous benefits across the entire shipping process.
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TMS Decision Support Capabilities

As the capabilities and scope of a TMS expand, the software moves from being a routine
decision support tool to a much more integrative system. It provides greater decision support for
transportation strategic, tactical, and operational planning, as well as delivery execution, in-
transit visibility, and performance evaluation.

TMS Functionality

As described above, a comprehensive TMS can assist transportation professionals in nearly

every aspect of freight movement. From strategic planning that focuses on complex multimodal
and multi-leg route planning for international shipments, to straight-forward load configuration
analysis for greater trailer utilization. The functionality is quite powerful. Figure 3-1 highlights
the broad array of TMS capabilities in each decision area.

From a planning perspective, TMS functionality focuses on the up-front effort to create optimal
deliveries that balance cost and service. Key planning support capabilities include:

• Routing and scheduling—Proper planning of delivery routes has a major impact on customer
satisfaction, supply chain performance, and organizational success. TMS software uses
mathematical models and optimization routines to identify feasible routes that meet service
constraints. Typical TMS output includes a detailed schedule of the routes, cost analysis, and
route maps.

• Mode and carrier selection—A TMS identifies the most appropriate mode and carrier in terms of
efficiency and timing. Using the organization’s contracts and routing guide criteria, the system
can pinpoint the best choices based on shipment characteristics, previous carrier performance
and price, and service requirements. This improves contract compliance, service, and freight
spending.

• Load planning—Effective preparation of safe, efficient deliveries can be accomplished via

TMS load optimization programs. Based on product dimensions, loading requirements, and
equipment capacity, the TMS software determines how shipments should be arranged in the
container or on a pallet. The result is reduced damage risk and improved cargo space utilization.

In the execution area, a TMS can automate a variety of activities to save time, avoid errors, and
reduce cost. Typical TMS execution functionality includes:

• Document creation—Freight movement requires a significant amount of documentation, particularly

for international shipments. An effective TMS automates document production and customs
reporting, helping to ensure that all of the paperwork required to complete a shipment is prepared
correctly and presented to the right people at the right time, and in the right format.

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• Load tendering—For a given origin–destination pair and shipment size, multiple carriers may be
available, though at slightly different rates. When the WMS indicates that an order is ready for
shipping, the TMS will tender the load to the appropriate carrier.

• Appointment scheduling—To avoid facility congestion, equipment delays, and operator inefficiency,
organizations use TMS capabilities to automate the scheduling function. Many systems support
Internet-based access to the scheduling system where carriers can schedule pickup and delivery
times at specific dock locations.

Importantly, a TMS provides valuable intelligence during and after the delivery process.
Necessary visibility and performance management functionality include:

• Track and trace—Maintaining shipment visibility across the network is a time-consuming

task. When linked to satellite tracking or a cellular network, the TMS monitors in-transit
shipment location and status. If the shipment is behind schedule, stopped, or off-route,
notifications are made so that corrective action can be taken.

• Performance monitoring—TMS tools can automate the measurement of key performance

indicators and dissemination of periodic reports. TMS-based scorecards, dashboards, and reports
provide information on overall performance as well as the results in specific segments of the
transportation operation. Transportation professionals can use this output resourcefully for
making effective decisions, identifying needs and key areas of functional enhancement, and
evaluating the effectiveness of existing strategies.

• Freight bill auditing—Payments made to carriers must reflect the contractual rates and the
services promised. To ensure that they are neither being overcharged nor undercharged for
freight services, many organizations use TMS software to reconcile invoices with their contracts
prior to making payments. These tools automate a manual process that did not always catch
discrepancies in a timely, accurate manner.

TMS Benefits

An investment in a TMS can generate a variety of cost and operational benefits. Table 3-1
summarizes the value proposition of a TMS.

A widely cited and highly desirable advantage offered by a TMS is cost savings that increase
return on investment (ROI). Various studies indicate that use of a TMS helps an organization
reduce freight costs by 6 percent to 10 percent. Users have attributed the savings to more
effective mode selection, better routing, and better procurement negotiations.

By providing transportation professionals with desktop and mobile access to carrier rates and
service information, a TMS also provides the ability to make better, faster carrier selection
decisions that optimize costs, flows, and delivery. With this access, the freight buyer can quickly
choose the best available option.

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Another important reason to use TMS is the dramatic increase in end-to-end transportation
network visibility. The TMS organizes relevant information into precise and easy-to-read lists,
which equips the transportation professional to make impactful business decisions during critical
moments that improve customers’ experiences.

Increased paperwork accuracy results from automated documentation processes. Key documents
are produced using the TMS database of international, regulatory, and multilingual
documentation and creating electronic and nonelectronic customs filing. This capability helps the
transportation professional avoid delays due to missing or incorrect documentation.

Other notable TMS benefits include improved customer delivery performance, greater
compliance with regulatory requirements, and stronger data security. Effective TMS suites also
integrate effectively with WMS and order management systems to seamlessly share information
and support end-to-end fulfillment processes.

Additional Applications

A TMS is not the only software resource available to transportation professionals. Most TMS
functions, such as routing and scheduling tools and freight costing tools, can be purchased as
stand-alone applications. Users may find that these individual tools offer more features, and
greater customization and power than found in a TMS suite.

Transportation providers and private fleets may use mode-specific software to plan and execute
their operations. These for-hire or internal service providers must be concerned with issues
regarding transportation equipment maintenance, fuel cost and management, driver
communication, fleet optimization, and regulatory compliance for drivers and equipment.

International companies will find global trade management (GTM) software to be helpful with
cross-border business. GTM systems focus on helping organizations comply with the myriad
regulations governing how components and products cross borders. From a transportation
standpoint, some GTM systems are adding tools that can help coordinate the physical flow of
goods, provide visibility to inventory and products, check whether certain materials qualify for
preferential treatment under a trade agreement, and help with transaction payments and
settlement processes.

Transportation Software Selection and Implementation

As the preceding section indicates, numerous software tools support transportation planning,
execution, visibility, and evaluation. Companies spend billions of dollars on technology with the
goal of making their transportation networks more productive. However, the mere purchase of
point solutions or software suites does not guarantee quick success. Systems integration
complexities and training requirements translate into implementation times that can exceed six
months at costs that may be twice the software price. Thus, gaining a rapid ROI on technology is
challenging.

The key to harnessing the capabilities of transportation software within a reasonable time frame
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is informed decision making. Transportation professionals take the time to develop a clear vision
regarding how technology spending will facilitate freight movement strategy and satisfy specific
goals. It is possible to achieve a 12- to 18-month ROI if the transportation experts properly
assess their needs, understand the options for software application delivery, and address the
technical issues before making a purchase decision.

Needs Assessment

The crucial first step in software selection and implementation is to understand the transportation
requirements that the technology is intended to support. Too often, technology buyers don’t
thoroughly understand their transportation processes, or they apply software to outdated
processes. This leads to deployments that are poorly matched to needs, unable to link
stakeholders, and/or too narrowly focused to support cross-network visibility.

Software Selection

Software selection is a multifaceted decision. First, transportation professionals must determine

which type of software—planning, execution, and/or performance management—is needed.
Additionally, transportation professionals must compare the advantages of commercial software
to in-house solutions, choose between single vendor suites and applications from multiple
vendors, and consider licensing versus on-demand purchases, among other issues.

Development Alternatives

Software can be created in-house by the organization or it can be purchased from an external
vendor. Walmart and Amazon have information technology departments to build some internal
transportation applications. Some transportation providers create in-house solutions as well.
While this requires significant resources and development time, the resulting tools are tailored to
the company’s supply chain requirements. Internal developers can achieve a level of
customization that is not possible with off-the-shelf software.

Solutions Packages

If an organization chooses to purchase transportation software, it should determine what types of

applications are needed and how they should be purchased. One option is to purchase individual
applications from leading providers in each software category, commonly called “best-of-breed”
solutions. Another option is to buy an integrated TMS suite from a single vendor. The middle
ground option is to purchase the main applications from a single software vendor and selectively
add other solutions as needed.

Purchase Options

Historically, transportation software buyers had one option—license software from vendors and
install it on the buyer’s system. This is a logical method for transportation processes with intense
computational activity requirements. The downside of licensing is the capital investment and
complex deployment. The buyer must pay for the software up front; address implementation
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issues; and manage software upgrades, fixes, and maintenance costs.

Another purchase option is hosted software. In this model, the customer purchases and owns the
software, but it is installed at a data center or “hosting center” where either physical or
virtualized servers that the company owns, leases, or finances are set up. The transportation
software is implemented much like it would be done on-premise at the buyer’s own facilities.
This model offers the services of a highly secure data center with multisite backup. On the
downside, hosted solutions can be expensive and access is lost when Internet service is
unavailable.

Cloud computing has changed the purchase landscape. Buyers can now use applications that are
not permanently installed on the company’s network. In the software as a service (SaaS)
distribution model, software access is provided via the Internet. It is a pay-as-you-go method that
allows the customer to use software as needed, without having to install it or purchase a license.
SaaS applications can be accessed securely by multiple customers, each of whom typically pays
a monthly usage fee.

The SaaS model has grown in popularity as more TMS options have become available. The
cloud platform supports a network that is multitenant, allowing many business partners to
integrate using the same technology. This promotes accessibility to more data, partner
collaboration, operational scalability, and visibility. The variable cost structure of a SaaS-based
TMS generally produces faster ROI.

Implementation Issues

Transportation professionals tend to focus on functionality when considering software, but they
must also consider the implementation and operational issue. Potentially useful software will
become “shelfware” if it is difficult to install, poorly linked to other tools, or too cumbersome to
use. Hence, up-front effort must be expended to assess the implementation challenges before
making software purchase decisions. Proper training, cultural change, systems interoperability,
and data synchronization are keys to success. Two additional SCIS implementation issues are
discussed as follows.

Data Standardization

Given the variety of software vendors, proprietary tools, and legacy systems, coordinating and
sharing information across the supply chain can be a significant challenge.

Application Integration

Another prominent issue is seamless integration of transportation software. This can be readily
accomplished within a self-contained TMS suite, but supply chain partners often rely on different
vendors, applications, or software versions. The greater the variety of applications, the more
challenging the connectivity and information-sharing issues become.

Additionally, some fundamental issues must not be overlooked. Transportation professionals

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must diligently guide the software selection and implementation process and plan for possible
disruptions. They would do well to follow these 10 golden rules for success:

1. Secure the commitment of senior management.

2. Remember that it is not just an information technology project.
3. Align the project with business goals.
4. Understand the software capabilities.
5. Select partners carefully.
6. Follow a proven implementation methodology.
7. Take a step-by-step approach for incremental value gains.
8. Be prepared to change business processes.
9. Keep end users informed and involved.
10. Measure success with key performance indicators.

Transportation equipment Technology

The exciting and beneficial technological innovations in transportation are not limited to
software. Transportation providers, freight shippers, government agencies, and other
stakeholders are on a continuous quest to improve the functionality, cost efficiency, and
reliability of transportation equipment. Ongoing development, testing, and investment in new
equipment features are being made to make transportation more sustainable, improve safety in
the transportation network, and reduce the potential for freight loss and damage.

Sustainability Initiatives

Transportation is a major consumer of fuel and produces significant greenhouse gas emissions.
Based on 2015 data, the U.S. trucking industry consumed 36.3 billion gallons of diesel fuel and
4.4 billion gallons of gasoline, and U.S. airlines used 12.5 billion gallons of jet fuel. As a whole,
the transportation industry created 27 percent of greenhouse gas emissions in 2015 with the clear
majority coming from trucks. Without question, the transportation industry has a financial and
societal need to focus on sustainable operations.

The trucking industry has been on a quest to improve its fuel efficiency. Fuel is the second
highest cost of trucking operations and can be as much as 20 percent of operating costs.
Improvements in fuel economy can have a positive impact on company profits and can reduce
emissions.

Technology innovations are also driving sustainability initiatives in other modes:

Airline industry—Commercial aircraft turbofans are getting bigger. Larger fans and higher
bypass ratios mean greater propulsive efficiency and lower fuel consumption.

Railroad industry—General Electric’s Evolution Series Tier 4 locomotive engine has 50 sensors
to measure valve control, fuel air mix, engine speed, manifold temperature, and load, and it
manipulates fuel and air throughout the combustion process accordingly. That level of precision
improves efficiency, ensuring the engine meets both the emissions and performance
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requirements for the train.

Ocean shipping industry—The longtime user of oil-fueled engines is responding to tougher

international and environmental standards with engines that use liquefied natural gas (LNG). It is
a much less expensive fuel, and LNG-fueled ships emit almost zero sulphur oxide emissions and
25 percent less carbon dioxide gas than existing oil-run engines.

Safety Efforts

Safety is an ongoing concern in freight transportation. The size of commercial equipment, the
distances traveled, and the shared access with passenger equipment on public thoroughfares
make it difficult to achieve total safety. In 2015, there were over 415,000 crashes involving large
trucks with 116,000 injuries and 667 fatalities. In addition, the cost of large truck and bus crashes
exceeded $118 billion. Comparatively, fewer than 300 fatalities involved rail freight carriers,
airlines, and water cargo transporters.

Given these costs, it is no surprise that significant efforts are being made to improve both
operator and equipment safety. Technology plays an important role in both. Among the variety
of efforts being made to improve safety are enhanced safety features, electronic logging devices
(ELDs), and fatigue reduction research.

Cargo Security Innovations

Cargo theft is a multi-billion-dollar criminal industry and a growing threat to the economy and
national security of the United States, according to the Federal Bureau of Investigation (FBI).
Often, cargo theft offenses are part of larger criminal schemes and have been found to be
elements of organized crime rings, drug trafficking, and funding for terrorism. Cargo is stolen
from tractor-trailers, railcars, ships, planes, and even directly from warehouses, and the goods are
sometimes sold on the Internet. To combat the problem, the FBI has established seven cargo task
forces across the country.

Transportation providers and freight shippers must also take a proactive role in cargo security.
To secure cargo, transportation professionals employ a multilayered approach that incorporates
the latest technology and fine-tuned basic practices, such as pre-employment background checks,
extensive staff training, and validation of driver credentials when tendering loads. Global
positioning satellite (GPS) tracking systems, onboard sensors and analytics, and intelligence
information sharing are three technology-based cargo security initiatives that can be used to
combat criminals.

Maintaining visibility and control of in-transit cargo is an excellent way to prevent theft.
Tractors, trailers, containers, and other transportation equipment can be outfitted with GPS
systems to achieve cargo-tracking capabilities. Geofencing technology, which allows users to
define geographical boundaries, can be used to enhance freight control. If the equipment goes
outside the defined boundaries, an alarm sounds, and the dispatcher or security personnel try to
reach the operator to determine why the equipment left its route. If the operator cannot be
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contacted, the vehicle engine can be shut down remotely to prevent a hijacking.

Internet of Things (IoT) sensors can be integrated into asset tracking solutions for an additional
layer of cargo security. The sensors can be used to detect when:

• container locks and seals have been tampered with,

• container doors have been opened,
• cargo is present or absent inside the container, and
• temperature readings inside a container exceed acceptable ranges.

Emerging Technologies

It is an exciting time in the transportation world, with technological innovation emerging at a

rapid pace. Transportation companies and their clients must clarify needs, evaluate options
wisely, and select technologies that have excellent prospects for long-term use. Venturing too far
toward the cutting-edge can be costly as these technologies may not achieve widespread
adoption and may not live up to their initial promise. Avoiding these flash-in-the-pan “solutions”
will do little to promote operational efficiency, customer service excellence, or provide cargo
security enhancement.

Autonomous Transportation

Transportation is a labor-intensive business, and operator roles like driving a truck, piloting a
ship, or operating a train can be a difficult job with odd hours, time away from home, and
stressful deadlines. That combination can lead to fatigue, poor decision making, and accidents.
Also, turnover can be high, particularly among the ranks of truck drivers.

Efforts are under way to take many of the routine operator tasks in trucks, ships, and trains, and
turn them over to computers, similar to what is done in the commercial airline industry with
autopilot capabilities. Larger, more sophisticated aircraft have multiple autopilot systems that
can control almost all aspects of the airplane’s movement and an auto-throttle system that is able
to fully control the speed of the airplane. On a Boeing 737, the autopilot can be turned on at
1,000 feet above the ground on takeoff. The second autopilot is engaged with the first one to add
a layer of redundancy to the autopilot.

Big name companies are racing to revolutionize the trucking industry with self-driving trucks.
Mercedes has its “Future Truck 2025” already on the highways. Apple and Microsoft are
involved. There is another combined effort by Waymo/Google/Alphabet that is working out
kinks in technology. Lyft and General Motors are combining efforts. Tesla and its innovative
CEO Elon Musk—the business magnate, investor, engineer, and inventor—are bullish. In
addition, Uber’s entry (formerly called Otto) successfully produced a self-driving truck that
hauled a load of Budweiser beer without incident on a 120-mile trek through Colorado.

These autonomous vehicles are being developed and operated on test tracks and remote
highways, usually with a driver onboard to handle complex tasks like parking or driving on city
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streets and to provide a backup safety system should the system not work properly. That’s
comparable to the role of airline pilots in the cockpit of a large jet.

Blockchain for Freight

Initially developed to enable the existence of cryptocurrency like Bitcoin, blockchain is a way to
structure data. Blockchain is a digital, decentralized ledger that keeps a record of all transactions
that take place across a peer-to-peer network. The major innovation is that the technology allows
market participants to transfer assets across the Internet without the need for a centralized third
party. No single party has the power to tamper with the records; the math keeps everyone honest.

Information held on a blockchain exists as a shared—and continually reconciled—database. This

is a way of using the network that has obvious benefits. The blockchain database isn’t stored in
any single location, meaning the records it keeps are truly public and easily verifiable. No
centralized version of this information exists for a hacker to corrupt. Hosted by millions of
computers simultaneously, its data is accessible to anyone on the Internet.

While currency exchange is the genesis of blockchain, it is being studied by other industries for
appropriate applications. It is seen as a tool to streamline financial systems with reduced fees and
delays, less paperwork, and fewer opportunities for fraud and crime. Equipment manufacturers
of long lifecycle assets with replacement parts (such as aircraft) can use blockchain technology
to reduce the potential for counterfeit parts to enter the supply chain. In addition, the food
industry can use the tool to track and trace the true source of ingredients. Should an ingredient
recall be needed, the problematic source could be pinpointed and its inventory removed rather
than all suppliers’ inventories.

Where does blockchain intersect with transportation? There are tremendous opportunities to
drive efficiencies and safety in global trade and transportation. Global supply chains are slowed
by the complexity and sheer volume of point-to-point communication across a loosely coupled
web of land transportation, freight forwarders, customs brokers, governments, ports, and ocean
carriers. Major problems include poor documentation workflows and limited in-transit visibility.

Next Generation TMS

As discussed earlier in the chapter, current TMS software helps organizations plan, execute, and
measure their transportation operations. Most systems will support the analysis of key
performance indicators and help transportation professionals create scorecards for decision-
making purposes. That is very beneficial, but still requires a great deal of human intervention.

Going forward, TMS software will harness the power of business analytics tools, machine
learning, and ultra-fast processers to quickly evaluate the vast number of options in a
transportation network, monitor the terabytes of data that companies have amassed, and make
decisions with little or no human intervention. This type of next-generation TMS will analyze far
more variables than a human could handle, refresh its records with real-time data, quickly
calculate the optimal shipping method, and even act on its findings, according to industry
experts. Adding these embedded analytics to a TMS platform will allow transportation providers,
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brokers, and customers to base decisions on current data being collected rather than on human
interpretations of partial data and perceived trends.

SUMMARY

• Transportation technology is needed to maintain cargo control and promote safe, timely, and
cost-efficient delivery of goods.

• To produce actionable knowledge, transportation information must be high quality, readily

flow between organizations, and support a variety of decision types.

• Transportation information must be accurate, accessible, relevant, timely, and transferable to be

of value.

• A well-designed TMS provides excellent decision support for strategic, tactical, and
operational planning, as well as delivery execution, in-transit visibility, and performance
evaluation.

• Primary TMS functionality includes routing and scheduling, mode and carrier selection, and
load planning, document creation, load tendering, appointment scheduling, track and trace,
metrics monitoring, and freight bill auditing.

• Savvy transportation professionals know that a TMS can provide cost savings and generate
service improvements.

• To maximize transportation software investment success, efforts must be made to assess

internal requirements, understand software capabilities and purchase options, and address the
technical implementation issues.

• Opportunities exist to leverage the latest transportation equipment technology for more
sustainable operations, enhanced safety, and greater freight protection.

• The technology landscape is ever-changing, and transportation professionals must evaluate how
innovations such as autonomous vehicles, blockchain, and next-generation TMS capabilities will
drive improvements in delivery efficiency and effectiveness.

Study Questions

1. Discuss the role of transportation information and how it supports network visibility, control,
and service consistency.

- Visibility is key to maintaining cross-chain knowledge, assessing situations, and taking

appropriate corrective actions; correct information is a must for visibility.

- Information is needed to maintain control and promote safe, timely, and cost-efficient
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transportation.

- Rapid delivery service is the norm in many supply chains; access to transportation information
must expand.

2. Describe the attributes of information quality and how they impact transportation decision
making.

Information quality is a critical characteristic of the vast amounts of data flowing across a
transportation network. Value trumps volume, and transportation professionals must be sure that
they are basing decisions on correct information.

To ensure that actionable knowledge readily flows between shippers, carriers, and customers,
information must display a variety of key characteristics. Chief among these attributes are
accuracy, accessibility, relevancy, timeliness, and transferability. Also important are issues of
usability, reliability, and value.

3. Explain how a TMS enables delivery process planning, execution, and control.

The planning and flow of materials across the supply chain are handled by a Transportation
Management System (TMS). The core set of business needs handled by a TMS include: routing
and rating, executing the shipment across multiple modes, tracking and tracing loads, and
freight settlement. This simple booking, execution, and payment perspective focuses on freight
management, but a TMS can be much more than a transaction-focused tool. Leading edge TMS
suites provide hybrid planning–execution–evaluation capabilities and a wide array of
functionality to generate numerous benefits across the entire shipping process.

As the capabilities and scope of a TMS expand, the software moves from being a routine decision
support tool to a much more integrative system. It provides greater decision support for
transportation strategic, tactical, and operational planning, as well as delivery execution, in-
transit visibility, and performance evaluation.

4. What are some of the most valuable TMS functionalities? How do they contribute to both cost
reduction and service improvement?

TMS can generate a variety of cost and operational benefits. Table 3-1 summarizes the value
proposition of a TMS. A widely cited and highly desirable advantage offered by a TMS is cost
savings that increase return on investment (ROI). Various studies indicate that use of a TMS
helps an organization reduce freight costs by 6 percent to 10 percent. Users have attributed the
savings to more effective mode selection, better routing, and better procurement negotiations.

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By providing transportation professionals with desktop and mobile access to carrier rates and
service information, a TMS also provides the ability to make better, faster carrier selection
decisions that optimize costs, flows, and delivery. With this access, the freight buyer can quickly
choose the best available option.

Another important reason to use TMS is the dramatic increase in end-to-end transportation
network visibility. The TMS organizes relevant information into precise and easy-to-read lists,
which equips the transportation professional to make impactful business decisions during
critical moments that improve customers’ experiences.

Increased paperwork accuracy results from automated documentation processes. Key documents
are produced using the TMS database of international, regulatory, and multilingual
documentation and creating electronic and nonelectronic customs filing. This capability helps
the transportation professional avoid delays due to missing or incorrect documentation.

Other notable TMS benefits include improved customer delivery performance, greater
compliance with regulatory requirements, and stronger data security. Effective TMS suites also
integrate effectively with WMS and order management systems to seamlessly share information
and support end-to-end fulfillment processes.

5. How can a company facilitate a smooth and timely implementation of a TMS?

The mere purchase of point solutions or software suites does not guarantee quick success.
Systems integration complexities and training requirements translate into implementation times
that can exceed six months at costs that may be twice the software price. Thus, gaining a rapid
ROI on technology is challenging.

The key to harnessing the capabilities of transportation software within a reasonable time frame
is informed decision making. Transportation professionals take the time to develop a clear vision
regarding how technology spending will facilitate freight movement strategy and satisfy specific
goals. It is possible to achieve a 12- to 18-month ROI if the transportation experts properly
assess their needs, understand the options for software application delivery, and address the
technical issues before making a purchase decision. Areas such as needs assessment, software
selection, development alternatives, and solutions packages must be investigated.

6. What options are available for procuring transportation software? Why would a company
pursue each option?

If an organization chooses to purchase transportation software, it should determine what types

of applications are needed and how they should be purchased. One option is to purchase
individual applications from leading providers in each software category, commonly called
“best-of-breed” solutions. Another option is to buy an integrated TMS suite from a single
vendor. The middle ground option is to purchase the main applications from a single software
vendor and selectively add other solutions as needed.

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Historically, transportation software buyers had one option—license software from vendors and
install it on the buyer’s system. This is a logical method for transportation processes with intense
computational activity requirements. The downside of licensing is the capital investment and
complex deployment. The buyer must pay for the software up front; address implementation
issues; and manage software upgrades, fixes, and maintenance costs.

Another purchase option is hosted software. In this model, the customer purchases and owns the
software, but it is installed at a data center or “hosting center” where either physical or
virtualized servers that the company owns, leases, or finances are set up. The transportation
software is implemented much like it would be done on-premise at the buyer’s own facilities.
This model offers the services of a highly secure data center with multisite backup. On the
downside, hosted solutions can be expensive and access is lost when Internet service is
unavailable.

Cloud computing has changed the purchase landscape. Buyers can now use applications that are
not permanently installed on the company’s network. In the software as a service (SaaS)
distribution model, software access is provided via the Internet. It is a pay-as-you-go method
that allows the customer to use software as needed, without having to install it or purchase a
license. SaaS applications can be accessed securely by multiple customers, each of whom
typically pays a monthly usage fee.

The SaaS model has grown in popularity as more TMS options have become available. The cloud
platform supports a network that is multitenant, allowing many business partners to integrate
using the same technology. This promotes accessibility to more data, partner collaboration,
operational scalability, and visibility. The variable cost structure of a SaaS-based TMS generally
produces faster ROI.

7. How is new equipment technology contributing to transportation sustainability initiatives?

Transportation is a major consumer of fuel and produces significant greenhouse gas emissions.
Based on 2015 data, the U.S. trucking industry consumed 36.3 billion gallons of diesel fuel and
4.4 billion gallons of gasoline, and U.S. airlines used 12.5 billion gallons of jet fuel. As a whole,
the transportation industry created 27 percent of greenhouse gas emissions in 2015, with the
clear majority coming from trucks. Without question, the transportation industry has a financial
and societal need to focus on sustainable operations.

The trucking industry has been on a quest to improve its fuel efficiency. Fuel is the second
highest cost of trucking operations and can be as much as 20 percent of operating costs.
Improvements in fuel economy have a positive impact on company profits and reduce emissions.

Technology innovations are also driving sustainability initiatives in other modes:

Airline industry—Commercial aircraft turbofans are getting bigger. Larger fans and higher
bypass ratios mean greater propulsive efficiency and lower fuel consumption.

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Railroad industry—General Electric’s Evolution Series Tier 4 locomotive engine has 50 sensors
to measure valve control, fuel air mix, engine speed, manifold temperature, and load, and it
manipulates fuel and air throughout the combustion process accordingly. That level of precision
improves efficiency, ensuring the engine meets both the emissions and performance requirements
for the train.

Ocean shipping industry—The longtime user of oil-fueled engines is responding to tougher

international and environmental standards with engines that use liquefied natural gas (LNG). It
is a much less expensive fuel, and LNG-fueled ships emit almost zero sulphur oxide emissions
and 25 percent less carbon dioxide gas than existing oil-run engines.

8. How can technology promote transportation safety?

Safety is an ongoing concern in freight transportation. The size of commercial equipment, the
distances traveled, and the shared access with passenger equipment on public thoroughfares
make it difficult to achieve total safety. In 2015, there were over 415,000 crashes involving large
trucks with 116,000 injuries and 667 fatalities. In addition, the cost of large truck and bus
crashes exceeded $118 billion. Comparatively, fewer than 300 fatalities involved rail freight
carriers, airlines, and water cargo transporters.

Given these costs, it is no surprise that significant efforts are being made to improve both
operator and equipment safety. Technology plays an important role in both. Among the variety of
efforts being made to improve safety are enhanced safety features, electronic logging devices
(ELDs), and fatigue reduction research.

9. Discuss how transportation professionals are deploying technology in their quest to minimize
freight theft.

Cargo theft is a multi-billion-dollar criminal industry and a growing threat to the economy and
national security of the United States, according to the Federal Bureau of Investigation (FBI).
Often cargo theft offenses are part of larger criminal schemes and have been found to be
elements of organized crime rings, drug trafficking, and funding for terrorism. Cargo is stolen
from tractor–trailers, railcars, ships, planes, and even directly from warehouses and the goods
are sometimes sold on the Internet. To combat the problem, the FBI has established seven cargo
task forces across the country.

Transportation providers and freight shippers must also take a proactive role in cargo security.
To secure cargo, transportation professionals employ a multilayered approach that incorporates
the latest technology and fine-tuned basic practices, such as pre-employment background
checks, extensive staff training, and validation of driver credentials when tendering loads.
Global positioning satellite (GPS) tracking systems, onboard sensors and analytics, and
intelligence information sharing are three technology-based cargo security initiatives that can
be used to combat criminals.
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10. Why are technology and transportation equipment companies investing so much time,
money, and effort into autonomous transportation research?

Transportation is a labor-intensive business, and operator roles like driving a truck, piloting a
ship, or operating a train can be a difficult job with odd hours, time away from home, and
stressful deadlines. That combination can lead to fatigue, poor decision making, and accidents.
Also, turnover can be high, particularly among the ranks of truck drivers.

Efforts are underway to take many of the routine operator tasks in trucks, ships, and trains, and
turn them over to computers, similar to what is done in the commercial airline industry with
autopilot capabilities. Larger, more sophisticated aircraft have multiple autopilot systems that
can control almost all aspects of the airplane’s movement and an auto-throttle system that is
able to fully control the speed of the airplane. On a Boeing 737, the autopilot can be turned on at
1,000 feet above the ground on takeoff. The second autopilot is engaged with the first one to add
a layer of redundancy to the autopilot.

11. Why should transportation professionals pay attention to the emerging area of blockchain?

While currency exchange is the genesis of blockchain, it is being studied by other industries for
appropriate applications. It is seen as a tool to streamline financial systems with reduced fees
and delays, less paperwork, and fewer opportunities for fraud and crime. Equipment
manufacturers of long lifecycle assets with replacement parts (such as aircraft) can use
blockchain technology to reduce the potential for counterfeit parts to enter the supply chain. In
addition, the food industry can use the tool to track and trace the true source of ingredients.
Should an ingredient recall be needed, the problematic source could be pinpointed and its
inventory removed rather than all suppliers’ inventories.

Where does blockchain intersect with transportation? There are tremendous opportunities to
drive efficiencies and safety in global trade and transportation. Global supply chains are slowed
by the complexity and sheer volume of point-to-point communication across a loosely coupled
web of land transportation, freight forwarders, customs brokers, governments, ports, and ocean
carriers. Major problems include poor documentation workflows and limited in-transit visibility.

12. What capabilities and benefits will result from the development of next generation TMS
tools?

Going forward, TMS software will harness the power of business analytics tools, machine
learning, and ultra-fast processers to quickly evaluate the vast number of options in a
transportation network, monitor the terabytes of data that companies have amassed, and make
decisions with little or no human intervention. This type of next-generation TMS will analyze far
more variables than a human could handle, refresh its records with real-time data, quickly
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calculate the optimal shipping method, and even act on its findings, according to industry
experts. Adding these embedded analytics to a TMS platform will allow transportation providers,
brokers, and customers to base decisions on current data being collected rather than on human
interpretations of partial data and perceived trends.

Case Questions

Case 3-1: myIoT Inc.

1. What types of software does myIoT need to support its business growth? What features and
capabilities are needed?

To obtain the necessary transportation capabilities in a short timeframe, what type of software
purchase option should myIoT pursue? Explain.

One option is to purchase individual applications from leading providers in each software
category, commonly called “best-of-breed” solutions. Another option is to buy an integrated
TMS suite from a single vendor. The middle-ground option is to purchase the main applications
from a single software vendor and selectively add other solutions as needed.

Licensing the software from vendors and installing it on the buyer’s system is one manner of
implementation. The downside of licensing is the capital investment and complex deployment.
The buyer must pay for the software up front; address implementation issues; and manage
software upgrades, fixes, and maintenance costs.

Another purchase option is hosted software. In this model, the customer purchases and owns the
software, but it is installed at a data center or “hosting center” where either physical or
virtualized servers that the company owns, leases, or finances are set up. The transportation
software is implemented much like it would be done on-premise at the buyer’s own facilities.
This model offers the services of a highly secure data center with multisite backup. On the
downside, hosted solutions can be expensive, and access is lost when Internet service is
unavailable.

Cloud computing has changed the purchase landscape. Buyers can now use applications that are
not permanently installed on the company’s network. In the software as a service (SaaS)
distribution model, software access is provided via the Internet. It is a pay-as-you-go method
that allows the customer to use software as needed, without having to install it or purchase a
license. SaaS applications can be accessed securely by multiple customers, each of whom
typically pays a monthly usage fee.

The SaaS model has grown in popularity as more TMS options have become available. The cloud
platform supports a network that is multitenant, allowing many business partners to integrate
using the same technology. This promotes accessibility to more data, partner collaboration,
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operational scalability, and visibility. The variable cost structure of a SaaS-based TMS generally
produces faster ROI. This may be the best way for myIoT to go.

2. What types of technology implementation challenges might myIoT face? How can these risks
be minimized?

Areas such as needs assessment, software selection, development alternatives, and solutions
packages must be investigated.

The mere purchase of point solutions or software suites does not guarantee quick success.
Systems integration complexities and training requirements translate into implementation times
that can exceed six months at costs that may be twice the software price. Thus, gaining a rapid
ROI on technology is challenging.

The key to harnessing the capabilities of transportation software within a reasonable time frame
is informed decision making. Transportation professionals take the time to develop a clear vision
regarding how technology spending will facilitate freight movement strategy and satisfy specific
goals. It is possible to achieve a 12- to 18-month ROI if the transportation experts properly
assess their needs, understand the options for software application delivery, and address the
technical issues before making a purchase decision.

3. How can myIoT benefit from the features that will soon be available in next-generation TMS?

Next-Gen TMS software will harness the power of business analytics tools, machine learning,
and ultra-fast processers to quickly evaluate the vast number of options in a transportation
network. The analysis of far more variables, real-time data refreshment, and quick calculation of
optimal shipping methods will benefit myIoT as it grows as a business.

Case 3-2: Vital-E nutrition

1. What types of track and trace capabilities could help VEN detect temperature problems and
respond before the product is ruined?

VEN needs a Transportation Management System (TMS). TMS can handle the planning and flow
of materials across the supply chain. Tracking and tracing of loads is cornerstone to TMS.
Overall, the core set of business needs handled by a TMS include: routing and rating, executing
the shipment across multiple modes, tracking and tracing loads, and freight settlement. This
simple booking, execution, and payment perspective focuses on freight management, but a TMS
can be much more than a transaction-focused tool. Leading-edge TMS suites provide hybrid
planning–execution–evaluation capabilities and a wide array of functionality to generate
numerous benefits across the entire shipping process.

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2. Are autonomous trucks a potential answer to driver the shortage problems that plague VEN’s
transportation providers? Why or why not?

While over the road (OTR) truck driving is a necessity in many industries, it is also labor-
intensive. That combination can lead to fatigue, poor decision making, and accidents. Also,
turnover can be high, particularly among the ranks of truck drivers.

Efforts are under way to take many of the routine operator tasks in OTR trucking and turn them
over to computers, similar to what is done in the commercial airline industry with autopilot
capabilities.

Big name companies are racing to revolutionize the trucking industry with self-driving trucks.
These autonomous vehicles are being developed and operated on test tracks and remote
highways, usually with a driver onboard to handle complex tasks like parking or driving on city
streets, and to provide a backup safety system should the system not work properly. Currently,
VEN cannot depend on autonomous OTR but may be able to in the future.

3. What value could VEN derive from the analytics capabilities being embedded in a state-of-
the-art TMS?

Global positioning satellite (GPS) tracking systems with onboard sensors that use analytics to
monitor shipments and share information with the trucks home base are available.

Transportation providers and freight shippers must also take a proactive role in cargo
monitoring and security. To properly monitor and secure cargo, transportation professionals
employ a multilayered approach that incorporates the latest technology and data analytics into
the process.

Likewise, the transportation providers must support customers’ information requirements.

Visibility and analytics provide timely insights that assist customers with decision making.
Analytics is the end output, illustrating that technology can provide insights that differentiate a
transportation provider from its competition.

Suggested Internet project

Have the student log on to the Internet and search for TMS packages. They should explain what
companies provide solutions, what types of packages are available, and what means of delivery
there are for those packages (e.g., license, cloud/SaaS, etc.).

Some addresses are:

Predictive Analytics Today https://www.predictiveanalyticstoday.com/top-transportation-

management-software/
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Capterra https://www.capterra.com/transportation-management-software/

Logistics List http://www.logisticslist.com/transportation-management-software.html

Council for Supply Chain Management Professionals http://cscmp.org/

Institute for Supply Managers http://ism.ws/

APICS—The Association for Supply Chain Management http://www.apics.org/

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