Testing Better Decision-Making: Scaling up the PilotPosted January 25, 2018
With this article, we try to summarise the experiences of a typical new TNX customer. What issues they try to solve, what challenges linger along the way, and how to move from a small pilot to a full-fledged implementation. It is given as a narrative, with fictional characters.
We closed out last time with Mike - who is in charge of transport at a mid-sized manufacturer – starting a pilot of TNX. He hopes the system helps his team to improve transport costs by making better dispatching decisions.
Mike presents the first results of using TNX to Sarah - the COO - after six weeks. In side-by-side tests transport procured with the assistance of TNX lowers transport costs substantially. The private fleet is better utilized. Subcontracted loads come at lower rates.
The actual savings level is closely guarded because this could work for competitors as well. But the only secret worth knowing is the one that gets out: it works.
Mike identifies the pilot team as a key factor for the success. In particular, choosing the right dispatcher is paramount, as there are too many places where an unmotivated or malicious insider could sabotage the success. The pilot team has to come together willingly.
Piloting Ups & Downs
There were bumps along the way. There were winners and loser in the group of subcontracting carriers. Some carriers knew their margins were going to be hit and tried to drag out the start date for the pilot. Only a show of determination from management convinced them that it was not their decision to make.
And it was hard for the dispatching team to get behind such a large intrusion into their area. They lost autonomy they deemed important for doing their job.
Scaling the Pilot
The pilot wraps up, and Sarah works with Mike to roll out what they learned. Quantity has a quality all its own, and they both notice that a rollout won’t be the same as the pilot.
Dedicated project resources will be assigned to make the process changes, track results, and manage communications. That means budget assigned and a commitment to savings targets for the next fiscal year.
The stakes are also high because the automation of tendering and spot procurement leads to a change in annual contracting. Mike used to sign contracted rates for almost all of his expected budget. Only unplanned transport had spot quotations from carriers.
Now, spot procurement will be 10 to 30% of the planned budget. Procurement needs to develop new strategies and models. Some carriers may be eliminated entirely, having held on despite poor cost-to-serve. Using TNX, they simply won’t get tenders or will only be offered lower priced work.
Finally, there will be staff changes. Some dispatchers will opt to move on instead of learning the new process. Others will be reassigned or cut because they are no longer needed. Layoffs are probably not necessary because the turnover rate is high enough to bring team size down naturally. But they’ll need to ensure morale stays high among those who are left.
All of this is worrying Sarah until she talks with her CIO and remembers what a typical TMS rollout would be like. They’d be planning in terms of years, not months. And the costs would be much higher, and often as CAPEX. Compared to that, the TNX rollout is easy.