Transcription
Hello everyone, and welcome to Talking Logistics, where we have conversations with thought leaders and newsmakers in the supply chain logistics industry. It’s my great pleasure to welcome today’s guest, JP Wiggins, co-founder and vice president of logistics at 3G TMS. Today, we’re going to discuss TMS in the food supply chain.
Transportation management systems (TMS) provide value to companies across all industries, but they have a particularly strong value proposition in the food industry. When you consider the cost of transportation as a percentage of revenue and the service challenges involved, TMS can make a significant impact. So, what factors are driving demand for TMS in the food industry today? Are barriers to implementation coming down? And what key capabilities are important for food companies to succeed? These are some of the questions we’ll explore in today’s episode.
JP, welcome back to the program.
JP: Great to be back! Thanks for having me again.
Host: I think the last time you were on the show, it was a bit warmer outside than it is now.
JP: Yes, we’re definitely feeling the brunt of winter right now.
Host: Absolutely. Let’s dive right into the topic. When you look at TMS in the food industry, what are some of the key factors or trends that are making TMS systems more important than ever today?
JP: I think a lot of it stems from the history of the food industry. There are three specific reasons that stand out. First, food companies have traditionally focused their resources on modernizing their infrastructure. Many of our customers have told us that they didn’t have the resources for a TMS in the past because they were so focused on other modernization efforts. Second, there has been a lot of mergers and acquisitions (M&A) in the food sector, which often results in companies having multiple ERP systems. Many food companies hoped that their ERP providers would meet their TMS needs, but that wasn’t always the case.
Additionally, the Food Safety Modernization Act (FSMA) has brought new regulations, particularly around temperature control and safety requirements. While TMS isn’t a silver bullet for FSMA compliance, it’s a great enabler in managing compliance challenges. Lastly, changing consumer buying habits are a significant driver. We’ve seen massive shifts in retail, and the same is happening in food service. Consumers now expect faster deliveries, smaller quantities, and more frequent shipments.
Host: That’s a great example. I had to be careful with my own Amazon Echo when you mentioned voice ordering! But seriously, you’re right. The way people buy food has changed, and that’s transforming how logistics needs to be managed. With all the mergers, acquisitions, and evolving consumer demands, it’s clear that companies in the food industry are under pressure to adapt. How does that tie into the increased interest in TMS?
JP: Exactly. The complexity of managing food distribution has skyrocketed. Many food companies are realizing they need state-of-the-art systems to remain competitive. Whether they’re a shipper or a 3PL, companies have to step up their game to meet customer expectations for faster, more flexible delivery.
Host: Historically, some barriers to TMS implementation have included cost and IT resources. Are you seeing these barriers come down?
JP: Yes, integration has always been one of the biggest challenges, especially in food, where companies often have multiple ERP systems due to M&A activity. At 3G, we’ve made significant strides in integrating with multiple systems, which has helped break down these barriers. The other big challenge is the rapidly changing industry. Companies need solutions that are configurable and adaptable because their business models are evolving quickly.
Host: It sounds like flexibility and adaptability are key in this space. You mentioned earlier that cost savings is a major driver for TMS adoption. Are there any other factors?
JP: Absolutely. Beyond cost savings, improving customer service is a huge factor. In the past, if a food company was just shipping full truckloads, a TMS might not have made a huge difference in savings. But today, with the increase in smaller, more frequent shipments, optimizing routes and consolidating freight can lead to significant savings and better customer service. We’ve seen companies save over 10% on their transportation execution costs while improving customer service.
Host: That’s an excellent point. As we’ve seen in the consumer world, providing visibility and predictability in shipping is becoming essential in B2B as well. TMS plays a critical role in meeting those customer expectations.
JP: Exactly. In today’s market, customers expect Amazon-level service. They want to know where their freight is at all times. TMS provides the visibility and control needed to meet those expectations.
Host: As we wrap up, what would you say are the most important TMS capabilities for companies in the food industry?
JP: The two big ones are integration and optimization. Integration is crucial because of the complexity of working with multiple ERPs and trading partners. Optimization is equally important for consolidating shipments, routing, and using pooled distribution. And finally, the ability to configure the system for changing business rules is critical in such a rapidly evolving industry.
Host: Those are great insights, JP. If I’m a logistics or transportation executive at a food company and I’ve got five minutes with my CFO, what key points should I emphasize when making the case for TMS?
JP: It’s simple: You’ll improve customer service and save 10% on transportation costs. That’s usually enough to get the conversation started.
Host: Thanks, JP. It’s clear that TMS is becoming an essential tool in the food industry. I look forward to revisiting this topic in the future. Thanks again for joining us today.
JP: My pleasure. Thanks for having me.
Host: I want to thank everyone for joining us. If you’re watching this episode on demand, feel free to leave a question or comment for JP, and he’ll be happy to respond. Thanks again, and we look forward to seeing you on a future episode of Talking Logistics.
