Logistics Tech 101: TMS vs. CX Platform

When it comes to creating a powerful logistics tech stack, there’s no silver bullet. Rather, successful freight forwarders leverage a combination of solutions to maximize productivity while also delivering the best experience to their customers. While a transportation management system (TMS) can increase efficiency in your internal operations, a customer experience (CX) platform gives your customers the tools they need to improve the process on their end.

Let’s talk about the difference between a TMS and a CX platform, and why both are essential for running a tech-savvy freight forwarding company.

TMS vs. CX platform

Freight forwarding, and the logistics industry in general, is known for its latency on the digitization front. However, that’s already begun to change. According to Allied Market Research, the global digital freight forwarding market was predicted to grow from $2.92 billion to $22.92 billion between 2020 and 2030– an increase of 685% over the decade.

In this rapidly changing environment, many organizations have come around to the fact that they need to digitize– and fast. Still, many don’t know which components they need in their tech stack, or what role each solution should play.

What is a TMS?

A TMS, or transportation management system, is a software aimed at streamlining the movement of goods from point A to point B by providing logistics providers with the tools they need to facilitate the shipping process from start to finish.

By adopting a strong TMS, your company can access specialized tools and an all-in-one platform to consolidate your business functions. In handling tasks like administration, data management, and carrier selection in a single system, the time and money you’ll save on day-to-day tasks will quickly add up.

What is a CX platform?

A 3PL CX platform is a logistics tech solution that works to improve the customer experience and strengthen relationships between you and your shippers. With customer-facing features like real-time visibility, invoicing, and messaging, CX platforms enable logistics providers to streamline and digitize the shipping experience for their customers.

In these early days of logistics digitization, many freight forwarders are still yet to adopt a CX platform. While it’s still possible to manage customer relationships the traditional way, it makes for a much more hands-on process, with manual updates, decentralized communication, and ad hoc reporting.

What’s the difference?

There can certainly be some overlap between TMS solutions and CX platforms, as both of them aim to optimize key areas like efficiency, communication, and productivity. However, they both carry out this goal in a different way. At its core, a TMS aims to improve operations and visibility within your organization, from planning to delivery. A CX platform, on the other hand, helps support your customers throughout that same process.

While both solutions ultimately impact the end user through heightened productivity and cost savings, a CX platform provides an accessible system for shippers to interact. Some solutions can even sit on top of your existing TMS to pull data from the system and present it to clients on a user-friendly interface. Because this solution directly touches the customer experience, many forwarders will incorporate their customer-facing solution as a value-add in sales pitches and business discussions.

How to implement an effective tech stack

Knowing the components to build a tech stack is one thing, but actually creating that ecosystem is a completely different story. Ultimately, the right process for your business will depend on many factors, including company size, customer demographics, and goals. However, regardless of your specific situation, there are some basic steps you can take to put yourself on the right track.

Find software that fits your team and customers

Every company is different, and the software that works best for your competitors won’t necessarily be the right choice for you. That’s why it’s critical to devote time and resources to researching the best options for your business.

First, consider whether you want to build or buy your tech stack. For a company with excess resources and a robust engineering team, building solutions in-house can be the way to go. However, leaner organizations often struggle with the startup cost and regular maintenance that comes with custom software. Therefore, for the vast majority of freight forwarders, it makes more sense to pay a monthly or annual fee to work with a provider.

As with any tech solution, there are many logistics software options to choose from. To narrow down the list, you’ll need to figure out which features to prioritize. Some providers will even let you choose a pay-per-feature plan, or a basic subscription with optional add-ons.

As you get closer to deciding on a tech solution, be careful not to place too much weight on price. Instead, think about which software will provide the best ROI based on your business model and customer needs. According to a recent FreightWaves/Logixboard survey, 83% of shippers would pay higher rates to work with a tech-savvy freight forwarder. For that reason, many forwarders are able to raise their own prices to pass on the cost of a high-performing program to the consumer.

When prioritizing your software needs, it’s important to understand what’s on the table based on the available options, which will differ depending on the type of software.

Features to look for when choosing a TMS:

  • Decision-making: carrier database, rate comparison tool
  • Automation: workflows, alerts, document review, data validation
  • Visibility: real-time tracking, centralized dashboard
  • Administration: document creation and delivery, invoicing, payments
  • Compliance: driver logs, shipment records
  • Optimization: analytics, reporting

Features to look for when choosing a CX platform:

  • User-friendly interface
  • Real-time visibility
  • Messaging
  • Accounting/payments
  • Analytics

Integrate your solutions into your system

Digitization is meant to make your work easier. While implementing a new solution may involve some initial startup costs, the last thing it should do is add steps to your day-to-day. To avoid unnecessary friction, take some time to figure out how your new solution can work into your existing processes.

Start by transferring all of your existing data and information to the new system. Talk to your software provider to figure out if they offer help with exporting during the onboarding process. At some point during or after the transfer, take an opportunity to check your data for accuracy. After all, there’s nothing worse than getting started on a new system just to find out that you’re working with faulty information.

In addition to completing a data transfer, you’ll also need to figure out how to make the most out of your new application. Work with your software partner or a solutions consultant to outline some concrete goals and how to achieve them. Many will be able to provide you with tips, techniques, shortcuts to increase productivity. Some providers may even offer custom configurations to enable your company to make use of the most critical features for your business needs.

Pro tip: When building out your tech stack, look for solutions that directly integrate with each other to minimize friction and manual updates as your system expands.

Go all in on change management

When undergoing a digital transformation, it’s easy to get caught up in the process of selecting and setting up your tech. However, be careful not to neglect the people aspect of undergoing major change.

Even the most robust solution is ineffective if you don’t know how to use it. To get the most out of your tech, your team will need to understand how to best leverage it. As you build out your company’s tech stack, focus on helping your team adopt it into their day-to-day.

To maximize your chances of success, try to pull your company into the digital adoption process early on. According to expert psychologists, feeling unheard by higher-ups can intensify feelings of fear, uncertainty, and resentment in employees undergoing change. For that reason, some leaders may even begin consulting employees before signing a contract, then continue to gather feedback throughout onboarding.

In addition to listening to your employees, plan to devote resources to train and support them as they adopt a new software. Ask your provider about courses your employees can enroll in, or even a software coaching service you can hire to work with your team. Keep in mind that each individual may have their own learning style, so consider offering multiple options to accommodate.

Final thoughts

Bottom line: Building a tech-forward company requires more than just a single solution. By combining your TMS with a user-friendly CX platform, you can ensure that your business is running efficiently while optimizing the end-to-end process for your customers.

Looking for a CX platform for your logistics operation? Book a demo to see how Logixboard can round out your tech stack.

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