When free isn't free: Using spreadsheets as a transportation management system

For years, carriers have relied on spreadsheets as their transportation management system (TMS). Using Microsoft Excel or Google Sheets to stay organized makes intuitive sense. After all, the initial cost for these products is minimal, which is critical when fuel and insurance costs are eating into margins.

However, the hidden costs associated with spreadsheets make it more challenging for carriers to use them as an operating system or source of truth. Here are the main challenges companies face using spreadsheets that they might not know they need to overcome: 

Accuracy

For carriers tracking customer orders on spreadsheets, there will be accuracy challenges across the organization. The most obvious issue is human error, which is sure to happen when people are handling data entry.

Accuracy issues often mean delays in payments from shippers, increasing the pressure on carriers by delaying the time-to-cash. Logistics provider OpenEnvoy found more than a third of invoices sent from trucking companies are inaccurate which means shippers are wary of every invoice they see from a carrier.

Increased due diligence can mean pushing beyond a typical 30-day pay window because many shippers will restart the clock when an invoice arrives with incorrect information. 

Efficiency

A recent drop in freight rates, coupled with high fuel and insurance costs are tightening margins for the entire trucking industry. Today, every dollar a carrier spends on operating expenses should add tremendous value. However, companies leveraging spreadsheets are likely missing out. 

Outdated and/or inefficient methods aren’t just limited to spreadsheets. Many trucking companies still carry full-time employees dedicated to scanning proof of delivery (PODs) or making hourly check calls. Leveraging a TMS with a complementary mobile application alleviates these issues too. 

Worse case, each check call or scanned document requires a follow-up action. Dispatchers or operations folks might move from a check call to offering a client update, sending email or text to let customers know that goods are on track to arrive as planned, depending on the standard operating procedure (SOP). 

In other words, it isn't just about the call, it's a process that requires multiple steps, and the SOP component adds complications since most shippers require a particular level of transparency. Since there is no industry standard for updates, the operations person either needs to know the rules for each customer or spend time looking it up to ensure the carrier delivers both goods and the promised service. 

In short, the POD scanner and the dispatcher are doing work that makes their company run but not in a way that can scale. By relying on a TMS, these folks can do more meaningful work for the carrier while also ensuring institutional knowledge isn't lost when dispatchers leave their role in the organization. 

Opportunity

This is an issue now, and it's only going to grow. The technological barrier to entry to secure big-name shippers is getting higher for carriers. Shippers want to send DOs via electronic data interchange (EDI) or application programming interface (API). They want real-time data that shows where their goods are and the ability to adjust everything from warehouse staffing to the location where goods will be stored. 

Sadly, there's no Excel or Google Sheets plugin for a warehouse management solution. And as more large shippers become tech-enabled, the gap between carriers with the right tech and those without will grow. As a result, there will likely be a point when shippers refuse to work with carriers reliant on spreadsheets.

It's clear the indirect cost of using spreadsheets far exceeds the immediate savings for carriers. They're known to increase time-to-cash (making it harder for companies to meet their payroll obligations), require dedicated resources to tasks a basic TMS can solve, and create an opportunity expense. Today's most advanced shippers need more technological capabilities than ever, and carriers that do not keep pace will have fewer options for finding freight. Spreadsheets may be free, but even so, their cost is tremendous. Carriers need to consider other TMS options now while it's still a competitive advantage instead of later when it becomes necessary.