The Hidden Cost of Running Your Transport on Spreadsheets

Most companies that move goods manage their transport without dedicated software. Orders are collected in a spreadsheet, loads are planned by someone with experience of the routes, carriers are booked by phone or email, and delivery notes come back to the office in a folder. This works, and for many businesses it has worked for years.

The reason it is worth examining is that the costs of running transport this way are difficult to see. They do not show up as a single line in the accounts. They appear as slightly higher freight spend, slightly lower vehicle utilisation, and a small group of people who spend most of their day answering questions about where things are. A transport management system, or TMS, is the software that holds this work in one place, and it is useful to understand what it covers before deciding whether it is worth the investment.

A TMS covers a fairly small set of functions

At a high level there are five. The first is planning, which is the process of turning a set of orders into journeys by deciding what travels together, on which vehicle, in what sequence and by which route. The second is execution, which is the handover of that plan to the people doing the work, so that the carrier receives a tender, the driver receives a trip sheet and the customer receives a delivery window. The third is tracking, which records what is actually happening against what was planned. The fourth is the capture of evidence such as proof of delivery, photographs, timestamps and exception notes. The fifth is settlement, which covers costing the journey, checking the carrier invoice against what was agreed and billing the customer.

Every business moving freight already does all five of these things. The difference a TMS makes is that they happen in one connected record rather than across email, spreadsheets, messaging apps and filing cabinets.

Planning by judgement has a natural limit

Without a system, load building and routing depend on the experience of the planner. That experience is usually good, and in smaller operations it is hard to improve on. The limitation is that a person can only hold so many variables at once, and transport planning has a large number of them, including delivery windows, vehicle capacity, driver hours, site access restrictions and cost per lane.

The result tends to be steady inefficiency rather than obvious error. Vehicles leave partially loaded, journeys that could have been combined are run separately, and return legs run empty. None of this is visible from inside the operation, because there is nothing to compare the plan against. A business can run above its achievable transport cost for a long time without knowing, since each individual decision looked reasonable when it was made.

Information ends up in too many places

This is the most common symptom. The planner has a spreadsheet, the warehouse has a printed list, the driver has a message on his phone, customer service has an email trail and finance has a stack of carrier invoices. All of these describe the same shipments, and at least two of them are out of date at any given moment.

The practical effect is that simple questions become investigations. Asking where a particular order is means calling a depot, which means calling a driver, which produces an answer that is already stale by the time it reaches the person who asked. At low volumes this is manageable. As volumes grow it becomes a full time job, and it is usually done by the most experienced people in the business, because they are the only ones who know who to call.

It also means that customers find out about problems before the transport team does. Telling a customer about a delay before they chase it is not really possible when the status of a load exists only in a driver's head.

Freight invoices are rarely checked properly

Carrier invoices are hard to verify. Rates vary by lane, weight and volume, and there is usually a long list of additional charges covering waiting time, failed deliveries, redelivery, out of hours access and pallet exchange. Checking each line against what was agreed and what actually happened is slow work, and when it is manual it often does not happen at all. Invoices are approved because they look approximately correct, and because chasing a small discrepancy costs more in time than it recovers.

Over a year, approximately correct is expensive. Estimates of freight invoice error rates vary between studies, but the direction is consistent, and most discrepancies are not in the customer's favour.

Disputes are settled on paperwork

When a customer claims that goods arrived damaged, late or not at all, the outcome depends on what evidence can be produced. A signed delivery note in a folder at a depot several hundred kilometres away, filed under a date that nobody is certain of, is difficult to retrieve inside the window in which a claim has to be answered. A dated delivery record with a location and a photograph attached is straightforward to retrieve.

Companies without a system do not usually lose these disputes because they were at fault. They lose them because finding the proof costs more than the claim is worth.

There is very little to measure

Manual operations record almost nothing in a form that can be analysed, which makes some basic questions hard to answer. These include the actual cost per delivery by region, which carriers meet their agreed windows, where delivery failures are concentrated and how much is being spent on urgent or expedited freight.

Without that information, carrier negotiations are conducted on headline rates rather than total delivered cost, carrier performance is assessed on impression rather than record, and the same recurring problem is dealt with repeatedly instead of being resolved once.

The operation depends on a small number of people

In most manual transport operations there is at least one person who knows which customers need a tail lift, which sites close early on a Friday and which driver to send to a difficult depot. That knowledge is valuable and it is also a risk, because it is not written down anywhere. When that person is on leave the operation runs measurably worse, and when they leave the business the knowledge goes with them. A system does not replace that experience, but it does record it so that it survives the person who built it.

Growth is more expensive than it appears

The structural issue is that manual transport administration scales more or less in line with volume. Doubling the number of shipments roughly doubles the administrative effort required to process them. This either limits how much a business can grow or makes the growth less profitable than the forecast suggested, and it is usually discovered after the larger contract has been won.

Not every business needs one

A company running a small number of deliveries a week on fixed routes to the same customers has a transport operation that genuinely does fit in a spreadsheet, and adding software to it adds cost without adding much value. The indicators that this point has been passed are reasonably consistent. Administrative headcount is growing faster than volume, customer enquiries about delivery status take up a noticeable share of the week, carrier invoices are approved without real checking, and straightforward questions about cost and performance cannot be answered with confidence.

It is also worth saying that a TMS does not fix a poorly defined operation. Applying software to an unclear process produces a faster unclear process, and most failed implementations fail because the business expected the system to make decisions it had never made itself.

In summary

A transport management system is not complicated in principle. It puts planning, execution, tracking, evidence and settlement into one record so that the transport operation can be seen rather than assumed. The businesses that benefit most are the ones where volume has grown past what a spreadsheet and an experienced planner can reasonably hold, which is a threshold that is usually crossed some time before anybody notices. Or you could just carry on with the spreadsheet, at least until the person who maintains it takes leave.