Guest Commentary: TMS Adaptability: A Critical Factor in Delivering Long-Term Value

Companies searching for a transportation management system (TMS) often focus on the wrong objectives. Since most companies do not have an existing TMS, they tend to look at short-term automation goals and neglect the long-term ability of the software to adapt to their fast-changing operations. And for companies that already have a TMS and are looking to replace it, they have come to realize that software products by themselves rarely drive innovation in their organizations. Typically, and at best, these implementations drive automation more than innovation, and once the automation is realized, the bloom is quickly off the rose and companies find themselves right back where they started.

What many companies fail to realize when looking for a TMS is that the biggest asset they are acquiring is the software’s architecture, yet this is often ignored in the buying process.

One of the most common reasons a TMS fails to deliver sustained, long-term value is the software’s inability to rapidly adapt to change. I break TMS adaptability into two types:

1.     Process-driven adaptability inherent in the software architecture;
2.     Automated adaptability where the software changes the behavior automatically based on process feedback such as KPI’s, rates, etc.

While automated adaptability is somewhat sexy, it is process-driven adaptability that allows an organization to create innovative solutions that differentiate it in the industry. Today’s TMS solutions should allow users to easily and quickly configure process workflows to support, for example, different types of freight or even different organizations within the corporation. When you combine those process steps with business-driven triggers and rules, the end result is a solution that differentiates the logistics team.

For logistics service providers, these innovative and unique solutions enable them to provide both managed freight and brokerage services for their clients. They can even go a step further, if desired, to provide unique solutions for a given client. The logistics provider now focuses on processes to create efficiencies as desired and demonstrate unique value. They are not paying for costly software changes or to maintain their own systems. The adaptable software allows them to differentiate themselves through people and process and adapt to whatever a customer desires them to do.

Adaptable TMS works equally well for shippers. As acquisitions occur, the business often demands changes. A TMS architected to adapt enables shippers to adjust their solution accordingly. I often think back to my days when I worked for a large computer company. The company started out shipping one mainframe computer in three to five tractor-trailer loads per customer. (Funny, but my current laptop probably has more power than some of those computers that filled raised-floor datacenters). By the time I left that company ten years later we were shipping three to five customers per trailer load. That change required us to buy a new TMS that allowed us to plan and optimize customer orders to maximize client shipping. The system we had been using before did not allow us to consolidate orders onto a single truckload move. Instead of having to invest in a new TMS, it would have been nice if we could have just adapted our existing solution to meet our ever-changing requirements. The company is probably shipping computers via parcel carriers now.

Shippers are also using adaptive TMS solutions to manage the risk of outsourcing their logistics operations. Many shippers are now deploying TMS software and then hiring third-party logistics companies to run their operations using the software. This allows the shipper to better measure the 3PL’s performance since they own the data and help setup the measurements to manage the relationship. If the logistics provider fails to provide value or the business changes and different skills are required, the software is ready to adapt. This makes the outsourcing decision much less risky since the outsourcer or the outsource decision may be changed as needed. Thus the shipper is using the 3PL for their logistics expertise not their proprietary software.

Another area of TMS adaptability is what analysts refer to as embedded analytics. As the TMS collects information, the data is analyzed and the results are fed back into the solution, which are then used to alter processes automatically in response to changes. For example, carrier performance may be fed back into the carrier selection process to change the ranking of certain carriers. Average and industry lane rates may be fed into the system to help shippers determine quote targets for spot market rates. The information gathered through the execution process helps the system adapt automatically to changes in real-time as they occur.

So, as stated earlier, software solutions by themselves rarely drive innovation and rarely differentiate a company. But software solutions with flexible, adaptable architectures enable companies to innovate and differentiate without having to custom build costly IT systems. Adaptable TMS solutions allow companies to focus on differentiating their transportation processes, not building and maintaining software. You don’t want to be arguing that your TMS solution only satisfies 88% of your requirements—this might sound like you are selling 88% all-beef tacos. Makes you wonder what is going on with the other 12%.

Steven Blough is founder and President of MercuryGate International, a best-of-breed TMS software provider.

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