Guest Commentary: TMS–Build vs. Buy?

A few months back, the spring on my garage door broke. My wife told me that I had the skills to repair the garage door and she said, “Wouldn’t it be a nice weekend project?” As I sized up the situation and repair job, I could envision the weekend ahead of me: reviewing repair websites, making multiple trips to the hardware store, calling in favors from friends…essentially spending the entire weekend tackling the project. I knew that a professional could easily finish the repair in two hours tops, so I “explained” to my wife that while I could do the job, I really shouldn’t do it. I felt a better use of my time would be cheering my twins on at their cross country meet and going out for celebratory burgers afterwards. Plus, my work at home doesn’t come with a warranty.

The build vs. buy decision that many companies face when considering a transportation management system (TMS) can fall into the same vein as my garage door repair decision: Yes, you can build your own TMS, but should you? I hear it said often: “We have a home-grown TMS solution already” or “We’re looking at buying, but we may build or rebuild our own instead.” Cost, time to benefit, technology, complexity, requirements for your industry, and the ability to differentiate your business are key considerations for any company making the TMS build vs. buy decision.

It’s also imperative that you look beyond the traditional discussion points when evaluating build vs. buy. For example, it is now six months after your “build” system has been moved to production. Except for a few help desk calls, things are going smoothly. You’ve managed to master the hardware, middleware, enterprise integration, security, and even nailed the functionality, when the CEO announces the new facility in China. The fun and excitement really starts when everyone realizes the local carrier integration requirements are entirely different from any other carrier you’ve worked with…and the TMS reports and user interface have to be available in Mandarin within the next two weeks! Acquisitions, divestitures, and the search for continuous process improvement mandate the need for adaptable solutions that companies can deploy quickly and support globally.

Here are a few questions that you need to ask when discussing build vs. buy decisions.

  • Is the existing solution enabling the business and driving improvements or doing just the opposite? A key reason companies move away from the build option is the cost and time required to modify their existing system to work with new carriers or take advantage of new service offerings.
  • Is the solution you are building and maintaining 2X better than a commercial solution you can purchase? If you can’t deliver 2X more functionality on day one, then the challenges of supporting and adding new functionality will take its toll on your ability to build, test, and deploy functionality moving forward for the business. The key reason for building is being able to leverage the solution to differentiate and drive true competitive advantage within the business. When the organization can’t easily see and articulate the 2X, or you are not in a position to deliver it, will your homegrown solution really allow you to differentiate?
  • Is cost a factor? The emergence of software-as-a-service (SaaS) TMS has eliminated the requirement to purchase hardware and make an upfront capital investment. SaaS allows a company to start small and match their investment with solution expansion based on actual utilization. SaaS is quickly eliminating cost as a criterion in the build vs. buy discussion.
  • Can you keep pace with technology? Ten years ago, I didn’t realize that I would be lost without a device that easily slips into my pocket, holds my music libraries, accesses the web, and delivers more applications than I could ever think of using. This is the world we live in today; solutions have to be accessible on multiple platforms. Employees entering the workforce over the coming years will expect and demand solutions that leverage the technology they use every day.
  • Can you go all in? In today’s competitive environment, companies have to move beyond incremental improvements and spend more effort on the BIG. If you can develop industrial strength transportation and global trade solutions, and you can deploy it globally and provide the framework for your employees to drive BIG change, then keep on trucking. If that’s not the case, then partner with a solution provider that enables BIG change.

When I tell the story about my garage door repair, I typically don’t discuss the cost or time saved. I talk about the joy of cheering for my twin boys and kicking back at our favorite burger place discussing their hopes and aspirations. I’m not saying that you don’t have the talent or expertise to build — just ask the tough question: should you build?

Edward A. Boclair is President of Precision Software, a division of QAD Inc. Boclair is responsible for global operations, including sales, marketing, research and development, and services. Boclair has a Masters of Business Administration from Texas Christian University plus a Bachelor of Science in Computer Science and a BBA in Management from Mississippi State University.

Comments

  1. To outsurce or not to outsource, that is the question.

    I really enjoyed this article first of all. It hits home on so many personal levels as I am tasked with home improvement project after home improvement project.

    It also is spot on in bringing up the question we all struggle with regarding doing things in house vs outsourcing. As a 3PL, we of course want to illustrate and prove how outsourcing logistics and supply chain functions are the optimal way to drive cost reduction and efficiency improvement. Aligning our infotech capabilities with our clients operations is something we must do well, at some level it becomes a commoditized requirement in the 3PL industry. As we have evolved TMS capabilities, we’ve ultimately found that outsourcing becomes the best answer. That makes selecting a technology partner who allows for flexibility and custom solutions offerings critical.

    In a world where we all must strive to compete globally with seemingly less resources, all the while with technology changing daily- the answer seems to be to outsource. We ask ourselves and ask our clients- what is our core business and where do we want to focus our efforts and resources. Then outsource the rest.

    For anyone interested, there are several articles we have posted to help break down these types of questions- (http://blog.logisticsgriffin.com)

    That reminds me, I have a garage project to finish this weekend. Let’s see if I can sell my wife on the whole outsourcing thing, to maximize MY ROI…