The Transportation Management Systems (TMS) market is going strong, as confirmed by ARC Advisory Group’s annual market study and a recent survey by EyeForTransport that showed TMS is the top category for future IT investments at 53%—ahead of CRM, WMS and other software applications.
Why are so many companies looking to buy a new TMS? I believe there are several high-level reasons:
- Effective inbound and outbound transportation management is becoming a priority for supply chain organizations as the hard dollar ROI of the technology has been well proven.
- Newer architectures have resulted in shorter and less expensive implementations.
- TMS solutions have evolved to be global and multimodal.
But on a more personal level, what drives folks to think they need a new TMS? I think you can cull the possible motives into a few reasonable buckets.
You know it’s time to look for a new TMS when your “functions aren’t functioning.”
The TMS many companies use today, if they use one at all, fail to keep up with current or anticipated needs.
If you’re a shipping manager, you know that the cost of shipping greatly affects profit and customer satisfaction levels. A TMS that lacks basic functionality and visibility can cause several problems, including unclear delivery dates, incorrect shipment costs, and uncertainty whether or not you’re using the most cost-effective provider.
Until recently, transportation management was often an afterthought within the supply chain management process. Shipping has traditionally been viewed as something that happens as part of the procurement process or just a way to deliver products to customers. In reality, shipping is an integral component of the product lifecycle, a major part of the cost/margin equation, and transportation management functions are crucial to the success of businesses.
You know it’s time to look for a new TMS when “You know what you don’t know.”
For many companies, quality functionality isn’t enough. If you are managing transportation purely as a transactional business without the data to inform strategy, then you know it’s time to seek a system that can provide you with business intelligence and usable data.
When you can aggregate and analyze transportation data across the supply chain, such as routes and carriers that are the most reliable and profitable, and profitability by customer or product, you are better informed to make decisions that can fuel further growth or stretch competitive advantages.
You know it’s time to look for a new TMS when “the devil is winning.”
In TMS, I believe the “devil is in the details” and the most “devilish” work is found in contract and pricing management. You’ve spent time and energy negotiating contracts with your carriers, but managing your contracted pricing can be a bewildering process. Each shipment may have its own unique factors that keep you guessing about the best way to get the shipment to its destination. Simply put, without a modern TMS, you’ll end up going crazy or losing money—or both. When you have automated contract management, you have a competitive advantage that enables you to make data-based decisions.
A contract management and transportation pricing system can manage a wide range of pricing factors including:
- All Parcel and LPL pricing (density, dimensions, weight, CWT, MWT) including all UPS, FedEx, USPS and other small package carriers
- All LTL commodity pricing (skid, pup, mileage, geography, density)
- All TL pricing (mileage, trip, geography)
- Fuel surcharges
- Accessorials, customizable by any type of charge (weight, trip, mile, percentage, unit)
- Carrier rules and tariffs, and how they apply to your shipments
Imagine trying to track all of these factors manually or with spreadsheets. It won’t be long before carrier selection becomes a “best guess” decision at the loading dock based on whichever provider is friendly and reliable regardless of the cost.
Automating contracts also makes a number of manual processes easier:
- Changes are easily updated
- Each rating reflects the terms of your negotiated contract
- Automatic best pricing is available according to each contract’s parameters
- All types of factors can automatically be entered, eliminating surprises and guesswork when it comes to pricing
In closing, many organizations are recognizing the opportunity to use a Transportation Management System to create a growth strategy and streamline processes and pare costs. If you want to jump on board, do some hard soul searching to clearly determine what’s important now. And keep an eye on future flexibility so that your new TMS solution can accommodate future growth. Make some calls, do your research and choose the best solution for your company. The right choice will quickly lead to better times for your organization, your bottom-line and your customers too.
Geoff Comrie is the CEO of Transite Technology. He has twenty years of experience in technology sales and management, with companies such as Pansophic and Siemens. Geoff has funded Transite from its inception in 2002 and has been the primary driver for product strategy, sales, and operations. Geoff is a graduate of Western Illinois University with a bachelor’s degree in computer science.
Geoff I agree that many companies are motivated to look for a new TMS based on the reasons you mentioned in this blog. I think these are also motivating factors for companies exploring SaaS-based TMS models and TMS plus managed services solutions. These solutions focus heavily on the details and allow you to make more strategic decisions and focus less on the manual element of managing a TMS solutions.