Blue Skies vs. Icebergs: The Right Approach to Buying a TMS

If you’re in the market for a Transportation Management System (TMS) you’ve got a lot of decisions to make. But there’s one that might be more important than the rest: Are you going to take a blue sky approach to the purchase process or treat it more like an iceberg?

Everyone knows about the blue sky concept, where you fantasize about the cool functionality that will save your company millions in transportation spending – and make you a hero in the process.

But if you understand that whiz-bang functionality isn’t what will get a TMS up and running and delivering for you, then consider yourself in the iceberg camp.

Yes, features and capabilities are important. But they’re like the part of the iceberg that’s sticking up out of the water, visible to all. Only the savviest buyers understand that there are other important factors to consider – the two thirds of the iceberg that lies hidden beneath the water’s surface. And when buying a TMS, the most important of these latent factors is the carrier network, which serves as the backbone to your transport operations and can make or break your business.

When you buy a TMS, you have two options when it comes to integrating your carriers: go DIY or buy into your software provider’s existing network. And while there are pros and cons to each, building out your own carrier network is no simple task. It requires a huge manpower investment across a number of different organizations, including operations and IT. For most small- to medium-size players – if not some of the large players – it’s probably something you don’t want to take on yourself, particularly when you can benefit from an existing carrier network.

Most of the carrier networks offered by TMS providers have been built up over time simply by on-boarding customers. What happens is Customer 1 comes in and uses carriers A, B and C, so they’re added into the system. Then Customer 2 comes along and uses A, B, C, D, E, and F. For the TMS provider, half the onboarding for Customer 2 is already done – they just have to load D, E and F into the system. This continues to happen, with the many carriers already in a TMS provider’s system and maybe a couple of new ones needing to be added each time a new customer signs up.

Every time you add a carrier for a customer, it becomes available to all the other customers in the system. At some point you sort of tip the scale.

So why not take advantage of that? As buyers go through the RFP process and ask about the functionality of the software, they should also be saying, “I use these carriers today. Let me do a carrier match with your network. How many of my carriers are you already connected to?” Once you know the answer to that key question, you’ll be able to get a sense as to how fast you’ll be able to ramp-up that software and start using it.

Here are three things you should consider when purchasing a TMS:

1. You need to understand whether you actually have the internal capability to assemble your own network. No one wants to have to build out an entire IT infrastructure just to realize the benefits of the TMS.
2. If you have more than a couple of carriers, think about the timeline of putting together that network. It’s not as easy as a simple phone call. There’s a lot of information that needs to be passed back and forth among the transportation folks and their colleagues in IT. And every day you spend doing that is one less day you have the TMS up and running and saving you money.
3. The bigger and broader the carrier network, the more options and opportunities you have going forward. Do you really want to limit yourself to the dozen or so carriers you currently use when you could easily tap into 1,000 times that many? Plus, the ability to do analytics across the entire network of carriers will give you greater insights into where future cost savings might lie.

Most shippers today probably aren’t limiting themselves to one or two carriers for their transportation. So they need connectivity to multiple players. Finding a TMS that features an expansive carrier network out of the box can be a home run for a business. There’s a big payback there because it can shave 6 to 12 months off the ROI when compared to building out a carrier network on your own. So before you get bedazzled by blue skies, remember to look beneath the surface of that glitzy new TMS.

With nearly 20 years experience in the supply chain industry, Evan has assisted enterprises and logistics service providers in more than 30 countries and across five continents with their supply chain initiatives. Originally a demand forecaster and planner for Castrol in the Asia Pacific region, Evan moved to a solution implementation role with Mercia (Supply Chain Planning) and then progressed to sales, pre-sales, marketing and global product management roles with Mercia and then Finmatica (Supply Chain Management). Evan has been with Kewill since 2004 in senior Marketing and Product Management roles, most recently as Chief Operating Officer for Kewill Asia Pacific.