Manhattan Associates recently sponsored a webinar hosted by Chris Cunnane, senior analyst at ARC Advisory Group, titled, “Transportation: Why You Can’t Thrive Without TMS.” In the webinar, Cunnane examined the complicated world of freight transportation and how companies can effectively manage their networks. He also delved into the value of an advanced Transportation Management System (TMS) and why today’s big (and even small) shippers cannot hope to thrive without one. This article will summarize the key points and takeaways from the informative webinar.
Over the years, as transportation networks have increased in size and complexity, a TMS has become a keystone for proactive logistics operations. The technology helps companies move freight reliably, consistently and cost effectively, as well as eliminate complexities and automate what was once a cumbersome, time consuming manual process. Today’s TMSs deliver proven ROI and are one of the fastest growing technology areas. Let’s take a quick look at some of the specific benefits that an advanced TMS can bring.
Current Benefits of an Advanced TMS
A TMS offers many benefits for an organization. The top three, arguably, are service level improvements, freight savings and enhanced omni-channel management. First, a TMS delivers better transportation and planning insight, which naturally drives service level improvements. Cunnane highlights a recent ARC survey of 52 TMS users, in which 64 percent of respondents saw improved service levels within one year of implementation. Additionally, 92 percent of TMS users saw on-time fulfillment; non-TMS users saw a reduced percentage in on-time fulfillment levels due to more delays. Second, the main reason companies implement a TMS in the first place is to reduce freight spend, a goal which the systems help achieve through a mix of process enforcement, analytics and optimization that cannot be achieved manually. Finally, the rise of omni-channel retail and the globalization of the economy have created new complications for shippers that demand sophisticated technology to manage. Shipping networks and systems are increasingly complex, and manual systems are no longer up to the task.
Three Main Growth Factors
In addition to the benefits seen today, Cunnane also outlined several key factors that will dictate the future growth of the TMS space and further cement the technology’s importance in the management of a complex supply chain.
- Notable ROI – An advanced TMS can help companies save money by lowering freight spend. It can also lower cost mode selections, improve routing and improve procurement.
- Lower Barriers to Entry – The freight spend required to invest in a TMS is lower than ever. Historically, if a company didn’t have $20 million in freight spend, a TMS was out of the question. However, the emergence of SaaS solutions and less sophisticated on-premise solutions have reduced that significantly. Now companies with as little as one million in freight spend can afford a TMS, which opens up the market immensely to tier-three and four customers who were previously left out.
- Omni-channel – Ecommerce has eliminated geographical barriers for many companies. According to ARC, ecommerce has grown 51 percent over the past five years, and that growth will only continue. That said, ARC’s survey showed that only 60 percent of respondents currently use a TMS for omni-channel management, which means there is a huge tech gap – and huge opportunity for growth – in this area.
The key point that the webinar hammered home was that the TMS market is growing and will continue to expand in the years to come. More sophistication enables companies to better utilize their freight spend, improve their service levels and on-time deliveries and ultimately create demonstrable ROI. The continued evolution of the global economy is moving TMSs from a “nice to have” to a “need to have,” said Cunnane. And as shipping complexities increase and sophisticated TMSs become increasingly available to smaller companies, market competition and TMS demand will continue to grow. Find out more about how an advanced TMS can benefit your company.
Scott Fenwick, Senior Director, Product Strategy is responsible for setting strategy and direction over the integration of Manhattan’s portfolio, bringing emerging products to market and designing composite application solutions to address complex business issues for customers, which span multiple supply chain disciplines. Scott has more than 20 years experience in logistics and product management.