As a company grows and expands its geographic footprint by procuring and selling goods around the globe, its supply chain naturally becomes more complex. As a result, a savvy supply chain manager will often look to deploy a transportation management system [TMS] to plan and run the company’s transport operations.
Unfortunately there are some lingering myths about implementing a TMS that have kept many businesses from transitioning away from outdated legacy systems. Here are the three biggest misperceptions about using a TMS to streamline your supply chain.
Myth #1: A Software-as-a-Service [Saas] solution doesn’t add value when it comes to logistics.
Reality: SaaS is a deployment strategy, not simply a procurement model. If you think about transportation and supply chain networks, the backbone to any successful approach is connectivity and effective trading partner collaboration. With a SaaS solution, the ability to easily connect with partners is inherent within the subscription vehicle and the cost is part of the proposition. In other words, much of the connectivity is built-in and there are fewer hurdles or unknowns with a SaaS solution compared with traditional software, which requires a huge IT investment to build out that network. Opting for a SaaS model allows users to easily scale and deploy systems globally, which is invaluable, especially during business expansion or an acquisition.
Myth #2: Systems delivered via the Cloud are too costly to implement for mid-size businesses.
Reality: Historically, return-on-investment [ROI] studies regarding TMS systems have examined large companies that work with enormous volumes and scores of trading partners, making implementation costs appear high. Truth be told, the total cost of ownership depicted by these studies simply isn’t germane to most businesses, especially mid-size companies. These organizations don’t have as many partners or customers to consider and the initial configuration is much more straightforward, so the costs of implementing and maintaining a TMS are much lower than what a larger company would incur. In addition, mid-size companies can use a TMS to automate processes they now handle manually, such as load tendering, which can free up staff to pursue value-add activities that can lead to further savings – something that’s rarely considered in an ROI analysis.
Myth #3: If you want to go global with a TMS solution, you have to move everything in-house. Outsourcing is no longer an option.
Reality: This is probably the biggest myth and one of the main reasons companies have been reluctant to undertake a global TMS strategy – and it’s simply not true. Businesses can still use outside vendors with a TMS. If you are using a 3PL in your supply chain, all you need is to have its operational data fed through your TMS, which shouldn’t be a challenge as the supply chain industry becomes increasingly digital. It’s no different than the way shippers connect their TMS with their carriers. You don’t need to take 3PL operations – or any other service provided by an outside vendor – in-house just because your business operates a global TMS. A SaaS-based solution makes it easy to connect to all your trading partners and third-party providers.
The Bottom Line
Running a TMS has become a competitive differentiator across virtually every industry, both for the way it can streamline transport operations and for the crucial data analytics and intel it can provide a business. It’s time to throw out all of the outdated myths and misconceptions you may have heard and consider the bigger picture: a TMS is a strategic investment that any shrewd logistics manager will consider in order to thrive and grow in today’s volatile market.
As Vice President, Multimodal Transportation Solutions at Kewill, Walt Heil brings over 20 years of experience in supply chain and transportation management operations, sales and sales leadership. Prior to Kewill, Walter led the worldwide commercial efforts for the IBM Sterling TMS solution, providing strategy and executive leadership for IBM’s global supply chain execution portfolio. Walt has managed several sales organizations and led Sterling’s supply chain execution strategy for the North American manufacturing market. Walter holds a Bachelor of Arts degree from Michigan State University and attended The Detroit College of Law.