Transportation management systems (TMS) are among the most powerful tools available to fleets and shippers alike, but many users fail to capture the full power of their systems. Why? Most often it is because they fail to understand what a TMS can do, what it can’t do and what they want it to do.
Businesses throughout the supply chain are implementing TMS solutions at a rapid rate. According to Gartner research, the global market for TMS is expected to reach $1.94 billion by 2022 – that is 31 percent of the anticipated total supply chain execution market in that year.
Like many technology deployments, adding a TMS is only beneficial if it is used for the right purposes, and in the right way. A modern TMS has a great deal of functionality, but how much it helps depends on the actual solution a business acquires and how it is used. Many shippers, for example, end up disappointed because their fancy new TMS doesn’t provide the visibility into their shipments they expected. The reason likely has less to do with the solution and more to do with the process used to acquire the TMS. Not all TMS can easily interface with a carrier’s system, for example, and without that integration, visibility is going to be lacking.
There are numerous examples of this, which illustrate how important it is to understand what your organization requires of its TMS. Before buying, start by answering this basic question: what do you expect to accomplish? Consider:
- Is your supply chain too complex to effectively manage?
- Are you trying to lower cos
- Are you looking for synchronization with other supply chain partners such as carriers?
- Are you trying to secure capacity?
- Are your rates too high?
- Is too much time being spent on managing regulations?
- Do you need to centralize decision-making?
This is only a small list of possible reasons why a TMS might be needed.
When considering a TMS, it’s also important to consider future growth possibilities. Can the TMS grow with you? In other words, is it scalable? A shipper might see visibility into its shipments as a key when purchasing a system, but without the ability to grow that system, new levels of customer service, such as automated billing, might not be possible. Some TMS provide that added level of integration out of the box, but it’s likely more beneficial to consider a solution that has the ability to grow as your needs grow.
After deciding what the TMS should do, there are still many more decisions that need to be made. Perhaps none are more important than whether the TMS is cloud-based or server-based. Cloud-based systems, such as nVision Global’s Impact TMS, offer advantages in connectivity and the ability to centralize decision-making, and they remain highly configurable.
Server-based systems may provide many of the same capabilities, but for multi-location organizations, they can slow down processes and don’t provide the same visibility across the entire organization without added costs. Consider an organization that is seeing lengthy truck detention at one of its facilities. This could be a system-wide process issue, but without a centralized TMS that can pull and analyze data from multiple locations, identifying this problem will be tricky and time-consuming.
If there is any doubt about what most companies are choosing today, Gartner has the answer. In 2017, only 37 percent of TMS applications were Software-as-a-Service (SaaS), or cloud deployments. By 2022, that number will be 65 percent, with much of that growth replacement of current systems.
“The TMS market continues to be highly fragmented due to the presence of a large number of vendors in the U.S. and Europe, mainly,” Gartner said.
Finding the right TMS provider is equally important as deploying the right TMS solution. Gartner says that top-tier vendors should show a “demonstrated knowledge, proficiency and differentiated vision of the current and future transportation marketplace.”
Like hiring a key executive, finding the right TMS is a critical business decision and one that requires research and understanding of the organization’s needs. Employees are not hired without checking their credentials and references and completing all due diligence. That same process should be used for any TMS purchase decision.
The right choice will provide end-to-end visibility of shipment, organizational connectivity, insight into carrier contracts and bidding process management, risk management capabilities and even e-commerce capabilities. It will reduce manual processes, streamline productivity and increase efficiencies across the board, not just in freight spend, but in areas such as inventory, which many organizations have found can be reduced with better visibility and improved efficiencies in the supply chain.
The wrong choice will generate the wrong data points and lead to incorrect business decisions.
The choice is yours.