Investing
in a transportation management system (TMS) makes sense for a lot of
businesses. Many, though, do not make the leap and as a result lose out on cost
efficiencies a TMS makes possible.
A TMS is a major investment for any
shipper, although there are new options available that have lowered the cost of
entry while ensuring the business has access to advanced technology and
specialized TMS expertise. But making the wrong decision on a TMS can set back
a business for years.
Here are 10 things you should know before investing in a TMS.
1. Should I use a TMS?
This is the most obvious question to ask. A TMS is a powerful tool, but failure to understand why you should use one, and how to use it properly, will lead to a failed investment, tying up needed capital for years to come. Consider these questions before investing in a TMS:
- Is your supply chain too complex to effectively manage?
- Are you trying to lower costs?
- 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?
If the answer to any of these
questions is yes, then a TMS can help and should be considered.
2. What does a TMS do?
A TMS is a technology tool that
assists in the planning, execution and analysis of the supply chain. Depending
on its robustness, it will provide visibility into the supply chain; monitor
compliance information and documentation; provide shipment consolidation,
mapping and ratings; and automate routing guides.
A TMS offers so much more, though. nVision Global’s Impact TMS, for instance, is able to automate alerts and approvals; control spot quotes; automate rating, routing and booking of shipments; provide real-time track and trace of shipments; and generate flexible and customizable reporting and financial analysis.
3. What is the cost of a TMS?
Like so many things, the cost of a
TMS varies depending on the provider. Installing the wrong TMS, though, can
cost a business hundreds of thousands of dollars. A cloud-based TMS offers
advantages over server-based systems, both in terms of flexibility and cost.
The true cost, though, depends on what features and functionality you want in a
TMS. Server-based systems often come with preconfigured functionality, but many
businesses will not need all of these options, whereas a cloud-based system
allows for more flexibility. As a result, the TMS provider can offer the
functionality that best fits your needs at a price that fits the budget.
4. Is there any hardware to buy?
It depends. If you choose to invest
in a server-based TMS, there is hardware to purchase or lease. Cloud-based
systems require no hardware purchases as the entire system is housed on the
provider’s network in a secure location. Cloud-based systems also allow users
to centralize decision-making, a key consideration for a shipper with locations
throughout the country. It brings together orders, logistics and even finance
departments and if a shipper is so inclined, it can incorporate the carrier’s
key data points, providing further efficiencies.
Doing this with a server-based
system requires disparate servers that may not integrate smoothly with each
other and opens the door for each location to incorporate its own technology
solution, leading to additional inefficiencies.
5. Does the TMS integrate with my customers’ systems?
In a word, yes. A cloud-based
system is able to connect disparate systems from various providers – carriers,
shippers, brokers, warehouse operators, etc. – and pull that data together into
a single location. In some cases, the information can be presented on a single
dashboard.
6. I also operate warehouses. Can the TMS help with this?
Yes. TMS can now be integrated with warehouse management systems to help manage inventory and material flow. Too much inventory leads to lost product, especially if it is perishable, and wasted costs. It also leads to inefficiencies in everything from management workflow to warehouse workflow.
A TMS can be used to manage the entire lifecycle of goods, from material sourcing to end customer. Every movement of a piece of inventory can be tracked in this way, and that is only possible with a modern TMS that connects disparate systems. In addition, some systems are capable of automating inventory replenishment, freeing up critical time for managers. They also ensure vendors are meeting product requirements through exception management.
7. Can I customize the TMS to meet my unique needs?
Absolutely, if you have the right
TMS. As mentioned previously, some systems come with preconfigured
functionality. In those cases, customization may not be possible. Many modern
systems offer customization, which helps shippers avoid paying for features
they won’t use. In addition, cloud-based systems are able to scale with your
business plan, giving you the ability to add functionality as the business
grows without investing in a new TMS.
The Impact TMS allows for customizing customer and product detail fields and automation of certain functions. A personalized dashboard and adjustable data elements to generate custom reporting are other key features.
8. What if TMS technology changes?
This is the problem with all
technology, right? Technology changes so fast that systems can quickly become
outdated. A server-based TMS faces this problem. The issue does not exist with
cloud-based systems. In fact, these systems are designed to deal with changing
technology, allowing users to quickly update the software as needed through
simple downloads. No need for a systems IT professional to sit in front of
dozens of computers over multiple days installing the latest software.
In addition, cloud-based solutions
allow for new options to be quickly added, even if they weren’t part of the
initial TMS purchase. This allows shippers to benefit as they identify new
avenues of efficiencies.
9. What else does a TMS do?
Many shippers are using TMSes to
monitor carrier compliance. The data generated from electronic logging devices
and the Federal Motor Carrier Safety Administration’s Compliance, Safety,
Accountability (CSA) program has given plaintiff’s attorneys newfound
ammunition to go after unsafe carriers and the shippers that contract with them.
Integrating carrier data and proactively managing that process through a modern TMS can help shippers remove unsafe carriers from their routing guides, thus reducing liability. By proactively monitoring carrier performance, shippers have the ability to craft rules within the TMS to ensure only the safest drivers and fleets move their freight.
A TMS like nVision Global’s Impact TMS also provides other critical tools for shippers such as real-time track and trace of shipments and carrier scorecards.
10. How do I choose a TMS vendor?
Choosing a TMS provider requires more than a Google search. In essence, the decision to invest in a TMS means investing in a partner. Will that partner stand by the product? What kind of after-sales support is available? Is the provider selling a prepackaged system or willing to work with you to customize it to your needs? How scalable is the solution? Will it integrate with customer systems?
These are but a few of the
important questions that must be answered before selecting a provider. Finding
the right TMS provider is equally as important as deploying the right TMS
solution. Research firm Gartner said that top-tier vendors should show a
“demonstrated knowledge, proficiency and differentiated vision of the current
and future transportation marketplace.”
Making the right choice will open up end-to-end visibility of shipment, organizational connectivity, insight into carrier contracts and bidding process management, risk management capabilities and e-commerce capabilities.
Like hiring any employee,
references and online reputation should be checked and all due diligence should
be followed. Vet claims made by the provider and be sure you are comfortable
working with this provider for the foreseeable future because hiring the wrong
TMS vendor is an expensive mistake.
