Guest Commentary: Why Wait Any Longer? TMS is Now Affordable for 2/3 of North American Companies

By Mark Nix, CEO, Cloud Logistics

Mark Nix, CEO, Cloud Logistics

With the improved affordability of transport management (TMS) solutions across the spectrum of business sizes and industries, more companies than ever have access to the cost savings, process improvements and other benefits that TMS delivers.

Some firms are adopting TMS or have already done so–but just one third of transportation firms are running them, according to an industry research report for Logistics Management and Supply Chain Management Review, with another 10 percent planning to implement them this year. What’s really interesting is that 73 percent of the respondents work at small and midsized firms, the businesses best poised to see the positive impacts of an integrated TMS system but who think they can’t afford one.

Cost is one of the prevailing myths about TMS solutions. Upfront costs in next-generation TMS solutions have come down dramatically with improved technology, and SaaS products in particular are offering more user-friendly options than before. The truth is that more than two-thirds of the companies in North America now can afford a TMS solution with the scale and flexibility they need, and they stand to save up to 20 percent of their transportation spend and improve productivity by as much as 70 percent by choosing one. The benefits don’t stop there; it’s time to explore some of the other myths that are still keeping half of all firms out of that TMS driver’s seat.

We’ve touched on cost and size, with an understanding that ROI for even low-volume shippers makes sense with new-era TMS. That’s true in logistics, billing, and automated process, but TMS is a real game changer where visibility and mobile-driven data collection are enabled too. If that sounds complicated, then it leads to the next myth I frequently see with clients: complexity. Professionals who know logistics don’t always think they know TMS solutions, sometimes even if they already have them!

It’s true that some TMS products on the market today seem like you’d need MIT graduates with lab coats to keep them turned on, much less use them and enjoy it. Companies looking for agility–and whose decision makers, at least in part, believe that’s the whole point of adopting TMS–see cumbersome and clunky instead.

“Technology improvements will continue to drive costs down and eventually allow every company the ability to enjoy the benefits that TMS solutions deliver”

They don’t understand why it would take days and days of training and staff time to begin using it, which rightly makes them wonder how well they’ll get people to keep using it and make the most of their TMS investment. It’s cost-effective only to the degree that functionality gets used, that employees think it’s better and want to know more–and unnecessary complexity creates a barrier to getting results. They also wonder who and how the TMS solution will be maintained and upgraded, and at what expense. A user-friendly and right-sized but scalable TMS product dispels these myths, and a related one: flexibility.

Some TMS solutions on the market are showing their age, and especially so given the exploding IoT environment. The architecture for these older systems was written a decade ago, and requires either a change in business process on the customer side or expensive custom modifications in order to make the system fit each business. Another flexibility problem, reduced neatly in a cloud-based SaaS model, is that older TMS products may run on completely different operating systems than a firm knows and has experience within their current IT department. This makes it difficult, if not impossible, to deploy and support the TMS with their current resources—and that’s real expensive, not just an IT staff headache.

And then there’s the “what’s it for” problem. Many of the older TMS models started out by managing outbound traffic in North America, primarily the United States. Where scope is concerned, there was little understanding of the reach that today’s digital environment offers, or even much focus on global supply chains that made it necessary to design for managing international inbound freight. They were also designed for volume, and rarely applied to the needs of smaller and midsized shippers. The TMS solutions available now meet the single-solution need for both global inbound and domestic outbound management, and they’re providing that in cost-effective and cloud-based products that actually fit.

While some of these obstacles have been historically overcome by outsourcing to third parties, most businesses really want to take control, and have modern visibility with match-pay solutions that the 3PLs do not offer. For the 37 percent of businesses who have no plans to start using a TMS product, the continued wait means they’re wasting resources and leaving money on the table at a time when TMS is easier, less expensive, and more available in a customized solution than ever before. So what’s holding them back?

I think some of it is awareness, but much of it is fear. Some companies just haven’t made the connection between the value of TMS and the improvements it drives in customer service, inventory management, risk exposure, reduced error, financial accounting and so much more. Automation delivers information: the ready and transparent knowledge across the business of where all moving inventory is located, who moves it with the best service and lowest cost, what it costs to do so, where to invoice payments.

Industry awareness is key to choosing a TMS product with confidence and to know it’s a good investment that will help grow the business. But that confidence depends on overcoming the fears of the TMS unknowns: questions about speed, security and reliability that have existed since the first SaaS vendors proved that companies could manage their shipments without bearing the infrastructure costs. Since then, next-generation solutions have enabled shippers of all sizes to automate their manual tasks and improve efficiencies at a fraction of the cost, decrease their implementation timelines dramatically and deliver much improved end user experiences. Simply put, technology improvements will continue to drive costs down and eventually allow every company the ability to enjoy the benefits that TMS solutions deliver.

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