Despite the rapid evolution of today’s supply chain and the proven cost-saving ability of a transportation management system (TMS), few shippers are using TMS software. In fact, only around 35% of shippers have a TMS.
Transportation management is gaining importance across all industries because of the wealth of opportunities available to reduce operating costs and improve service levels. Shippers who manually manage transportation are missing out on efficiency opportunities.
Why is Now the Time to Invest?
Every business is different and values certain technological investments over others. But due to several trends within the transportation industry, right now is the perfect time for shippers to successfully invest in and implement a TMS.
There are 3 main reasons why TMS investment makes sense in our current economic climate
Transportation Costs are Low – For Now
The relatively low cost of diesel fuel, combined with mild demand for trailer space, has created good pricing conditions for shippers. Freight carriers have to drop prices to stay competitive, but this won’t last long. The price of oil is on the rise, and a driver shortage is continually on the horizon. Both of these trends will force freight rates to skyrocket. Invest in a TMS now while transportation isn’t inflating operating costs, and you’ll be prepared to find cost savings when transportation rates rise — giving you a competitive advantage over your competition.
Recent TMS Improvements
Cloud technology has completely changed the way businesses use and benefits from TMS software. With software-as-a-service (SaaS) TMS technology available, there is no upfront investment in the technology. Nobody needs to come and install the program. It’s available on the web, in a format where you simply pay for what you use, and there are never costly upgrades. These systems are easier to use than ever before, making ROI much faster and easier to achieve. The recent improvements to TMS technology mean that there’s less risk in investment, lower costs to operate and more benefits from the system itself.
Supply Chains are Changing Rapidly
Technology changes industries in fits and starts. While transportation has yet to be completely overhauled by technology, industries like video rental stores, which disappeared overnight, have been permanently affected. Drone delivery, 3D printing, e-commerce, and omni-channel fulfillment, self-driving vehicles, and rising consumer demands are all disruptive trends. Many industries face a future in which their distribution network will be entirely altered. Investing in a TMS now is important for the future. You’ll need a system in place to help manage transportation while it undergoes dramatic transformations.
The industry is in a sweet spot right now – a growing need for TMS technology coincides with a time of low costs and low-risk investments, and all of it near the tipping point of rising costs and extreme supply chain innovations.
How to Get Started Looking for a TMS
Shopping for a TMS can be a daunting task. There are hundreds of options, and whether you are a small or large shipper, it can be difficult to determine which one best fits your needs. It’s one decision to invest in a TMS – it’s a whole other ball game trying to choose one.
To help guide your evaluation of different TMS software, there are 3 very important questions you can ask.
- What’s Important to My Business? You first have to consider what your immediate business needs are in relation to transportation. You’ll want a TMS that can provide immediate ROI so that implementation is successful and the investment is not a huge burden on your business. But you’ll also have to think about long-term needs. Will you be operating in a new region, a new mode or with new freight? Is inbound and outbound visibility important? Will your business outgrows the TMS’s carrier capacity? You n eed to consider all of these features when comparing to TMS features.
- What’s the True Price of the System? Make sure to get a line by line pricing from a TMS provider. Installation, training, reports and instant notifications could end up costing you 25-30% You’ll need to know the cost of operating a TMS long term, too. Are there charges for technical support or system upgrades? Does the TMS have the necessary billing capabilities? The cost to operate a TMS can easily end up being more than the original price of the software – getting detailed cost information is crucial.
- Does the TMS support Systems Integration? A big benefit of a TMS is its ability to help provide a broad view of supply chain performance. If a TMS can’t integrate with your other internal systems, such as a WMS or ERP system, you’ll be missing out on this functionality. Visibility into transportation is necessary for enacting cost-saving solutions, but end-to-end visibility in the supply chain is far more valuable. Will your company want to leverage big data? Transportation data is vital to using big data in the supply chain. Without TMS integration, you’ll be missing a crucial part of that visibility.
Deciding to implement and then choosing a TMS is a big undertaking for any business. However, by making the decision now to invest in a TMS, and closely researching your options, you can start saving money on transportation right away and be prepared for a future in which transportation is changed dramatically.