The article discusses the views on the use and implementation of a web based transportation management system and the market in general and discusses the current state of the TMS marketplace and where the industry is headed.
While it can’t be said that every company has tapped into the power and flexibility of a web based transportation management system, such applications have been around long enough to no longer qualify as new (in fact our web based transportation management system, the Cerasis Rater, has been web based since 1997, before Google was even a company) – and their presence in the enterprise is growing. Is it fair to say that traditional TMS software has been overtaken by web based transportation management system yet? Perhaps not, but such online, hosted or on-demand systems are proliferating. Just take a look at the recent information in Inbound Logistic’s TMS Buyer’s Guide. They are quick to deploy in most cases, they are highly scalable and the faster-time-to-ROI argument hasn’t hurt web-based TMS adoption either.
The Widespread Adoption of the Web Based Transportation Management System
Does a Transportation Management System Need To Have a Large Expense to Deploy?
Let’s talk about TMS in general first. A new study of more than 400 logistics managers conducted by Peerless Research Group found 43 percent were either already using or planning to implement a TMS. Clearly from these statistics, not many shippers have yet taken steps to utilize these technologies to improve on-time delivery, reduce transportation costs and improve visibility into the moving pieces of their supply chains, which are all the main reasons why shippers would want to implement something like a web-based transportation management system and the core benefits of a TMS.
So, some may ask, why? Well, typically, for some companies, size is a primary issue. Organizations doing less than $8m to $10m in sales will have a hard time justifying the costs of a TMS. Many small companies may not even be aware of the existence of TMS since their transportation needs are well-met with manual processes. But for larger companies, it is the structure of their operations that may be the impediment. A lot of organizations are decentralized, with their carrier management and rate negotiation functions spread across a wide field of operations, with each site using a limited (and frequently disparate) set of tools to accomplish the same kinds of transportation goals. In these cases, companies may not feel like there is an advantage to centralizing transportation management with a TMS. Or perhaps they feel like the benefits of doing so wouldn’t outweigh the disruption they imagine it would cause to implement a TMS.
Then of course, there are a whole host of companies who already have some kind of TMS in use, typically through their relationships with 3PLs or 4PLs who bring a technology to the table. Many shippers use the TMS tools provided by their logistics service provider, and in some cases, they simply outsource the process entirely to the 3PL.
However, what most small shippers may not realize is that they can not only outsource entirely to a third party logistics provider, but using the 3PLs web based transportation management system means that the shipper may not incur any cost at all to use the tool provided by the 3PL – and often integrated managed transportation services come with the web based transportation management system.
So If Shipper/Organization Size is Not an Issue, What Would be Reasons NOT to Deploy a Web Based Transportation Management System?
ScreenDemo2 2 300x214 How the Web Based Transportation Management System Will Make the Server Side TMS Go the Way of the DinosaurA Logistics Manager may be sold on using a web based transportation management system. He or she sees that it will enable them to do more with their resource, scale, sustain, and even grow with the company without adding much overhead in their department. But yet, there are challenges that the logistics manager may face when seeking buy-in from key decision-makers regarding engaging and implementing transportation process automation technologies like TMS. For some reason, there are still reservations on the part of leadership when considering a large system integration project like TMS?
Often, the reservations come from either an old paradigm or misunderstanding of how new technology systems, especially web based systems like a web based transportation management system may work. From the sales feedback we hear in the marketplace, overwhelmingly the objections we come up against once the Logistics or Transportation Manager is on board and we talk to leadership is a consensus that executive leadership in many organizations has a dated functional view of transportation. Some regard this increasingly strategic facet of the supply chain as little more than the a “shipping department.”
The question transportation hears frequently when pitching the idea of investment into a TMS program is, “Why would you need a system with all these bells and whistles for a tactical function like shipping?” It’s unfortunate, but many still fail to see the value transportation can drive across the enterprise and all the touch points it involves.
Luckily, over time, this contentious point continues to grow less and less prevalent as supply chain management continues to grow more integral to business. We see its rising influence in all the popular literature and even the universities offer business degrees with focus on supply chain education. So while there is still the “old guard” who consider anyone in transportation “box kickers and label lickers,” there are several entire generations of younger professionals who give this discipline the respect it deserves.
It is also worth considering that people are fairly spoiled by the success of transportation in modern life. They go to the supermarket and 99 times out of 100, the product they’re looking for is there on the shelf where they expect it to be. This makes it pretty easy to take transportation and logistics for granted, without thinking much about what goes on behind the scenes to make this happen. We have the best practitioners in the world here in the USA, so in this respect, we can be our own worst enemy.
However, Despite Reservations….Isn’t it Really About the ROI of Something Like a Web Based Transportation Management System that Matters?
The most common reservation Cerasis Account Executives hear, as you may expect, is the cost of purchase and maintenance for a TMS solution. Many fail to see the direct payback or ROI into such a system.
For more sophisticated companies, a common point of resistance to engaging a third-party web based transportation management system is a bias against “bolt-ons” or software tools or solutions that are not produced by their implemented ERP provider. In many cases, organizations prefer to have anything related to their supply chain management, even their transportation management, built as core functionality within their ERP systems. This is a typical mindset at a larger organization. “Bolt-on” may be perceived as requiring IT resources that the organization isn’t prepared to allocate to such projects. IT leadership worries about new systems and how much support they’ll require both to integrate and to protect from a security standpoint.
However, these days, integration into something like an ERP is a non event. What we mean by that is that it is so easy with APIs and connect services to have a web based transportation management system integrated by the third party logistics company’s dedicated technology team.
The Study States that Logistics Manager Want More Technology to Improve Transportation Management…so Why All the Fuss From the IT Department?
web based transportation management system reasons How the Web Based Transportation Management System Will Make the Server Side TMS Go the Way of the DinosaurThe same PRG study went on to state further that load optimization/consolidation, electronic communications, settlement, reporting and integration with other enterprise applications were each identified as prime objectives by a near plurality of respondents. With each of these things being far more effectively achieved through a TMS system, could it simply be IT constraints that dissuade would-be buyers from making the decision to engage a technology like this? Maybe….We definitely wouldn’t underestimate or minimize the reality of IT constraints. Everyone, especially the largest organizations, can relate to having to make significant IT cutbacks. IT budgets tend to grow larger as they go through the process of adding systems. Then, one day, the comptroller, CFO or CIO is given to finding savings, especially in an economy that is focused on cutting out as many wastes as possible. They look at a large IT organization and it seems ripe for cutting. In fact, in this last downturn, many large organizations took the step of outsourcing their IT altogether. We have heard from many of our own shipper customers that IT limitations are the top concern when deciding on a new technology deployments in any aspect of their businesses.
But, A Web Based Transportation Management System Should Decrease, Over Time, This Hesitation With Education
So has SaaS (software as a system) or the rise of the web based transportation management system changed the perception of what is involved in engaging TMS? Does this help mitigate IT resource allocation concerns when deciding?
The relatively low level of effort required of IT to implement and maintain a SaaS or web based transportation management system has certainly been one of the main drivers behind the rise in new TMS implementations over the last few years. The proof is out there, easy to find. Most of the largest companies in the world are already using these applications. It is starting to change for the mid-sized business too. The cost of a SaaS-based TMS versus an ERP-provided transportation management solution is like the difference between night and day. The SaaS solutions are so much less expensive and quicker to deploy. Further, the user training is far simpler with the SaaS solution. The front-end of the modern TMS is far more intuitive than the clunky offerings from server-based ERP/TMS application providers. Today, users are already hip to the slick user experience they encounter when visiting sites like Amazon.com and others. The ERP-based solutions lack the elegant front end offered by the web based transportation management solutions.
Conclusions on the Web Based Transportation Management System
Overall, the change to the wide spread use of web based transportation management systems is happening, albeit slowly. The internet continues to pervade all areas of user’s lives, especially those of younger professionals: the Gen Xers and Millennials. As these users grow further into leadership roles in business, we’ll begin to see the final phase-out of server-based TMS. Twenty years from now, the server-based model will be regarded the same way mainframe computing is regarded today. It’ll be a dinosaur.
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Mick Jones, Vice President Global Logistics, Supply Chain Strategy & Network Transformation at Lenovo took part in a panel at eft’s Hi-tech Supply Chain Summit in Amsterdam, have a read at his takeaways.
Last Thursday eft launched the European 3PL Summit in logistics hub, Venlo.