Transportation News

8 Reasons Every Shipper Needs a Transportation Management System

With adoption levels still low, three top industry analysts outline their reasons why every shipper should be integrating a tms, transportation management system, into their overall supply chain management efforts.

TranzAct Technologies Resources

Companies

  • BluJay empowers you to optimize your company’s future in the global economy. Does that mean we help make you a superhero? Yes, pretty much. Picture yourself gliding out across the blue sky, an army of 40,000 carriers and supply chain partners as your rocket boosters. You join forces with 7,500 other…

  • At GT Nexus, we built a company around a simple but very powerful idea: put a single cloud-based collaboration platform at the center of a huge but enormously inefficient industry - global trade and logistics - and give companies a rapid, low-cost way to enable hundreds of inter-company supply chain…

  • With more than 1,250 customers worldwide, Logility is a leading provider of collaborative supply chain optimization and advanced retail planning solutions that help medium, large, and Fortune 500 companies realize substantial bottom-line results in record time.  Logility Voyager Solutions™…

  • At MercuryGate, we help company logistics operations be more profitable, productive, and efficient though the use of innovative transportation management software (TMS) solutions. Together with our customers, we are designing the Future of Delivery.

  • TranzAct helps shippers like you reduce their transportation spend while providing the tools necessary to make better business decisions on an ongoing basis. Our solutions provide shippers of all modes with freight audit and payment, reporting and TMS applications, rate negotiation and savings, contract…

  • Company Quicklook

As one of the more “mature” offerings within the supply chain management software space, transportation management systems (TMS) are best known for their routing, scheduling, routing, carrier selection, load tendering, and shipment consolidation capabilities.

And while these solutions have been around for a while, a recent survey of Logistics Management readers shows that just 35 percent of shippers are using these systems as part of their overall supply chain management strategies.

On the upside, that same survey also found that 39 percent of companies planned to either purchase or upgrade their TMS during the coming year - a signal that could result in higher adoption rates in the future.

Chris Cunnane, senior analyst with ARC Advisory Group in Boston, says that his findings point to TMS adoption rates heading up to above 50 percent over the coming years, although there are still “a large number of businesses that are not reaping the benefits of TMS,” he says.

With the goal of helping logistics operations better understand the benefits that TMS brings to the table, three different industry analysts outline their top reasons that every shipper should be integrating these platforms into their overall supply chain management efforts.

8 Reasons Every Shipper Needs a TMS

1. TMS has a proven return on investment
According to Cunnane, an ARC survey on the ROI of TMS found that respondents indicated freight savings of approximately 6 percent with the use of a TMS application. Of these savings, nearly 60 percent of users indicated that less than 25 percent of the net savings were absorbed by the TMS.

Chris Cunnane, senior analyst with ARC Advisory Group

“A large number of businesses are not reaping the benefits of TMS”Chris Cunnane, senior analyst with ARC Advisory Group

However, “many companies are using managed transportation services [MTS] providers instead,” says Cunnane. “And while both TMS and MTS performed roughly the same in terms of freight savings, TMS was less risky, meaning fewer TMS users achieved negative results versus MTS users.”

2. It helps shippers work better in the omni-channel environment
Omni-channel fulfillment, the changing nature of the global economy, and the steady growth of e-commerce are all putting more strain on the typical supply chain. E-commerce, for example, has all but eliminated geographic barriers for many companies while also making them more “global” in nature.

Granted, there are logistical and regulatory issues that accompany global shipping, Cunnane explains, but e-commerce allows customers in nearly every part of the world to view and purchase merchandise, regardless of that merchandise’s physical location. “TMS reduces a number of these headaches of moving freight from origin to destination, by matching carriers and optimizing modes,” he says.

3. It’s available in the cloud
Few would argue the fact that TMS was one of the first supply chain management solutions to move into - and stay in - the cloud. With their lower barriers to entry, lower upfront costs, and easier maintenance and upgrading, cloud-based applications have taken off across a number of different supply chain solutions and platforms.

Manu Gupta, TMS practice leader at management consulting firm Capgemini, says the fact that TMS is readily available in a cloud-based option makes it attractive for new users. “The cloud gives TMS users a competitive price, low overhead and maintenance costs, and reduced headaches,” says Gupta. “These features are pulling new companies in that may have previously thought a TMS was beyond their needs or too pricey.”

4. TMS can lessen the impact of driver shortages
The truck driver shortage remains a primary concern for third-party logistics providers and the shippers they serve, according to Capgemini’s 2016 3PL Study. In fact, the American Trucking Association estimates a driver shortage of 35,000 to 40,000 in 2015, and that number jumps to 240,000 in 2020.

Manu Gupta, TMS practice leader, Capgemini

“The cloud gives TMS users a competitive price, low overhead and maintenance costs, and reduced headaches”Manu Gupta, TMS practice leader, Capgemini

“The driver shortage continues to become more grave for shippers,” says Gupta, who sees TMS as one way for shippers to get a better picture of driver availability and carrier capacity. “We’re going to start to see some pretty innovative strategies surfacing,” Gupta predicts, “and Excel spreadsheets and phone calls aren’t going to cut it. Shippers are going to need technology - specifically TMS - to help them make better decisions in this area.”

5. It can serve as a valuable data repository
Companies that are still using a mix of spreadsheets, phone calls, and e-mail to manage their transportation components could be costing themselves significant money on an annual basis.

According to Gupta, companies that haven’t made the move to automated transportation management should stop and ask themselves questions like: How much am I spending on shipping? What am I spending on each load? Are my customers receiving the product on time? Do I have the right levels of supply chain visibility?

“Shippers that aren’t using a TMS probably may not even have access to these numbers or the answers to these questions,” says Gupta. “Those shippers that do use TMS, however, have access to the dashboards, reports, and other measurements that enable good decision making and cost savings.”

6. TMS enables a more proactive approach to supply chain management
Companies that rely on a mix of spreadsheets and manual interactions with their suppliers are more likely to run “reactive” transportation departments. In other words, key employees are more focused on putting out daily fires than they are on finding ways to work smarter, better, faster, and cheaper. Add a TMS to the equation, however, and the scenario shifts dramatically.

“There’s a contingent of companies out there that have small carrier bases and that aren’t necessarily concerned with the opportunities and the competitive nature of the transportation market, nor are they being proactive about seeking solutions that can give them the best cost options and performance levels across a variety of carriers,” says John Santagate, research director with IDC’s Manufacturing Insights.

John Santagate, research director, IDC Manufacturing Insights

“Companies must be able to digitally connect with their supply chains”John Santagate, research director, IDC Manufacturing Insights

By implementing a TMS, adds Santagate, the same shippers can streamline their transportation departments, connect their carriers to their 24/7, online networks, and improve the way they procure and manage freight.

7. It helps shippers enhance customer service levels
As Cunnane pointed out earlier, the typical shipper achieves a 6 percent ROI from its TMS investment. That’s a $60,000 savings on every $1 million spent on freight - no small potatoes there. In addition, Santagate says that TMS users experience “softer” benefits, such as enhanced customer service levels made possible by the improved visibility, speed, and automation that the TMS provides.

In an era where customers are demanding more and more, using a dashboard to pinpoint a shipment, access a specific delivery time, or offer up an alternative can be invaluable customer service tools. “Transportation is definitely an area that can be leveraged to achieve the levels of customer service that are being demanded right now,” says Santagate.

8. TMS is a valuable link in the digitally-connected supply chain
A good TMS not only allows shippers to manage their own costs and keep tabs on their internal metrics, but it also “hooks” carriers, customers, suppliers, and other business partners into the platform. For example, shippers can use a TMS to quickly see how specific carriers are performing in terms of on-time deliveries and customer service.

Using that information, companies can make better transportation decisions that, in turn, improve their own levels of customer service. By creating this digitally-connected supply chain, shippers can more effectively navigate in a world where mobility, cloud, the Internet of Things, and other innovations are in the driver’s seat.

“Companies must be able to digitally connect with their supply chains,” adds Santagate, “and TMS provides an angle for shippers small and large to capture the necessary data points, conduct analytics, and make improvements as they see fit. All of that is pretty hard to do with a spreadsheet-based system.”


Higher TMS adoption levels ahead
With our industry analysts making some pretty compelling arguments in favor of TMS, and with trends like omni-channel distribution and e-commerce pushing shippers to streamline and hone their transportation components, expect to see more companies using TMS in the future.

“I definitely think that companies will be looking not only at TMS, but also at solutions that provide a broader view of the supply chain,” Gupta predicts. “Shippers need to be able to look all the way up the chain to what’s happening at their suppliers’ factories, and that requires a broader-based technology solution that can look across the entire supply chain.”

Santagate says that TMS adoption will likely increase as vendors release even more affordable solutions that offer more flexible deployment options and enhanced capabilities into the marketplace.

“The levels of TMS adoption - which we also currently pinpoint at around 35 percent - are likely to improve,” says Santagate. “Up until recently, the solutions were geared more to the larger end of the market and there wasn’t an abundance of options targeting mid- to lower-market shippers. As more affordable solutions emerge, we’ll likely see more smaller companies testing TMS out.”

Related: Five Keys to Transportation Success


Article Topics
Best Practices   Transportation   Transportation Management   ARC Advisory Group   Capgemini   IDC Manufacturing Insights   TMS   Transportation Management   All topics


Comments
Be the first to post a comment.
You must be logged in to post a comment. Login.

About the Author
Bridget McCrea, Editor
Bridget McCrea is a Contributing Editor for Logistics Management based in Clearwater, Fla. She has covered the transportation and supply chain space since 1996, and has covered all aspects of the industry for Logistics Management and Supply Chain Management Review. She can be reached at [email protected]
 
Latest Transportation News
Transportation Predictions That Will Shake-Up the Supply Chain Industry In 2018
Dan Clark, Founder and President of Kuebix, gives his annual vision of what he sees happening in the transportation and supply chain industry including; tax reforms, decreased capacity, higher rates, and…

Home Depot Considers Buying $9 Billion XPO Logistics So Amazon Doesn’t
If Home Depot were to make an offer, one main impetus would be to keep XPO out of the hands of Amazon, which the home improvement retailer believes has also considered buying the logistics company, according…

CSX Provides Surface Transportation Board with Update on Precision Scheduled Railroading Progress
In a letter to leadership at the United States Surface Transportation Board, CSX CEO James Foote outlined the progress the Jacksonville, Fla.-based Class I freight railroad carrier has made in its ongoing…

The Five Ways 3PLs Can Retain Their Employees
Creating a positive work environment can help your 3PL improve its operational performance.


 

24|7 Pro Team

The 24|7 Team is your direct pipeline to solutions for your business challenges. It's your opportunity to have supply chain and logistics experts look at your specific challenges and needs, and give you free, no-obligation advice, solutions, and information.

The 24|7 Team will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your Request for Proposal list.

1
  Choose a topic for your RFP

Transportation RFP/RFI

The Transportation RFP is your direct pipeline to solutions for your transportation challenges. It's your opportunity to have logistics experts look at your specific transportation challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request.

Choosing the perfect software or system can be an indomitable challenge. Using this transportation/TMS RFP will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your Request for Proposal list.

Warehouse/DC Management RFP/RFI

The Warehouse Management Systems (WMS) RFP is your direct pipeline to solutions for your WMS challenges. It's your opportunity to have logistics experts look at your specific WMS challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request.

Choosing the perfect WMS solution can be an indomitable challenge. Using this WMS RFP will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your WMS Request for Proposal list.

Supply Chain RFP/RFI

The Supply Chain RFP is your opportunity to have logistics experts look at your specific challenges and needs, and receive free, no-obligation advice, solutions, and information. It simplifies finding a pool of likely partners, building your knowledge base, and preparing your Request for Proposal list. The companies in the Logistics Planner have agreed to respond to your request for in-depth information and follow-up, and your request is totally confidential.

Software/Technology RFP/RFI

The Software/Technology is your direct pipeline to solutions for your logistics information technology challenges. It's your opportunity to have logistics experts look at your specific technology challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request. Whether it's WMS, TMS, Mobile or Cloud, our pros can help.

The companies listed below have agreed to respond to your request for in-depth information and follow-up. Your request is totally confidential.

Executive Education RFI

The Logistics and Supply Chain Education RFI can help you identify the schools, coursework, continuing education, distance learning and certification opportunities available from leading logistics educational institutions.

Upgrade and improve your logistics and supply chain skillsets. Whatever route you choose—advanced degree, executive education, certification or distance learning—the time and money you invest in your education today can pay off in continued career success tomorrow. Contact leading universities and professional institutions for the information you need to prepare for the future.

Third Party Logistics RFP/RFI

This 3PL Request for Proposal (RFP)/Request for Information (RFI) can help you find the 3PL and 4PL providers that can meet your specific 3PL service challenges and needs. The 3PL companies below will provide free, no-obligation third-party logistics advice, solutions, and information.

Ask your 3PL questions, you'll get answers. Simply complete the information, and detail your 3PL challenges. Then, check off the third-party logistics companies that you want to review your request.

1. Choose an RFI topic.
2. Enter your contact information and challenge.
3. Select companies and optional categories.
4. Submit.


2

Your Information



Your Challenge, Problem or Request *

3

Select Transportation Companies

  • Select All

  • 3Gtms
  • BluJay Solutions
  • CSX Trans. Intermodal
  • Kuebix
  • Landstar
  • Legacy Supply Chain Svs.
  • One Network
  • Pitt Ohio
  • Purolator
  • Quintiq
  • SEKO Logistics
  • SMC3


Select Relevent Categories

  • Air Freight
  • Intermodal
  • Motor Freight
  • Ocean Freight
  • Rail Freight
  • TMS

Select Warehouse/DC Management Companies

  • Select All

  • 3PL Central
  • Apex Supply Chain Tech.
  • Honeywell Intelligrated
  • Kuebix
  • Legacy Supply Chain Svs.
  • Swisslog
  • Westfalia Technologies
  • Zebra Technologies


Select Relevent Categories

  • Auto ID & Data Capture
  • Automation
  • Conveyors & Sortation
  • Lift Trucks
  • Packaging & Labeling
  • Pallets & Containers
  • Shelving & Racking
  • WMS

Select Supply Chain Companies

  • Select All

  • 3Gtms
  • 3PL Central
  • Amber Road
  • Apex Supply Chain Tech.
  • APICS
  • BluJay Solutions
  • CSX Trans. Intermodal
  • Frontier Business
  • Kuebix
  • Legacy Supply Chain Svs.
  • Logility
  • One Network
  • Purolator
  • Quintiq
  • SMC3
  • Synchrono
  • TAKE Supply Chain
  • Westfalia Technologies
  • Zebra Technologies


Select Relevent Categories

  • Global Trade
  • Inventory Management
  • Risk Management
  • Sustainability

Select Software/Technology Companies

  • Select All

  • 3GTMS
  • 3PL Central
  • Apex Supply Chain Tech.
  • BluJay Solutions
  • Honeywell Intelligrated
  • Frontier Business
  • Kuebix
  • Logility
  • One Network
  • Quintiq
  • SMC3
  • Swisslog Logistics
  • Synchrono
  • TAKE Supply Chain
  • Zebra Technologies


Select Relevent Categories

  • ERP
  • Sales & Operations
  • Sourcing/Procurement
  • Optimization
  • Transportation Mgmt
  • Warehouse Mgmt

Select Executive Education Choices

  • Select All

  • Graduate Courses
  • Online/Distance
  • Executive Education
  • Certifications
  • Undergraduate
  • Seminars
  • Associations
  • Conferences
  • Tradeshows


Select Third Party Logistics Companies

  • Select All

  • 3PL Central
  • Landstar
  • Legacy Supply Chain Svs.
  • Purolator
  • SEKO Logistics
  • Westfalia Technologies


4
 

24|7 Company Profiles