The Industry’s Struggle to Define TMS
E-Commerce Transportation Execution
Streamlining transportation execution in today’s omni-channel distribution environment is a clear cut process if you're using a modern, multi-mode transportation system.
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3Gtms is the fastest growing, Tier-1 transportation management system (TMS) provider. It is dedicated to helping shippers and logistics service providers gain a competitive advantage through technology. Whether you move $5 million or $5 billion in freight, its 3G-TM solution seamlessly manages the…
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I’ve been in the TMS industry for more than 30 years and wrote the first TMS as a developer back in the ‘80s.
Since I’ve been around longer than most people and understand the industry better than most people, Steve Banker of ARC Advisory Group once called me “the father of the TMS industry.” I figured I’d put that moniker to good use in this series, and offer some advice on navigating the TMS marketplace.
Today the term “TMS” covers many different product classes. In fact, I would estimate that well over half of the transportation software market refers to themselves as a TMS provider. This includes: vehicle maintenance, carrier selection, accounting, cargo care and handling, fuel costing, routing and mapping and vehicle communications. In addition, there are many TMS systems that focus on only one mode, and therefore they handle that mode very well.
In other words, there’s no clear definition to help buyers navigate this very complex world. This makes it very hard for someone who is buying transportation software to figure out which companies are actually a good fit. In addition to the software companies that refer to themselves as a TMS, a lot of 3PLs say that they are TMS companies.
The simple act of figuring out which transportation software companies address a buyer’s needs is almost impossible because there’s no agreed-upon terminology for buyers to refer to. I was recently speaking with Bart De Muynk from Gartner and we both agreed that our industry could benefit from some standard nomenclature to assist buyers in selecting the right solutions for their business.
One way that we can help transportation software buyers in their process is to define some new TMS terms. For starters, let’s look at the class of solutions that were the original TMS systems.
I suggest that this class of products should be classified as a specific subset of the TMS world – perhaps the term “multi-mode TMS” would work. In our view, a multi-mode TMS would include routing, rating and mode selection for multiple modes – thereby the name. This class of solutions addresses a core set of business issues:
- Route and rate the orders
- Execute the shipments and loads across multiple modes
- Track and trace the loads
- Freight settlement
By defining a narrower category for multi-mode TMS, a buyer can more easily narrow the list of TMS software providers capable of covering multiple modes. This simple classification would simplify the selection process significantly.
One of the biggest mistakes a business can make is investing in a software solution that doesn’t fit. Buyers who don’t realize the risks and don’t spend enough time evaluating the right vendors are much more likely to fail. As I mentioned in a previous post, you will most likely be best-served by just a few providers so it’s important to figure out who really meets your needs.
Adrian Gonzalez, industry expert and analyst of Talking Logistics, further explains:
“Before diving into the TMS vendor evaluation and selection process, first clearly define your near-term and long-term transportation management needs and objectives. By knowing not only what you want to accomplish but how you want to get there, you can better determine whether the vendor can deliver value on both your immediate needs and long-term goals. As the great Yogi Berra famously said, ‘You’ve got to be very careful if you don’t know where you’re going, because you might not get there.’”
Within the multi-mode TMS space there are still many software providers and many different groups of companies and products. Even analyst firms are wrestling with categorizing the TMS space: Gartner’s Magic Quadrant for TMS uses the term “TMS” in a similar fashion to what I described above, while ARC Advisory Group breaks TMS systems into fleet-oriented, planning and schedule niches.
No matter the terms we settle on, we need consistency. The lack of it is hurting the marketing in many ways, yet some firms just throw up their hands and say “this is what I call this space.” That’s not a solution.
It’s up to all of us in the industry to come up with consistent, meaningful terms. This will lead to more efficient buyer searches and improved customer satisfaction.
I would love to hear your thoughts on how we can better define and categorize the TMS space.
In future posts, I will discuss how we might further focus our naming conventions by taking a look at geographies supported, markets served, as well as depth of features.
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