May 2016 | Sponsored | Thought Leaders

An Incremental Approach to TMS Acquisition

Tags: Transportation Management Systems (TMS), Transportation, Logistics, Technology , Supply Chain

Alan Miller is President, TransportGistics, 631-567-4100

Q: If savings from a TMS deployment can be significant, what are the benefits of an incremental approach to acquisition?

A: It's true, studies show that savings from a TMS deployment can exceed eight percent of annual freight spend in some verticals. These savings are derived from visibility, analytics, optimization, process improvement and enforcement. In pure numbers, a company spending $150 million annually on freight can spend roughly $1 million and up to $2.5 million on a TMS.

In order to achieve these savings, either the TMS must be adapted to the company's processes or the company's processes must be adapted to the TMS workflow. As a result of this adaptive period, promised savings are postponed while expenses are quickened. The larger the system, the longer the implementation, the higher the costs, the longer the return.

With Incremental TMS Acquisition, companies can deploy a series of solutions in consecutive fashion while propelling a shorter run up to ROI. This serves to accelerate savings, decelerate expenditures, and reduce the impact on existing, macro-operations. It also provides a greater degree of flexibility; changing a plan is much easier than changing installed systems and processes. This incremental approach focuses attention on solving experiential issues, whereas deploying all-at-once TMS solutions requires a longer outlook relying upon forecasts and predictions.

Q: Are you saying, "Why buy an aircraft carrier when you need a patrol ship?"

A: Yes and no. Serial deployment of TMS micro-solutions does not preclude the ultimate deployment and full implementation of total TMS functionality. However, doing so achieves a faster run up to ROI, defers some expenditures and is less intrusive to day-to-day operations. It enables companies who need an aircraft carrier to begin reaping the low-hanging benefits before its long and costly completion.

Alternatively, a company's operations and processes might not present a need for total TMS functionality. In this instance, it would make sense to buy only the minimum to meet the requirement. In addition, by reaping the easier, achievable benefits early on, subsequent ROI evaluations can take place on remaining, unemployed micro-solutions to determine cost/benefit of adding such functionality. After all, why waste time and money attempting to implement world-class when excellence will suffice?

Q: Should I look to source solutions from multiple suppliers or should I seek out a provider that offers end-to-end functionality in a building blocks approach?

A: Sourcing TMS micro-solutions from a provider that offers end-to-end TMS functionality is the optimal approach (assuming that the solutions have the ability to be seamlessly integrated with one another). This tactic ensures that each TMS micro-solution works well with one another and that you are engaging with a partner that has an intimate knowledge of your requirements and macro-TMS vision.

On the other hand, taking an incremental approach to TMS acquisition allows companies to source the most appropriate solution to meet their specific requirements. TMS solutions cover a wide breadth of operations and functionality. If a company's issues are with segments that can be carved out and isolated, bundling solutions from multiple suppliers may be an appropriate method.