July 2011 | Commentary | IT Matters

Maximizing TMS Resources Helps Achieve Sustainable ROI 

Tags: Transportation Management Systems (TMS)

Jordan Kass is executive director, TMC, 312-494-1725

These days, logistics managers need to achieve higher productivity levels and deliver better customer service at a lower cost, faster than their competition. Some wonder if they can achieve their goals with the resources available to them.

Many organizations turn to a transportation management system (TMS) for the answer. Thanks to Software-as-a-Service (SaaS) technology, shippers can now implement a TMS at a lower cost and with fewer disruptions, while retaining control of daily tactical operations.

But what ongoing cost and performance improvements can SaaS deliver? After the shine wears off, a growing number of shippers are left wondering how to achieve ROI after year two, and whether managing software is the best use of their finite resources.

The combination of SaaS plus managed services represents the next step in transportation management. Instead of committing to complex TMS technology investments, software plus managed service allows shippers to shift limited resources to strategic projects that drive ongoing value. It mixes and matches these capabilities to current and future needs. And because the enterprise is not encumbered by costly infrastructure, it is able to accelerate the adoption cycle and achieve clear, sustainable ROI.

The Road to ROI

Software plus managed service is not the same as traditional outsourcing. Organizations retain control over functions such as carrier selection and management, while co-opting the transportation management, pay-as-you-go resources they need to run their networks more efficiently.

Another important distinguishing feature of the software plus managed service variant is the nature of the “services” element. Dedicated provider TMS teams function as an extension of the organization’s logistics department, with team members identifying themselves as affiliates of the shipper organization. These teams can even be physically located in the shipper’s offices, and function as an integral part of the operations group.

A well-known food company has such a unit that includes a strategic account manager, an operations manager, four operations and logistics analysts, and two dedicated schedulers/customer service representatives. These specialists report to the company’s transportation leaders, and provide ongoing management and analytical support.

With such comprehensive backup in place, the company’s in-house logistics managers can deploy their staff on productive, strategic work that benefits the bottom line. This is not consulting in the conventional sense; the provider team does not vacate the building once a project is complete. They are fully accountable and there for the long haul.

As an alternative to on-site teams, some companies use dedicated TMS project managers during the initial phases of product launches. Others prefer to have a provider manager rotate between departments to address transportation issues.

Adding managed services to their TMS model helps shippers pick up where their SaaS investment leaves off—while still providing all of the SaaS benefits such as retaining control, eliminating capital investment, and pay-as-you-go programs. The software plus managed services TMS platform is geared to the demands of an uncertain business environment that requires logistics professionals to get there faster.