Selecting a TMS
Given the large number of options available, it is critical to determine the best transportation management system (TMS) based on your operation’s unique needs. The goal is to maximize potential before making a decision.
1. Establish your business goals. Gather key internal stakeholders to identify current business challenges, areas of opportunity, and goals to determine how a TMS solution can best support. There is no one-size-fits-all TMS. Prioritize finding a solution that checks the boxes on your non-negotiables.
2. Look to the future. Because no business can predict what will happen next, look for a TMS that offers a modular approach that is flexible enough to grow alongside your operations. This will enable you to scale and add new capabilities as needed in the future.
3. Determine your budget. Understand the fixed costs and contract structure associated with a TMS. Based on your business needs, you may have to factor in additional budget to cover enhancements. If you are debating between insourcing or outsourcing, consider costs and resources. For example, could a third-party logistics provider manage your day-to-day TMS work for less cost than what you can do internally?
4. Understand implementation. A critical factor that will make or break the success of a TMS is the implementation process. Ask about a TMS vendor’s implementation, dedicated resource team and the skill set of those executing. Typically, the implementation process for a large-scale company takes 6 to 12 months based on the complexity of the operations and system integrations.
5. Assess enterprise integrations. Are you planning to integrate the TMS with your enterprise resource planning and accounting systems that manage your daily operations? What about your warehouse management system that handles the daily flow of orders? Look for a TMS vendor with the expertise to integrate with your current systems smoothly and successfully.
6. Strategize carrier connectivity. Some TMS providers enable you to leverage their pre-existing connectivity with hundreds of carriers while others expect you to manage that on your own. If you choose to do it in-house, the cost of an internal IT team to oversee carrier connectivity could be more than what a TMS provider charges.
7. Create a freight audit and payment plan. While some companies prefer to handle it internally or through a separate third-party vendor, many TMS solutions offer real-time freight auditing and payment. For instance, a TMS can provide an automated audit of freight invoices against contracted rates and the ability to authorize carrier payment to streamline the process.
8. Evaluate data analytics and reporting capabilities. Because the main purpose of a TMS is to gain access to data to make informed business decisions, evaluating its analytics and reporting capabilities is key. While a TMS can provide a significant amount of data, you also need to consider how to integrate that information into other parts of your business along with your enterprise-wide reporting tools.
9. Determine your transport modes. The business rules and routing for a large volume e-commerce and parcel shipper can significantly differ from shipping less-than-truckload and full truckload. The same can be said for domestic vs. international requirements. Ensure your TMS can support all your transport needs as some have more sophisticated capabilities than others.
10. Consider additional fleet and trucking needs. Do you have a dedicated fleet or trucking assets that you also need to manage within the TMS? As many companies have their own trucks and drivers, determine if the TMS needs to support your ability to manage equipment, drivers, and more.
Source: Jeff McDermott, Senior Vice President of Transportation Management, GEODIS in Americas