Tips for First-time TMS Buyers
Q: TMS solutions are traditionally complex to implement. Why is that?
A: A transportation management system (TMS) has one of the strongest ROIs of any supply chain management software: an average of about 7.5 percent in freight savings, according to recent research by ARC Advisory Group. But they’re also notoriously thorny to implement because most on the market were first designed 15-20 years ago—and their design, at its core, still addresses those outdated needs and practices.
Obviously the transportation industry is in a completely different place now, but vendors have simply kept adding on to their legacy systems and ultimately increased the complexity of the technology and the implementation process for customers. This patchwork approach is also a big reason why so many TMS projects can take extraordinarily long to implement or even fail to meet their project goals.
Q: What should first-time buyers know about a modern TMS design?
A: It can be hard for first-time buyers to recognize what’s different between a modern TMS and one designed in the 1990s, but a main difference is its ability to handle nearly any configuration or need your business has. A modern TMS will allow you to configure the system yourself, meaning that you can fine tune it to your business needs without going to the vendor’s development team or bringing in an engineer to write code. This keeps costs much lower and enables better responsiveness to customer demands.
Watch out for TMS vendors who sell a low-cost solution, only to make you rely on them for changes and support later on. In fact, it’s not uncommon for a TMS company to make 50 percent or more of its revenue post-sale from support, consulting, and other technical services. When deciding on a TMS vendor, be sure to ask about their business model.
Q: How do I vet a TMS vendor?
A: The first thing is to have a good understanding of what your goals are for your TMS, and then match potential vendors to those requirements. "TMS" is a broad term and most vendors will oversell their abilities, so be sure to clearly define mode and size, as well as execution and project expectations. After you narrow it down to your demo list, ask for recommendations.
In addition, ask the vendor for failed project lists and do some background research to find references that the vendor didn’t offer; anyone can provide a few happy clients, so non-referenced clients can be a wealth of information. Very importantly, ask to see bios of your implementation team (don’t settle for junior staff).
As a first-time TMS buyer, educate yourself on what a modern TMS can do—and come to the table with high expectations.