The Whole Industry Is Struggling to Define TMS. Here's My Take.
I’ve been in the transportation sector for more than 30 years and wrote the first transportation management system (TMS) as a developer back in the '80s. Since then, the term “TMS” has come to mean many different things.
Today, it covers different product classes; many transportation software vendors refer to themselves as a TMS provider (whether they provide vehicle maintenance, carrier selection, accounting, cargo care and handling, routing, and mapping, etc.); and even some 3PLs call themselves TMS companies.
This is causing a lot of confusion in our industry, including among the purchasers, developers, and media. I’ve talked with industry analysts who struggle with defining TMS in their work and research.
With no standard terminology in an already-complex industry, it’s not surprising that so many buyers have trouble figuring out the differences between solutions and which one best fits their needs.
A starting point
We know that at its core, the job of a TMS is to move an order through your system and settle it in the most efficient and cost-effective way.
But beyond that, definitions get murky, so I’d like to offer a suggestion and start a broader conversation on how our industry should define TMS.
I suggest that the class of solutions that made up the original TMS systems 20 to 30 years ago be classified as a specific subset of the now broader TMS world. This subset could be called, for example, “multi-mode TMS.”
A multi-mode TMS would include routing, rating, and mode selection for multiple modes. This class of solutions addresses a core set of business issues, including 1) routing and rating the orders, 2) executing the shipments and loads across multiple modes, 3) tracking and tracing the loads, and 4) freight settlement.
This straightforward classification would greatly simplify the selection process. By creating a narrower category for multi-mode TMS, you can start to whittle down the list of TMS software providers capable of covering multiple modes.
Not the what, the how
Within the multi-mode TMS space there are still many software providers and many different groups of companies and products. As the buyer, that means you’ll need to take the time to thoroughly evaluate your potential vendors, and the lack of agreed-upon terminology may make your work even more difficult.
To solve this, you’ll need to determine not only which vendors can provide what you need (that will likely be a lot) but that they provide it in the manner that best suits your way of doing business (that will likely be a few).
So dig deep—don’t just pull the first five TMS companies you find on Google—define your business goals and how you want to accomplish them. This how part is just as important as the what, and it will help you narrow down the list of providers. Most TMS software providers can check all of the boxes on your RFP and claim they can accomplish what you need, but how they do it will vary greatly between solutions.
No matter whether the industry settles on “multi-mode TMS” or not (and I have no pride of authorship about it, as long as we all can agree on some classification), consistent terminology will help ease the purchasing process and allow us providers to better market and communicate our solutions.
It’s up to all of us in the industry to settle on meaningful terms. This will lead to more efficient buyer searches and improved customer satisfaction overall.
I would love to hear your thoughts on how we can better define and categorize the TMS space.