A Transportation Management System is a vital tool for shipping professionals. It helps to coordinate all of the available data points in a transport network, including rates, route options, warehouse supply, and distribution. Transportation management systems present this information in a clean, easy to understand format that then allows the shipping manager to make the best and most efficient decisions possible. In 2015, the state of transportation management systems is good, with the industry slated to see tremendous growth in the coming few years.

Traditionally Transportation Management Systems have been very expensive and complex, making them costly to implement and maintain over time. That made it impossible for most small and mid level shippers to employ them effectively. However, the cost savings and increases in efficiency have prompted most large companies to adopt these systems, giving them yet another edge over their niche competitors.

Today the state of transportation management systems is changing, as developments in technology are constantly making these products less expensive, easier to use, more functional, and less time-consuming to install. That is allowing smaller shippers to take advantage of the great benefits that these systems can provide, in cost, data acquisition, efficiency, and communication flow.

The Potential of Transportation Management Systems

Many people are claiming that the potential for Transportation Management Systems is enormous and that within ten years all serious shippers will be using them on a regular and sophisticated basis. That is because there are unquestionable advantages to making use of these systems to control and sort complex shipping networks. At the same time, as pricing drops it will make those companies that do not adopt these practices obsolete.

Another factor influencing the growth of TMS use is that vendors are starting to target untapped smaller companies. These businesses have not previously had the resources to implement these systems effectively. However now that pricing has dropped and there are now web-based transportation management systems which are easy to deploy the providers of this software are starting to increase their field of view to take in new prospective customers. That is fueling the market even more, causing these systems to permeate every corner of the industry.

At the same time the efficiency and function of these systems is making transportation management systems more desirable than ever to a wide variety of customers. Cloud-based products are cutting down on the time it takes to install and implement a Transportation management System in an effective way. This allows even smaller companies to leverage the power of high-end servers in order to achieve precise and insightful data analysis.

Reasons to Implement a Transportation Management System

One of the most important reasons to implement a Transportation Management System is  to acess the best rates from transport carriers possible. These systems take cost information from a variety of providers, on a number of different routes, and organize it all into a simple to read list that lets the shipping manager make a quick and effective decision on how to move their freight from one place to another.

By providing shippers with the ability to rate and choose the carrier they want based on price, limit of liability and transit time, transportation management systems turn the entire process into a buyers market. At that point, all that the shipping manager has to do is sit back and choose the best option for that specific shipment that gets the cargo to the destination they need in the time frame required. That can lead to big savings, which can in turn impact the bottom line.

Another important reason that more companies are adopting Transportation Management Systems in 2015 is that they can dramatically increase the efficiency of a business. Rather than having a single person keeping track of multiple products, shipments, and solutions, these systems organize everything into precise, easy to read lists that can then be used effectively to make the best decision possible. That eliminates human error while making the person in charge of shipping more effective at their job.

The ability to make shipping less expensive, and more efficient, is driving many businesses to invest in Transportation Management Systems in 2015. A 3PL can now provide a TMS at no charge to shippers as often a 3PL focused on transportation management will offer integrated services and make money off of margins. This ultimately means that the savings benefits for shippers are even more powerful at any size of the enterprise. At the same time, the ability to eliminate redundancies, human error, and increase the efficiency of the organization can result in realizing greater profits.

Beyond a Transactional Tool, A TMS is Now a Strategic Continuous Improvement Tool

transportation management systems strategicHowever, Transportation Management Systems also have the ability to do much more than simply provide rate information. They are able to collect data points from multiple transport providers on various routes around the country. That wealth of information is incredibly valuable, but only when it is parsed down into a form that can be used effectively.

The challenge for Transportation Management System developers going forward will be to find effective ways to help shipping managers understand and interpret the wealth of data that these products can make available to them. They need to be able to understand what it means, and have it accessible to them when a decision point is reached. That will allow the shipper to make far more effective decisions about shipping across the entire organization.

Transportation Management Systems can also be beneficial to carriers who are willing to adapt to these products. While they do make the market more competitive, forcing prices down, they also allow more access to customers. That can increase the overall number of opportunities that become available, increasing the bottom line for them as well. At the same time, they can use these systems to make their own organizations more efficient and cost effective.

The state of Transportation Management Systems in 2015 is solid, but there is still tremendous potential for this industry. It’s estimated that only 35% of shippers are currently using these solutions. However advances in technology, and decreasing prices are making these products accessible to a much larger audience, and today even small and mid level shippers are able to take advantage of the utility of these systems. At the same time, vendors are also starting to target these untapped markets as they become more accessible. This is leading to greater use across all logistical operations.

Characterized as one of the fastest growing enterprise application markets by ARC Advisory Group, the transportation management systems (TMS) sector has been growing at a double-digit rate over the last couple of years—and isn’t showing signs of letting up anytime soon.

A technology solution that helps companies efficiently, reliably, and cost effectively move freight from origin to destination, most transportation management systems includes both planning and execution solutions (systems for freight moves involving carriers). Shippers are embracing transportation management systems, according to ARC analysts, thanks mainly to the strong ROI offered up by such solutions.

“The simple, bottom line is that TMS can save companies money by lowering their freight spend,” says Steve Banker, ARC’s service director of supply chain management.

Banker points to an ARC survey as proof of that point, adding that over 40 percent of respondents felt that if they were forced to give up their TMS and go back to more manual processes for planning and execution, their total freight costs would increase by 5 percent to 10 percent. “In fact, 23 percent felt their total freight costs under the control of the TMS would increase by over 10 percent if they were to stop using it,” he adds.

For logistics professionals charged with the movement of freight, transportation management systems can also help create transportation efficiencies, provide real-time dashboards, enable better decision making, and handle myriad other tasks that can’t be adequately addressed with phones, faxes, and spreadsheets.

5 Shipper Demands Shaping Transportation Management Systems

Here are the 5 shipper demands that supply chain software analysts say are shaping the TMS landscape—and pushing even more logistics professionals to put it to work.

1. The omni-channel retailer needs support

transportation management systems omni channelNo longer able to compartmentalize their various business channels, today’s retailers and industrial suppliers need help running seamless, omni-channel systems that incorporate bricks-and-mortar, online, mobile, catalogue, and other sales channels under a single umbrella.

Transportation plays a key role in this streamlining, which means transportation management systems also play an important part in creating the omni-channel environment. For example, with the B2C sector gaining much maturity in the world of online/eCommerce fulfillment, more and more distributors and industrial suppliers are putting catalouges online and offering seamless eCommerce freight shipping calculations to their customers, because now the shipping quotes include real freight rates, such as LTL and small package, because the shopping cart integrates into transportation management systems.

2. Transportation Management Systems Mirroring Trends such as Near-Shoring and Reshoring

Undoubtedly you have heard of the biggest trend shaping US Manufacturing at present: Near-shoring and Reshoring. If you want to know more about this trend, make sure you read our reshoring series here. However, as companies are now moving manufacturing facilities back to the US, and as companies in the automotive industry are moving facilities near the US to places like Mexico, we are seeing an increase in volumes of freight. As in any economic force, when there is greater demand for capacity, the prices are going up. To combat rising prices due to economic forces, logistics managers are going to have a competitive edge if their transportation management systems can handle shipments in all of North America, with all American, Mexican, and Canadian facilities having visibility to all shipments under one user control. This visibility allows for good information flows, giving access to data, which allows for better business decisions when making future business decisions involving transportation.

3. Embedded analytics are in high demand

Bombarded daily by terabytes of digital information, shippers need a way to wade through the data, select its most useful components, and then use that information to make the best possible transportation decisions.

Transportation management systems that effectively embed analytics, help to discover rich and meaningful patterns within the data, will remain in high demand. A TMS that includes carrier score-carding, for example, should be able to cross-pollinate that rating information for application during the vendor-selection process. Embedded analytics allow shippers to come up with useful key performance indicators and actually consume and utilize the data as they go about their other activities.

4. Shippers Want Transportation Management Systems that help them utilize Backhauls and Support Services for Reverse Logistics

Retailers and those in the automotive aftermarket industry are particularly interested in not hauling empty trucks back to their DCs after the goods have been delivered, says Rishi Raina, principal of North American supply chain technologies at Capgemini. “They want to be able to utilize their networks more efficiently, and they’re looking to their transportation management systems for help in this area,” Raina adds.

And while some of the more established vendors have historically incorporated backhaul capabilities into their platforms, the challenge lies in setting up more of a robust reverse logistics program: tying carrier contracts, agreements, and negotiations into the equation. “If a shipper can get through those hurdles, there will be a lot of savings to be unlocked on the backend,” says Raina.

5. Planning, Execution (Read: Integration) could get a place at the TMS table

Right now, transportation management systems vendors are looking for ways to better tie planning and execution systems into their platforms. “Traditionally, those systems have operated within their own silos, and with no tie-in to transportation,” Raina points out.

Many transportation management systems providers are beginning to integrate those processes in a way that will allow shippers to more efficiently monitor manufacturing and production cycles as part of the distribution process. “There has to be a better way of managing the flow and synchronization among transportation, planning, and execution,” says Raina. “In fact, there’s a huge amount of interest in this from the shippers’ perspective right now, but none of the TMS platforms are fully there yet.”

Other Transportation Management Systems Trends

transportation management systems cloudOther trends unfolding in the TMS space include the continued interest in cloud-based solutions that require low upfront fees and minimal IT infrastructure; an ongoing push to upgrade older systems and replace them with state-of-the-art platforms; and the need for holistic TMS that can do more than just track transportation movement and spend. Raina adds that the latter will likely help drive TMS growth and innovation well into 2014.

Third-party logistics providers are especially interested, for example, in adopting end-to-end, holistic TMS that can handle optimization, dedicated fleet management tasks such as driver invoicing and payroll, and traditional brokerage operations.

“There hasn’t been a strong case for a TMS that can do all three of these things well,” adds Raina, “so it’s an area that software vendors are examining more closely based on the market demand that we’re seeing for it.”

Fortunately, for Cerasis customers, our dedicated technology team is able to respond to these trends and embed them into our transportation management system, the Cerasis Rater. You may request a demo of our TMS, by clicking here.

The above trends were a part of an article featured first here SupplyChain247.com, where Cerasis is a blog contributor.

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