Differences exist between high-quality and delay-ridden shippers. These differences may revolve around multiple factors, but one thing is becoming more apparent. Those that utilize a transportation management system (TMS) reap steep benefits. Shippers are capable of navigating complex freight rates, keeping freight spend under control, fight tight truck capacity, and meet the increasing demands of consumers, reports Bridget McCrea of Logistics Management. Shippers need to understand the trends in TMS implementation, adoption, and capability to stay competitive.
The evolution of transportation modes is one of the top trends in TMS innovation. While the best TMS platforms on the market reflect recent developments, the majority of TMS platforms in use were initially designed between 15 and 20 years ago. These platforms were state-of-the-art at the time, but the world has evolved. Among the changes in consumer spending and shopping habits, e-commerce became a dominant force, and the everyday shipper simply can no longer manage things manually.
It is easy to argue that a TMS is only valuable for large-scale shippers, explains Supply Chain 24/7. However, reality paints another picture. Shippers operating one location may be able to manage their freight without a TMS, but the majority (91%) of shippers with 20 or more locations are actively using a TMS today. Disagreements between the exact point where a TMS begins to make a significant impact on profitability continue to confuse shippers. In general, those moving between 20 and 40 loads per week represent this break-even point. Yet, the trends in TMS for the remainder of 2019 continue to ebb. Since a TMS exists between the traditional functions of an enterprise resource planning (ERP) platform and the existing warehouse management system (WMS), more shippers moving into the digital age will likely see profitability and ROI from TMS implementation regardless of the number of loads managed if they go down the path of integration between the TMS and ERP or WMS.
The improvement of connection technologies is another factor affecting the leading trends in TMS innovation and implementation. Once, it took countless weeks to prepare the system for implementation, not to mention the lost time spent integrating existing technologies, such as handheld readers, into the platform. It was a significant cost for shippers, but the connection technologies are evolving too. The application of an API or EDI, automated identification and data capture (AIDC), radio frequency identification (RFID), low-energy Bluetooth connectivity, and more will give shippers faster implementation timelines and leverage greater freight visibility into all processes. Of course, it would be impractical not to think about the value of blockchain in conjunction with the trends in TMS innovation.
Blockchain-driven software is among the latest buzzwords in supply chain circles. At its core, blockchain is an indestructible, incorruptible ledger virtually eliminates all risk of data tampering and poor visibility. Major platforms are under development to bring blockchain to the masses, and while significant consortiums exist, such as the IBM-Maersk platform, TradeLens, shippers remain skeptical over joining such platforms. However, supply chain software developers, such as ShipChain, are looking to develop a genuinely public blockchain-based platform, capable of reusing connected technologies to integrate existing systems with an open-architecture blockchain. Blockchain might be the new kid on the block, but it is the most popular. Walmart has been the latest retailer to force shippers to rethink their use of blockchain, requiring all fresh fruit producers to implement blockchain-based tracking capabilities this year.
Now another business implication of the trends in TMS development will continue to revolve around traditional functions of a TMS in today’s world. These include load planning, optimization, scheduling, and more. As shippers better plan their loads, carriers will be more apt to view that shipper in higher regard. Yes, we are talking about gaining “Shipper of Choice” status. Achieving this data is integral to securing discounted shipping rates, navigating the complexities of the capacity crunch and ensuring your freight has priority over Johnny Shipper down the street.
Final trends in TMS development to watch for the remainder of the year also focus on the powerful capabilities of data, including artificial intelligence (AI) and application of machine learning. These technology leverage learning algorithms that continuously refine system configuration and settings to ensure the best outcome is achievable and reached, such as considering drop shipping for tight schedules and turn-around times. The insights gained from implementing a TMS with such capabilities are merely invaluable, helping shippers know what to do, when to do it, how it will impact profitability and whether customers will even like it.
The most significant trend in TMS implementation for 2018 will be the continuing increase in TMS adoption. Shippers of all sizes are beginning to consider the value of a TMS in their operation, and even those that operate a single location or send one load per week have turned their gaze to the technology. Adoption rates among the smaller companies remain low, approximately 7-8%, but the continued rise of cloud-based TMS will lower the barriers to adoption, including speed and implementation, cost of implementation and value add to your company.
The trends in TMS development and implementation are here to stay, and shippers need to begin seriously thinking about how the use of a TMS could be a real game-changer for their operation. It is not enough to simply know which carrier is best for your organization, based on outdated information and an inability to compare costs in real time. These are the capabilities possible when your organization implements a TMS, so do you think the trends in TMS implementation will allow your organization to survive without one?
The answer is simple: most likely not.
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