DC Velocity - September 2011

against what their peers were getting. But shippers no longer have to operate in the dark. A number of TMS developers— particularly those who offer their solutions on a software-as-a-service (SaaS) or on-demand basis—are starting to collect carrier rate and service information from all of the shippers in their network, which they then use to develop benchmark data for specific shipping lanes. This allows logistics managers “to determine if they are getting good or bad rates compared to the norm,” Klappich explains.

Klappich notes, however, that this capability is still in the early stages of development and may not yet be widely available.

The ability to provide business intelligence. In addition to handling routine shipping tasks, more and more TMS packages these days have the capability to analyze the user’s shipping practices and identify opportunities for improvement. They do this by capturing data and using it to develop key performance indicators (KPIs)—metrics showing how an operation is performing in areas like on-time delivery or damage in transit.

“Today’s best transportation solutions are smart,” says
Chris Timmer, chief operating officer at LeanLogistics,
which offers on-demand transportation management sys-
tems. “They tell you where your process is optimized and
where it is not. They also identify available options in lanes,
carriers, rates, and performance.”
Klappich notes that these kinds of embedded analytics
can provide valuable information for tasks like carrier
selection. For instance, a shipper could use the KPIs to cre-
ate a scorecard for handicapping the carriers. If the score-
card showed a particular carrier offered the best rate but
had a poor record of on-time delivery, the shipper would
automatically know to divert a time-sensitive shipment to a
slightly higher-cost carrier with a better service record.

COMPETITION DRIVING DOWN PRICES

So what has all this meant for the price of transportation management software? The good news for shippers is that the emergence of these premium features hasn’t necessarily led to premium pricing. If anything, market competition has forced TMS prices down in recent years.

That’s partly due to the advent of TMS delivered on a software-as-a-service basis for a modest monthly fee. “SaaS is having an impact as the subscriptions keep near-term costs down [for TMS purchases],” says Klappich.

But intensifying marketplace rivalry plays a role as well. “Competition is tough everywhere … which says that vendors cannot charge a steep premium for their TMS,” says Klappich. “Deals are heavily negotiated today.” ;