techwatch
GIVEN THE IMPORTANCE OF CONTROLLING FREIGHT
costs, you would think that every company would have
deployed a robust transportation management system (TMS)
by now. Unlike five years ago, when that type of application had
to be purchased and installed on a company’s own servers, the
software today can be “rented” in the form of a cloud-based
solution from a variety of venders. Not only does that make
deployment a breeze, but the payback in freight savings easily
justifies the rental costs.
Surprisingly, though, not everyone has a
TMS yet. That’s about to change, according
to a new study. ARC Advisory Group is predicting that the TMS market, currently valued at more than $1 billion, is set to explode,
with year-over-year double-digit sales gains
through 2017. “A key driver of growth is the
renewed interest of large companies in TMS
solutions,” says Steve Banker, service director
of supply chain management at ARC. Banker
is the principal author of the report,
Transportation Management Systems Global
Market Research Study.
Although you might expect that purchases
by small- and medium-sized companies
would be driving TMS sales growth, Banker
says that’s not the case here. Rather, it’s big companies with
more than $1 billion in revenue. What’s happening, he says, is
that large U.S.- and Europe-based companies have successfully
deployed a TMS in their home region and are now hoping to
replicate that success by rolling out the software throughout
the world. In addition, a number of multinationals based in
Asia and Latin America are buying their first TMS for deployment in their home regions. One side effect of this surge in
interest in TMS solutions is that vendors are not having to discount their applications in order to sell them in Latin America
or Europe.
Banker expects that large shippers planning multiregion roll-
outs will be particularly interested in TMS solutions that can
facilitate global shipping. These programs, which have become
increasingly available in recent years, are designed to effectively
optimize international shipments in addi-
tion to their domestic counterparts. On top
of that, many offer specific functionality for
a designated region as well as analytics that
can deal with currency fluctuations that
occur during a process that extends from
planning to booking to settlement.
It’s not just shippers who are reloading
with TMS solutions, however. Banker says
there’s a new wave of
buying by third-party
logistics service compa-
nies (3PLs) who want to
upgrade their legacy soft-
ware with more modern
versions, particularly
modules offered by the
enterprise resource plan-
ning (ERP) vendors.
“SAP is gaining traction
here,” Banker reports,
adding that the German
ERP vendor offers “logic
that might be called ‘3PL
order management’ as
well as other logic for specific billing and
cost allocation [tasks].” The modular
approach to software has proved particu-
larly popular with this market sector, large-
ly because of the ease of use, he says. “3PLs
don’t want to piece together solutions.”
Will small and medium-sized shippers be
at a disadvantage to their large brethren
when it comes to managing freight costs?
“Not necessarily,” says Banker. “Any shipper
has a choice, do transportation manage-
ment in-house or outsource to a 3PL. If
they are trying to do it in-house without a
TMS, then, yes, they are putting themselves
at a competitive disadvantage.” ;
Climbing aboard the TMS
bandwagon
BY JAMES COOKE, EDITOR AT LARGE
