DC Velocity - September 2016

36 DC VELOCITY SEPTEMBER 2016 www.dcvelocity.com
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products that are offered on a software-as-a-service (SaaS) basis, subscribing to the cloud-based software for a relatively modest monthly fee rather than footing the cost of on-premise computing equipment and an IT staff, said Vertachnik.

Web-based TMS solutions offer other advantages as well. In addition to the very low cost of ownership, their plus-es include simplicity and swift implementation, according to Scott Vanselous, executive vice president for marketing and strategy at TMW Systems Inc. TMW offers TMS platforms for enterprise users and is also part-owner of 3Gtms Inc., whose 3G-TM planning and shipment management software is designed for SMB users.

“The reason we can go in and deploy
it quickly is that the system has been
designed as one application,” Vanselous
said. “Other TMS systems are trying to
conquer the world and optimize global
shipments, but the reality is that most
SMBs rely on freight forwarders to do
that.”
Many small businesses start out by developing their own
TMS platforms, but as they grow, they discover those basic
software applications can’t keep up with increasingly com-
plex transportation demands, Vanselous said. SMBs that
find on-premise TMS platforms to be too costly often turn
to an SaaS product so they can save money on hardware
and IT management.

THE GREAT MARKET DIVIDE

This increasing diversity of options in the TMS sector is a result of the bifurcation of the market between products designed for large shippers and those made for small to medium-sized businesses, said industry analyst Dwight Klappich, a vice president with Gartner.

Gartner defines large shippers as those with an annual freight spend of $75 million to $100 million and complex, multimodal transportation needs. Such customers typically own a TMS already, having chosen a sophisticated TMS product from vendors like Oracle, JDA, SAP, and Manhattan Associates, Klappich said.

In contrast, mid-tier shippers are those with annual freight budgets of $25 million to $50 million. These shippers have long been underserved by software vendors that were more focused on larger customers, but lately that has started to change, according to Klappich. “Now, we have a whole lot of good vendors going after that next tier. That’s where we will see a lot of activity in the next five years,” he said.

These providers—which include MercuryGate, Cloud
Logistics, and 3Gtms—understand that “small and medi-
um shippers are not just ‘little big shippers,’” but have their
own requirements, he said. For instance, small companies
typically place a high value on an intuitive user interface,
while large buyers seek complex features like load design
tools and optimization engines that calculate the most effi-
cient way to route goods through a complex supply chain.

Other TMS features typically demanded by small and midsized users include quick and easy implementation, the ability to pay for only the features they need, and the option to add more advanced features with the click of a mouse as their business grows, said Tony Wayda, supply chain practice senior director and principal at Boulder, Colo., consulting firm SCApath.

While vendors are capable of supplying any and all of these options if needed, they realize that smaller users may not have the appetite for such a full plate all at once. By offering customers only the tools they need, they have tapped into a pent-up demand.

“Midrange users have been undeserved by vendors, and they are starting to wake up to the full value of a TMS,” said Klappich. “[Medium-sized] shippers now realize that these are high-value instruments. If you can save 10 percent—heck, 5 percent—for someone with a $50 million freight bill, you can save a lot of money, even without an optimizer.”

MIX-AND-MATCH SERVICES

Demand from the SMB side will remain strong for the near future, since it’s estimated that less than a third of small

The following are some of the vendors that offer transportation management systems (TMS), either on a standalone basis or via the SaaS model (or both).

3Gtms, http://www.3gtms.com Accellos, http://www.accellos.com Ascend TMS, http://inmotionglobal.com Cloud Logistics, http://www.gocloudlogistics.com Descartes Systems Group, https://www.descartes.com Freightview, https://www.freightview.com HighJump, https://www.highjump.com JDA Software Group, https://jda.com Kewill, http://www.kewill.com Kuebix, http://www.kuebix.com Logility, https://www.logility.com Manhattan Associates, http://www.manh.com MercuryGate International, http://www.mercurygate.com Omnitracs, http://www.omnitracs.com Oracle, https://www.oracle.com SAP, http://scn.sap.com/community/scm/transportation-management TMW Systems, http://www.tmwsystems.com