It is not a secret that effective management of freight transportation has a major big role in the distribution system of companies. Freight transportation requires big financial expenses and dramatically influences on return on investments (ROI). Automation of logistics is one of the instruments which can ease the task of freight moving optimization, which can decrease expenses on transportation. Such automation can be achieved by the implementation of a Transport Management System (TMS).
The transportation market has a huge amount of TMS providers. These systems do not have equal possibilities and problems, as each provider has its own strategy and can be aimed to a specific sector of economics.
That’s why choosing a TMS system is a rather difficult task for companies which are in the process of scouting the right system that requires the companies needs.
The very first thing that should be done, even before comparing different TMS systems, is to define what are these needs and what do you want to achieve with the system (this should not only include current needs, but also predict company needs in future). This point is very important, as it will influence your choice and potentially brings additional cost and time expenses during the implementation phase (or even after it!) In the worst case, this could make your new TMS system unusable if some important requirements will be not taken into consideration.
The second important factor is your financial, human, technology and time resources which are available to implement a TMS system from a particular provider. This item also needs a thorough internal analysis.
After these two factors are analyzed, you can search the TMS which will suit your needs. We defined a few core characteristics which are indispensable during the search for a software and TMS-provider, in order to implement the right, effective TMS (systems which will improve transportation and decrease freight spent by timely delivery of goods, faster reaction on changes, control of shipments, better consolidation etc.).
6 key questions: What to look for in a TMS
1) Is it a traditional purchase-and-install or Cloud-based TMS system? Both ways of hosting have pros and cons. Cloud based TMS system are not so expensive (and costs are much more predictable), don't require special hardware and IT-staff for managing the system etc. But, at the same time, the level of support is not nearly as intensive when compared to the support of an in-house application upgrade, connectivity to a cloud-based system can be patchy from areas of the world where connections are intermittent or where there are frequent power brownouts/blackouts, fewer possibilities for customization, security issues with data access (and also risk that hostage will stop working), system maintenance which can break business processes etc. As the result, Cloud-based TMS solutions are more used by small and mid-size companies which don’t have enough resources to implement a traditional TMS.
2) Implementation and post-implementation support, staff training and learning resources. It is very important to receive professional and timely support from your TMS provider, also after implementation of their software, to ensure correct business processes within the company. Additionally, it is really useful if a TMS-provider provides a periodic training on the system and has full-time available manuals as all employees should be well trained to use all TMS functionalities and maximize the effect of TMS.
3) Scalability. If your company intends to expand drastically in future, or you want to use the system only for one subdivision firstly, to extend later in case of good results, it would be beneficial to invest in a scalable TMS solution (especially for big multinational companies). This can save the trouble and expense of having to switch systems in the future or to buy extensions. TMS-systems are scalable in: quantity of users, geographically (subdivisions in different countries etc.) and functionally (TMS should have the possibility to be extended with additional functions which were not required at the beginning).
4) Integration. TMS systems should have the possibility to be integrated with already available systems or systems which might be installed in future (ERP, WMS etc.). Such integration will lead to future time-savings and create better visibility of data.
5) Simplicity and possibility for customization. The more universal TMS – the more complexity you will face during system usage. But, at the same time you could not to find some really needed functions in specialized systems. Some TMS providers sell really customized systems, some provides more universal systems. For such universal systems it is really helpful to have internal possibilities for customization (just to remove or add different buttons/functions to some user roles or even for all users directly from the system) which helps to tune TMS for each end user.
6) Additional TMS features:
- Integrated accounting. This will help to have always accurate and reliable freight accounting and will save the time.
- Multi leg and Multi carrier management. Mostly used for international shipments, but nowadays a lot of companies which had only domestic shipments goes internationally. This requires additional support from TMS, while TMS is not always have the ability to plan such shipments.