Getting senior executives to greenlight a transport management system (TMS) implementation isn’t easy, but selecting one may be more difficult. The TMS market has exploded, and is projected to grow up to 17% from its 2021 size by 2030. And with revenues in the tens of billions already, the space will continue attracting new players over the years ahead. So, how do you know where to even begin finding the best TMS for your business? Keep reading to learn which considerations will help you make the best TMS decision.
Why should you use a TMS?
In many ways, a TMS modernizes how companies handle their transport operations. They often replace spreadsheet- or even paper-based systems that are completed manually and offer little strategic benefit. By integrating them with an enterprise resource platform (ERP) or warehouse management system (WMS), businesses are able to gain total control over their supply chains. Read Discover 4 TMS benefits for your business for additional details.
What are some well-known TMS solutions, and why?
If you aren’t sure where to start the process of making a TMS decision, look for platforms that are well known and highly rated. They’re popular for a reason, and the exercise can help you identify capabilities that are most important for your business. Here are a handful of them, and a high-level idea of what they’re known for:
- Products from C.H. Robinson, Uber Freight and Penske benefit from the name recognition and industry expertise of their developers.
- Some of the smaller companies topping “Best TMS” lists are Trimble (Kuebix TMS), MercuryGate, Shiptify, BlueYonder and Shipwell.
- Offerings from highly rated up-and-comers 2Ship, Alvys, FreightPop and Logistically Inc. are picking up steam.
- Oracle and SAP offer transport management modules that work seamlessly with their other products.
What to consider in a TMS decision
With literally hundreds of TMS providers vying for your attention, deciding which one to implement isn’t a simple task. The following considerations will help shorten the list of possibilities so you can make a TMS decision.
Amount of time to implement
Implementing a transportation management system takes time, and there’s no real one-size-fits-all solution. Small businesses may be able to integrate a TMS quickly and easily. Businesses with larger fleets may take longer to integrate the system and bring everyone up to speed. The average deployment may take three to six months, or longer in particularly complex cases involving integration with legacy systems. Once it’s up and running, though, a TMS is an enormous time-saver.
IT configuration
As they begin the vetting process, companies should have a general idea of which applications the TMS is intended to replace, which technologies will be kept, potential scaling needs, and existing in-house systems expertise. This information alone may help narrow down the options by determining, for instance, whether the ideal solution should be:
- Deployed as a standalone platform
- Integrated with a warehouse management, enterprise resource planning or supply chain management system
- Implemented as an add-on module of a software application already in place
- Located on a local server (viewed as an older-style, less robust solution) or in the cloud (more common for new implementations)
- Open API-based
- Focused more on ease-of-use or range of capabilities
Niche requirements
According to Corey Coogan, president and co-founder of Logistically, one of the biggest challenges TMS customers experience is how complicated most systems on the market are and the burden that puts on users. Often, these systems are packed with too many features users never touch, while lacking the features they actually need.
Many TMS providers focus on meeting unique needs of smaller customer segments rather than bringing additional broadly-targeted solutions to market. Businesses now may find an increasing number of options specific to their:
- Industries
- Modalities used
- Shipping volume
- Fleet operational models
- Numbers of users
- Biggest pain points
Costs
TMS costs are difficult to compare due to differences in business models, capabilities, upfront expenses, payment terms, etc. Here are a few examples of how pricing can be set up, along with associated costs:
- An enterprise-wide TMS license can cost anywhere from $10,000 to $250,000. The final total depends on the system architecture; the more complex the system, the more it costs. Most TMS packages also come with an annual maintenance cost, which is typically a percentage of the initial outlay.
- Out-of-the-box solutions with low up-front costs that charge by number of system connections may initially seem cheaper than custom builds. In these cases, additional costs incurred as the company grows plus annual maintenance fees can rapidly add up. By one estimate, first-year costs of $36,000-40,000 can explode to $900,000-1,000,000 in five years, compared to implementing an easily scaled and maintained, tailor-made system for $130,000-150,000 that costs $300,000-400,000 over five years.
- Still other TMS providers base pricing on company size and number of vehicles managed. Most of the time businesses must buy TMS hardware, and sometimes an additional monthly fee is required. This is the case with Samsara, for instance, which offers a package including hardware starting at $100, with a $30 monthly charge per vehicle.
- Chicago-based FreightTech startup MVMNT has introduced a free-to-use platform that’s scalable, boasts a full range of capabilities and requires no setup fees. In just two years, over 30,000 carriers have joined their user ranks, attracted as much by its features and intuitive interface as the cost.
The right TMS decision is important for your business
The right transport management system is a game-changer for businesses that need to become smarter with their supply chains. Newly available data-based insights offer countless operational optimization opportunities, from short term efficiency gains to long range strategic planning improvements. You must choose wisely to maximize the return on your investment, though. The wrong selection could result in a loss of time and money, ultimately cutting into the profitability of your business. Considering the required implementation time, existing tech stack, niche needs and scaling costs will lead you down the right path. After the initial learning curve, you’ll wonder how your business ever managed without the advantages of a modern TMS.
Read 6 top TMS solutions for 2023 to learn more about some of the leading TMS solutions on the market today.
FAQ
Transportation management systems are technology-based logistics platforms used to plan, monitor and optimize end-to-end supply chains. They can streamline inbound and outbound shipping with automated operations based on customizable parameters set by individual businesses.
Any organization that relies on shipping and receiving items in a volume that requires coordination may benefit from a TMS. Users often include manufacturers, wholesalers, distributors, e-commerce businesses, retailers, freight brokers and 3PLs.
While it’s possible to implement TMS solutions on in-house servers, the most innovative options are cloud-based. From a data protection perspective, cloud technologies are safer from attack and offer more redundancy than possible when hosting on site.
Sign up for a FreightWaves e-newsletter to stay informed of all news and trends impacting supply chain careers and operations.