4 min read
Why your aging TMS is harming your business
By Jonathan Raemdonck on Jun 26, 2020 1:15:55 PM
Here are three reasons why your legacy TMS is doing your business more harm than good, and how a modern, cloud-based solution can solve all of those problems… and more.
Built for large organizations that had multimillion-dollar annual freight bills and that needed a tech-based way to manage their transportation costs, legacy transportation management systems (TMS) gave shippers that could afford them an advantage in the marketplace.
Fast-forward to 2020, and many of the same companies that invested in TMS 10 to 20 years ago are now adopting more flexible, cloud-based systems that include data analytics, transportation monitoring capabilities, and advanced collaboration capabilities (among other functionalities).
Increasing customer expectations is one trend that’s driving this change as supply chains become even more customer-centric. Add the current pandemic to the equation, and it’s increasingly clear that shippers need solutions that can manage transportation from different angles – not just cost.
“A lot of these companies are switching over to newer, and typically multi-tenant cloud solutions,” Gartner’s Bart De Muynck told Logistics Management. From their new TMS, these companies also expect higher levels of operational transparency—something that traditional, on-premise TMS doesn’t provide.
HERE'S WHY TRADITIONAL TMS IS FAILING
Lacking the application programming interface (API) capabilities needed for flexible integration with other partners, classic TMS operated mainly within its own silos. Without a 360° view of their operations, companies relied on uninformed decision-making. Here are three of the biggest culprits and a look at how modern TMS helps companies overcome these challenges:
- Older TMS systems are mainly focussed on costs. As organizations learn the value of buzzwords like “total cost of ownership” and “total landed costs,” they’re looking beyond price as the primary decision driver. TMS is no exception, and has historically focused on cost: how can we move goods from point A to point B in the most cost-efficient way? It has been addressing the transport process from an internal, cost-optimizing planning perspective.
In an increasingly complex and challenging supply chain environment, transportation has moved from being merely a supporting service and gives shippers a competitive edge and differentiation point. This has been particularly relevant during the global pandemic, when cutting transportation costs took a backseat to issues like getting essential supplies to people around the world as quickly and reliably as possible.
- Legacy TMS doesn’t add much value to the whole customer experience. According to Gartner, TMS continues to be an investment priority as companies change their logistics strategies. “Many logistics functions are looking at technology to automate their logistics processes, strengthen their logistics functions to mitigate the impact of disruptions, and build a roadmap to become more digital,” the research firm points out, noting that the top three reasons for investing in TMS are to create internal and operational efficiencies; improve visibility; and manage costs.
The problem is that not every TMS is created equally. For example, older solutions just don’t support the visibility, collaboration, and integrated workflows that today’s organizations demand. As a result, these older systems continue to operate largely as silos and stick to their original missions of cutting transportation costs. Because you can’t provide proactive customer service without a holistic view of your operations, the lost revenue due to customer churn can nullify any cost savings generated by your classic TMS.
- For traditional TMS users, end-to-end supply chain visibility is still just a distant dream. For many companies, the never-ending quest for complete supply chain visibility is severely hampered by old, legacy technology that lacks the right balance of internal and external connection points. As shippers deal with increasingly complex global supply chain challenges, end-to-end visibility helps those companies overcome these issues while also providing high levels of customer service.
Able to transform data from multiple systems into actionable insights, modern TMS improves transparency across the entire transportation process and provides the right information to the right people at the right time. Transportation planners know the exact ETAs of in-transit shipments, logistics managers receive detailed visibility over freight spend, and customer service reps can quickly address all exceptions. By transforming data from multiple systems into valuable insights, a modern TMS helps keep the goods flowing in the most cost-efficient way, all while meeting customers’ expectations.
The Time is Now
Companies not yet considering a modern TMS as part of their overall technology investment strategies should move now to avoid falling behind. Not only is the TMS market expanding at a faster rate than the overall pace of SCM applications, but the need for modern applications that effectively optimize and manage transportation is growing exponentially.
Where traditional TMS focused on sourcing, planning, execution, and settlements, SupplyStack adds both monitoring, real-time insights and collaboration to the equation. In doing so, the system combines all of the features that a shipper would expect from a traditional TMS platform and puts it on steroids by adding a transportation control tower to the system.
In return, shippers get all of the cost visibility that they’d get from a traditional TMS, but in a more flexible, adaptable, and affordable package that helps them ramp up their own agility in today’s competitive, disruptive market.
Main differences between a classic and a modern TMS:
Written by Jonathan Raemdonck
Head of Growth at SupplyStack
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