Is “Carrier Network” on Your TMS Wish List?

When shopping for any big-ticket item it’s easy to get distracted by the bells and whistles. With a house, people obsess over the fantastic view or the high-end appliances. With a car it’s all about creature comforts and high tech gadgetry. Only well-prepared buyers think to inspect a home’s foundation and HVAC system or grill the salesperson about a vehicle’s engine and transmission.

Likewise for those shopping for a transportation management system (TMS). Buyers want to know all about the features and functionality that will help them optimize the transportation portion of their supply chains. And rightly so. But that’s often all they care about.

What they fail to consider is what makes the TMS run – the network of carriers that act as the fuel for the TMS engine.

I refer to it as the iceberg approach. The user interface of the TMS and its technical capabilities represent the obvious one-third of the iceberg that’s jutting up out of the water and prompts all the oohs and ahhs. The carrier connectivity that underpins the entire system is the two-thirds of the iceberg lying beneath that no one can see – or thinks to ask about.

When you purchase a TMS, there are two ways to get this connectivity. You can either buy a TMS that comes with it out of the box, or you buy a blank-slate TMS and build out your own network of carriers.

While the former is likely to cost you more up front, the latter most certainly will cost you more down the road. Why? Because integrating your own network of carriers into a newly purchased TMS isn’t simple. There’s a lot of behind-the-scenes work that needs to be done – from the employees who do the legwork of mapping out which carriers should be included and talking to them about their rates and requirements to the IT personnel that need to get involved on the technical side.

So there are two key questions everyone should ask when evaluating a TMS:

  1.     Do we have the internal capability and resources to build out our own carrier network?
  2.     If so, how long is it going to take to get it done?

The answer to the second question is often six to 12 months – and sometimes even longer. Needless to say, after you’ve built the business case for buying a TMS and gotten the green light to move forward with the purchase, you don’t want to be the guy who has to go back to the board of directors and say, “Well, we thought this was going to be a 3-6 month return on investment, but because of the carrier connectivity piece it’s now going to be 12 months or more.”

So there’s a huge speed-to-market advantage when you opt to leverage the hard work that’s already been done by network-based TMS vendors. And if you opt to go that route, you should ask all potential vendors to do a carrier match for you – give them the list of all the carriers you use and ask them which ones are already connected as part of their existing network.

As you go through the purchase process you’ll begin to contemplate what your new TMS and carrier network might deliver down the road, no pun intended. For example, we’re starting to get really excited about the analytics potential of our TMS via benchmarking: mining data from the interactions between the shippers and the 16,000+ carriers in our network to help our customers optimize the transportation operations and, ultimately, save money.

For instance, let’s say I move goods from point A to point B. I know what it costs me today, but I’d love to know whether I’m overpaying or underpaying. With a TMS and the right data, we can figure out that the average cost of a shipment for that lane is, let’s say, $175. This is bad news if I’m currently paying $250, but it allows us to drill down into that and try to figure out why I’m not getting a better deal – and hopefully rectify the situation, either with my existing carrier or someone else.

Harnessing this analytics power will allow customers to develop a business model that’s got a lot more detail and analysis behind it than the typical pen-and-paper exercise of ringing up a couple of carriers to get a few quotes. It’s a powerful asset, but one that requires deep network visibility. And the more carriers you can examine, the better market intelligence you’ll have. So here’s the take-away: when you go shopping for a TMS, make sure “Carrier Network” is underlined on your wish list.

Evan Puzey, CMO, Kewill

Evan Puzey, CMO, Kewill

Evan Puzey is Chief Marketing Officer at Kewill. With nearly 20 years experience in the supply chain industry, Evan has assisted enterprises and logistics service providers in more than 30 countries, across 5 continents, with their supply chain initiatives. Originally a demand forecaster and planner for Castrol in the Asia Pacific region, Evan moved to a solution implementation role with Mercia (Supply Chain Planning) and then progressed to sales, pre-sales, marketing and global product management roles with Mercia and then Finmatica (Supply Chain Management). Evan has been with Kewill since 2004 in senior Marketing and Product Management roles, most recently as Chief Operating Officer for Kewill Asia Pacific.

Comments

  1. Nice article Evan and very valid for many companies looking to purchase TMS. However, I would like to offer an alternative perspective. The importance placed on a carrier network associated with a TMS provider in the decision making process is heavily dependent on several factors.

    1. Geographic footprint of the transportation network – US vs International
    2. Complexity of network – multi-stop, crossdock, break bulk, pooling , etc
    3. Number of modes utilized – Parcel, LTL, TL, Ocean, Intermodal, Air
    4. Number of carrier utilized
    5. The IT & EDI capabilities – Experienced department with available resources vs no IT
    6. Maturity of the Transportation & Carrier Relations/Sourcing team

    If your company has a network that is US domestic only, utilizes TL and LTL only, performs only simple multi-drop, has an existing experiences EDI team, has less than 15 total carriers that are currently under an existing contract, then the carrier network of the TMS provider is probably pretty low and comes down to costs.

    I recently connected 18 domestic TL and LTL carriers in 6 weeks to a tier 1 TMS with a team of 4. (204, 990 & 214 with 6 different status codes). The aggregate costs by lane is nice to have but that data can still be obtained from other sources.

    Conversely, if your company operates in and between multiple countries, utilizes all modes and has a complex network with 60+ carriers that they switch out often, the carrier network becomes much more important. Regardless of the number and maturity of their IT/EDI and transportation/sourcing departments.

    Given today’s demanding consumers and the proliferation of omni-channel distribution the simple transportation network is becoming a thing of the past and SaaS based TMS’s make it easy to utilize existing carrier connections.

    Tony Wayda
    Supply Chain Practice Sr. Director and Principal at SCA llc

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.