For the last couple of decades transportation management systems (TMS) have revolutionized supply chains, helping companies streamline their logistics processes, achieve greater visibility into their operations and save significant dollars on transportation.
But even as more and more businesses get wise to the advantages of a TMS, many large, multi-national corporations have remained on the sidelines, unwilling to believe in the existence of a truly global TMS that could meet the needs of complex, widespread companies.
Unfortunately some of this doubt that still pervades the marketplace today stems from outdated notions about the on-premises deployment models of yore – not the cloud-based systems that are growing in popularity and now make up a sizable chunk of the market.
So allow me to play “Mythbusters” and shatter some of these long-held stereotypes about global TMS implementations.
Myth #1 – Deploying a TMS on a wide scale is too slow and too costly.
There’s a perception among large multi-national corporations that there isn’t a TMS in the marketplace that they could get set up within a workable timeline and for a reasonable cost. And it’s hard to find supply chain managers with the moxie to go to their senior leadership and say, “We want to purchase a global TMS, but it’s going to take a couple of years to roll out and a few more after that to realize a return on investment.”
But that kind of slow, years-long ROI was based on the traditional delivery model of an on-premises TMS with perpetual licensing, where you have to buy all the hardware and invest in capacity and serious IT support – and then undertake a complex configuration process. Those days are over. There are alternatives out there today that take advantage of the Cloud and software-as-a-service (SaaS) models to deliver a quick implementation and tangible results in a compressed, easily digestible timeframe (12-18 months).
Myth #2 – TMS providers don’t offer a truly global solution.
Until recently SaaS-based TMS providers struggled to deliver a truly global offering. A lot of the issues centered around localization, which isn’t easy. You go from Europe to the Americas to Latin America to APAC with your transportation needs and there are all sorts of very specific requirements, whether tactical, operational or strategic. But we’ve entered an era where some SaaS providers are offering solutions that satisfy most of those localization requirements.
The biggest catalyst for global TMS use comes from companies hungry to expand their business analytics and understand their costs, how they’re touching their customers, and how they’re interacting with their suppliers. This simply can’t be done if you’re just taking a regional approach. There’s no way to meld different data streams from different systems in different parts of the world into a single platform and get consumable information out the other end.
But with a global TMS on a SaaS platform, you can connect your procurement relationships with suppliers and the costs all the way through your network and your customers – and then tie that data back to a single platform to get real business intelligence with a global perspective. That’s the big win. That’s where companies are getting really excited because then they can take a much closer, harder look at where they can drive costs out of their supply chain and where their inefficiencies are.
Myth #3 – If you want to go global with a TMS, you have to move everything in-house.
The myth here is that if you want to roll out a TMS that works worldwide, you have to take on all the transportation operations yourself. And it’s simply not true. If you’re outsourcing to third party logistics providers in certain markets, those providers can interact with a multi-tenant, cloud-based TMS just like a directly contracted trading partner can. There’s really no difference. As long as you can get the data from that 3PL into the platform and it can be consumed in the same way as data from a directly contracted carrier or an NVOCC can be, then there’s really no difference. This is absolutely one of the biggest myths and probably one of the biggest reasons why companies have been reluctant to undertake a global approach to transportation.
Beyond helping improve your supply chain, a TMS can serve as a powerful business tool. You just have to get past some of the myths about TMS deployments that have cropped up over the years. If you are looking at a TMS to help make your logistics operations more efficient, here are three key recommendations to consider.
1. Recognize that there is now a reasonable way to deploy a TMS on a global scale. This is a relatively new development over the last couple of years. Many companies looked at rolling out a global TMS years ago but came to the conclusion that it was too risky, too costly. Not anymore. You need to understand that, thanks to the Cloud, the global TMS landscape has changed for good and it’s now possible to scale easily and cost-effectively on a worldwide basis.
2. Know what your core objectives and goals are. You don’t have to roll out everything at once. A TMS deployment can be a gradual process. The key is get that connectivity established with your carriers or third party providers. You don’t have to rip the band aid off right away. You can approach this intelligently with the intention of keeping risk to a minimum via a SaaS-based system.
3. Consider the bigger picture. Often companies put together a strategy based on localized, tactical objectives. They want to automate these functions here or they want better load planning or carrier selection in a particular market. But you need to think about the bigger picture. It’s a global TMS platform, after all. So you need to consider how valuable it would be to the company as a whole to have end-to-end transportation data all the way down to the SKU level. What does that mean to your company? What type of benefits are you going to be able get from that type of data? What does it mean to finance? What does it mean to operations? That’s the kind of information that can influence a company’s decision on going into a market, staying in a market, where to source inventory from, which suppliers to work with, etc. So don’t look at the decision to buy a TMS in a siloed, tactical way. Look at it more strategically from a higher level, and examine how those benefits might translate to all the other stakeholders in the business, not just transportation.
Editor’s note: For additional insights on this topic, watch the recent Talking Logistics episode, “Myths and Realities of Global TMS Deployments.”
As Vice President, Multimodal Transportation Solutions at Kewill, Walt Heil brings over 20 years of experience in supply chain and transportation management operations, sales and sales leadership. Prior to Kewill, Walter led the worldwide commercial efforts for the IBM Sterling TMS solution, providing strategy and executive leadership for IBM’s global supply chain execution portfolio. Walt has managed several sales organizations and led Sterling’s supply chain execution strategy for the North American manufacturing market. Walter holds a Bachelor of Arts degree from Michigan State University and attended The Detroit College of Law.