Now that most firms have reported their 2011 numbers, we can reflect on the super growth they had last year and look forward as they are poised to continue with that growth in 2012. Our survey of TMS companies and the end-user market regarding their purchasing decisions for 2012 (Figure 1) shows the growth trend will continue.
Why might this be so?
Solution Providers Contributing to this Article:
- Growth of global trade due to the sheer volume of trade, number of trades, and number of global competitors entering markets.
- Continued reliance on, and leveraging of, trading partners. Both channel and global supplier partnerships continue to grow. In our business survey we asked users about the techniques they plan to increase growth and sales. Respondents indicated that they plan to increase reliance on channels and wholesalers.
- Changes required in transportation methods, routing guides, and other customer requirements as companies increase foreign trade.
- Need to manage complex multi-modal freight procurement, and evaluate the costs of any options before signing contracts or procuring freight.
- Need for visibility in orders, items, and condition monitoring.
- Radical changes in technology that allow users to upgrade their technology, or new users just automating. These replace reliance on phone, fax, or third-party brokers to manage their freight.
- Ease of interacting, on-boarding, and paying for the technology. SaaS/pay-as-you-go models have removed most obstacles from the traditional software purchasing process.
- Ability to analyze and optimize freight spend.
- And last but clearly not the least are the pre-configured connections to the customer’s trading partners.
Figure 1: TMS Leads in Purchase Plans for 2012
Capturing and Managing the Network
In the last decade TMS providers have been building, building, building and linking up the network. One of the areas in which the TMS players shine is in providing the prebuilt, standards-based network. For example, a shipper may want to do business with a specific carrier, a large customer, or want visibility across multiple modes, through multiple carriers and third parties. Today, the stonger, more mature TMS players will already have most of your service providers’ connections and your customers’ routing guides. And you and your customers can look up status across the network through shared access to the cloud. You can be alerted to changes, from anywhere in the network, as required.
Getting onboard quickly is key for both customers and suppliers. Today, dealing with complex trade requirements, document compliance, and communcations protocols creates a pretty big ‘to-do list’ just to start a relationship. The desired result brings to mind a once popular term — ‘frictionless commerce.’ A system should enable trade relationships — not lengthen the to-do list.
Cost Is King
Users are consistently reporting case studies with impressive results in cost savings. A decade ago the best they could do was negotiate rates and look at reports, often months later, to see if the carrier charges were in line with plans. If a firm used multiple carriers, they had to sift through many (paper) reports to examine a variety of charges (in different formats). People spent hours trying to reconcile freight charges, and hours on the phone and emailing; then finally, they renegotiated their contracts for the year ahead.
Now users can see the planned charges, and have ‘in-time visiblity’ and the ability to conduct freight audits as they go, rather than waiting for months to reconcile.
Managing freight with a single system, though you may use multiple carriers, creates a foundation for cost analysis. At this point, glaring mistakes often appear. This first wave of saving can happen fairly quickly, providing that needed ROI to ‘pay for the technology.’
Of course, continued analysis and leveraging the many cost-saving, time-saving tools is the next step. Often it can take a year or more for a firm to look at their carriers, agreements, charges, routing methods, etc. and begin to make changes. So we often caution users not to expect too much in the beginning.
Making the Choice
Good supply chain software is the gift that keeps giving. With each and every decision there are generally better choices — if one has the data and analytical tools to see them.
With so many TMS options in price and delivery architecture (SaaS versus On Premise) many obstacles have been removed from the purchase and benefits stream. Of course there is much more to selecting the software and services that are right for your firm. We will continue this discussion in the next TMS installment.
To view other articles from this issue of the brief, click here.