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Always something new to talk about
After 19 years, what else can you say about transportation management systems that you haven't already said?
My wife asked me that question as I was heading out a few weeks ago to give a talk on transportation management systems (TMS) to a group of supply chain and logistics professionals at a CSCMP New England Roundtable meeting. It's a good question, one I hadn't stopped to think about before, so I reflected on it as I drove to the meeting.
[Figure 1] TMS vendor landscape Enlarge this image
[Figure 2] On the edge of TMS Enlarge this image
First, I verified the math in my head (twice), and my wife was right: I've been an industry analyst now for over 19 years, most of that time focused on transportation management and TMS. I can't tell you how many TMS-related research reports, blog posts, videos, webinars, and presentations I've written or produced over the years, but it's a lot—enough to make you think I've said all I could about TMS already.
The reality is that I do repeat myself a lot because, despite the abundance of evidence out there about the benefits of implementing a TMS, many companies are still managing their transportation operations with spreadsheets and homegrown systems that are decades old. So, I repeat myself because some companies are new to TMS and are learning about the technology and its benefits for the first time, and some companies are like distracted children: You have to tell them over and over again until they finally listen.
The other reality is that there is always something new to talk about. The scope and capabilities of transportation management systems, as well as the vendor landscape, have changed significantly over the years, and the systems continue to evolve. The same is true for the transportation market and the types of challenges and opportunities that shippers and third-party logistics providers face.
Simply put, although transportation management systems have been around for decades, there are plenty of new things to talk about, too many to cover here. But here are some of the trends and developments that rise to the top for me.
Expanding scope and capabilities
At its core, the primary function of a TMS hasn't changed over the years: to help shippers and third-party logistics providers plan and execute processes in the transportation management lifecycle, including (but not limited to) procurement, optimization, routing and scheduling, load tendering, track and trace, freight audit and payment, freight forwarding and brokerage, and business intelligence and analytics.
The things that have changed are:
More powerful optimization capabilities: Thanks to the rise of cloud computing, along with advancements in the types of algorithms used, optimization engines today are able to solve more complex problems much faster than before. The scope of transportation optimization goes beyond load consolidation—that is, aggregating less-than-truckload shipments into truckload shipments. It also plays an important role in procurement, zone skipping, mode conversion, cross-docking and pooling, what-if analysis, and various other scenarios.
Increased control tower visibility: The line between TMS and control tower solutions has started to blur, especially when it comes to international, multimode shipments. Leading solutions go beyond providing visibility to shipments and assets. They also enable visibility to orders and stock-keeping units, and they incorporate optimization capabilities (to replan when exceptions occur) and collaboration capabilities (to facilitate communication and the exchange of data and information between trading partners). Leading solutions are also starting to embed machine-learning capabilities and leverage a broader set of data sources—including weather, traffic, location, and social media—to enable predictive capabilities, especially around determining more accurate estimated times of arrival (ETAs).
Improved user experience: In the past, many TMS user interfaces were crammed with too many features and too much information that users didn't need or want to accomplish their tasks. They had nonintuitive workflows that didn't align with the way users were accustomed to working (or with the way they wanted to work); or they forced users to open multiple windows and tabs, and click countless times, to accomplish what should have been a straightforward task. The good news is TMS vendors have started to think beyond features and functions and have started investing heavily, including hiring user interface (UI) and user experience (UE) consulting firms, to improve the usability of their solutions (both desktop and mobile), often with inspiration from social networking and consumer apps.
In addition to these three major changes, TMS providers have also significantly improved their solutions' mobile capabilities along with creating more flexible and configurable architectures that enable companies to drive their own innovation.
Changing vendor landscape
The technology is not the only thing that has changed; who's providing it and how it is delivered has also evolved. There have been many mergers and acquisitions in the TMS space over the years, driven in part by customer demands to replace multiple siloed applications with a single platform that can addresses multiple modes (including parcel and private fleet) and multiple geographies. There's still no single vendor that does it all well, but the market has come a long way in this effort.
Startups (such as Kuebix, Cloud Logistics, 3Gtms, and EmergeTMS) also continue to enter the market, leveraging their newer architectures as a differentiator, as well as new business models, and pricing strategies (such as "freemium" offerings, where a basic version is provided for free and users pay for more advanced functionality) that combine technology with managed services.
I hate putting TMS providers in categories or boxes because in many cases they either fit in multiple boxes or they don't fit any exactly right. But for the sake of simplicity, Figure 1 shows a snapshot of the current TMS vendor landscape. Providers range from vendors that offer a wide variety of supply chain applications (including warehouse management systems) to vendors that offer broad TMS suites (multimode, multigeography) to vendors that offer specialized solutions (a single mode or transportation process). Several third-party logistics providers also offer their own, internally developed TMS solutions.
There are also a variety of other technology solutions that are on the edge of TMS—meaning, they either extend or enhance the capabilities of TMS applications. These "on the edge" solutions focus primarily on transportation network design, modeling, or optimization, or they enable specialized transportation processes like real-time freight visibility, carrier connectivity, and freight-lane matching and collaboration. (See Figure 2.) The two that are getting the most attention today are real-time freight visibility and carrier connectivity.
Real-time freight visibility: A subset of control tower applications, this is one of the hottest segments of the TMS ecosystem and saw a couple of significant acquisitions last year (such as Descartes' acquisition of MacroPoint and Trimble's acquisition of 10-4 Systems). Most leading TMS vendors have partnerships with multiple freight visibility solution providers, such as those listed in Figure 2. Demand for these solutions is being driven by the need for more real-time and accurate visibility to orders, shipments, and trucks in response to more stringent customer service expectations, such as Walmart's "on-time in-full" (OTIF) requirements.
Carrier Connectivity: Electronic data interchange (EDI) still remains well-entrenched in transportation as the means for exchanging data between shippers, carriers, and other transportation partners. The future of carrier and trading partner connectivity, however, is application program interfaces (APIs) and web services (such as XML). APIs and web services provide more real-time data and visibility than EDI, along with other integration and maintenance benefits. Most leading TMS vendors have partnerships with multiple API-based carrier integration partners, including those listed in Figure 2. APIs for less-than-truckload (LTL) carriers are the most mature, but APIs for truckload, parcel, and rail are emerging, as well as APIs for status updates, transit times, and other data sets.
I don't know where I'll be in twenty years, whether I'll still be following the TMS market or not, but I'm pretty sure the technology will continue to evolve in response to market demands, and I'm pretty sure they'll always be something new to talk about.
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