Over time, transportation management in companies has become increasingly complex. Changes in business models, geographic expansion and increasing customer demands strain resources and technology. The result is that transportation management systems, or TMS, are increasingly being included in the conversations and budgets of those leading supply chains.
In essence, TMS solutions serve to move products as efficiently and cost-effectively as possible. To optimize these flows, it provides end-to-end visibility across the entire multi-party network, and also provides multi-modal and container, pallet and parcel support. In addition, a TMS should ensure on-time deliveries by tracking and tracing in real time with alerts and corrective capabilities when unforeseen events arise.
According to Gartner, globally, the TMS market will grow from $1320 million to $2110 million from 2019 to 2024. In other words, it is going to grow by 75% in five years. Enterprise transportation management was long a sector targeted by budget cuts. But with recent transformations in, for example, the increased importance of last-mile logistics, companies are beginning to shift focus. The right TMS solution can help companies process their data and make smarter, more cost-effective planning and execution decisions to improve operations. For example, by providing real-time visibility into flows and sending alerts to track and trace orders and quickly resolve exceptions as they occur.
As established and new TMS vendors began to offer cloud-based options, the market grew substantially. This is because this type of solution is faster and less expensive to implement. In other words, whether large or small, companies began to realize that in order to effectively manage transportation operations, they need to incorporate technology. Companies incorporate TMS solutions for a variety of reasons, whether it is to improve relationships and collaboration with suppliers or partners, to improve visibility into the operation, to strengthen decision making, to improve cost management, and so on. Regardless of the reason, the market is currently full of vendors that have been offering such solutions for years.
However, the wide range of solutions on the market makes it difficult to determine which one is the most suitable for a company. To start choosing, you should consider the level of transportation complexity your company may have. Typically, the greater the complexity and sophistication of transportation operations, the greater the degree of capabilities and support you will require from a TMS. In addition, the importance of integration or convergence with other supply chain functions increases the higher the level of complexity to achieve efficiencies.
Other functionalities that a TMS can provide include ensuring efficient and cost-effective sourcing, selecting carriers based on order requirements, managing rates and invoices, setting and tracking performance KPIs, minimizing cost inefficiencies, and so on. In addition, order-centric TMSs can isolate orders that are urgent, so that they do not economically impact other standard orders.
Transportation costs are generally one of the major expenses in supply chains. TMS solutions can help control transportation costs and even increase the benefits it brings. Automating transportation planning and execution processes will improve your company’s ability to optimize everything, from sourcing decisions to carrier and route selection. To begin incorporating such a system, you must first understand your company’s overall level of complexity and define the capabilities and functionality your transportation team needs. Once these issues are resolved, you can identify the type of TMS solutions and vendors that are right for your company.
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