Do you really need a TMS in your organization?

There is never a clear answer for this question and customers are always grappling with the timing for investing in a system. In an economic low period, typically we see customers reducing IT Spend and are postponing IT purchases. We turn the question completely around and asking ‘Can you afford to not have a complete visibility of your business? ‘

However, it is important for customers to keep in mind a few things while making that decision:

1. Transportation becoming a key spend area: For many industries, transportation is the key to ensuring that products are available in customer markets at the right time. However, as company operations become larger and the number of service providers and fleet size increasing, the entire transportation management activity may become too complex to manage without having a system to manage and provide visibility

2. Be clear about your objective for getting the system: There have been many occasions when organizations chose complex systems assuming that they will need the entire suite of capabilities including high-end analytics and optimization algorithms. However, their organization may not be mature enough or ready to use such a system. Therefore it is important to be cognizant of the maturity level of the organization and what the objective of procuring such a system is. The objective may be to set up the basic execution processes which may not warrant a high-end optimization algorithm. The bottomline being that, it is important to do a Maturity Assessment and set down the objectives.

3. Operational Gaps: In a tough market condition, preserving cash and ensuring that money is not ‘left on the table’ is arguably the most important thing to help ride out the storm. What this means is to ensure that all the inflow and outflow of money in addition to closely managing operational metrics is being done with precision. To do that, it is important for organizations to have complete visibility of the entire transport cycle including payment. If there is no easy way of managing the transport operation, it may be a good reason for companies to consider investing in a system. The starting point for this, is to understand all the key operational metrics and perform a spend analysis of the transportation costs.

3. How do you decide what TMS to choose for the organization?

With the number of options available in the market, choosing a Transportation Management System can be a complex exercise since every organizations need is different and there are very rarely Commercial-Off-the-Shelf (COTS) applications that can truly meet all the needs of an organization. Hence it may be worthwhile for organizations to look at engaging experts to evaluate and perform an objective assessment of the right TMS for the organization.

Some of the key parameters that need to be kept in mind while deciding on a software system for Transportation Management are the following:

• Business Functionality Requirements: Before embarking on the choice of a TMS, it is important for organizations to prioritize and decide on the ‘must-haves’, ‘nice-to-haves’ and the ‘good-to-haves’. The list of features and functionality outlined earlier can be used as a guideline for deciding on the best features for the specific organizational needs

• Total Cost of Ownership: There have been many occasions where companies have invested in software systems based on a short-term view of the costs that they are incurring. However, there may be other costs that were not considered that would kick in during the lifetime of the software. Total Cost of Ownership needs to consider at least the following costs:

• Licensing Costs per User (must consider the user base growth rate)
• Infrastructure requirements (Database, Server)
• Maintenance Costs
• Training and User Involvement Costs

• Customer References and Local Support: One of the best indicators for deciding to invest in a system is the activity undertaken by the competitors. If your competitors are investing in particular systems, there probably is a strong reason for that. This is usually a big clue to how the industry is changing and what external forces are driving the change. Also, the number of installations in the country is an indicator of the vendor’s commitment to long term and local support to customers which may become critical for a growing organization

• Integration to other systems: A Transportation Management System by itself may not be able to fulfil all the needs of a company. Hence it is imperative that the system chosen can be integrated with other Enterprise Applications primarily an ERP or Financial Accounting Systems. As a result we find that many of the mainstream ERP vendors are offering TMS as part of the functionality.

 

• Ease of Use: While companies are quick to look at the mainstream vendors for their TMS needs, it is important to keep in mind that in India, the Transportation Industry is a fairly technology phobic industry as of now. Hence it is important to have an easy to use system for a successful implementation