It is no secret that Transportation Management Systems (TMS) have become a vital component of business success for logistics service providers, carriers, shippers, and other supply chain and logistics domain stakeholders. However, not all TMSs are created equal. While one system might constantly evolve to help its users boost their business, others could hinder business growth due to a lack of functionality or outdated technology.
This blog will explore the importance of TMS for domain stakeholders, look at the signs indicating your TMS might need some upgrade, and discuss why having an up-to-date system is necessary for being competitive in a rapidly changing business environment.
What TMS is, and how it helps its users to growth
Transportation Management System (TMS) is a software solution designed to help companies manage and optimize their transportation operations. The set of tasks such systems address varies depending on a company's specific needs or the functionality such software can provide. As mentioned, not all TMS are equal in terms of functionality, and the needs of different stakeholders also differ.
Below are listed some of the most common pain points stakeholders of the supply chain and logistics domain can solve by relying on a modern, up-to-date TMS:
- Multimodal shipment planning and execution to efficiently move freight across different modes of transport like road, rail, air, and sea.
- Carrier selection and management to find the best option to match specific criteria such as price, capacity, or delivery time, and be able to manage carrier contracts, negotiate rates, and audit invoices.
- Freight consolidation and route optimization to reduce transportation costs, improve the efficiency of operations, and minimize carbon footprint.
- Real-time freight tracking and visibility to know its exact location at any point.
- Analytics and reporting on transportation operations to make data-driven decisions and identify trends and issues causing low performance.
- Freight payment and audit automation to automate the freight payment process and perform audits on carrier invoices to ensure accurate billing.
As you can see from above, through modern TMS software, companies can streamline their transportation operations, increase visibility, reduce costs, improve efficiency, and enhance customer service. As a result, having an up-to-date system providing you with all these features and evolving alongside modern-day business requirements is vital.
9 Indicators that your TMS needs to be upgraded
Outdated transportation management systems can lead to inefficiencies, missed business opportunities, and ultimately impact the bottom line. Below, we have listed nine signs that indicate your TMS may need an upgrade, enabling you to stay competitive and deliver value to your customers.
- Incompatibility with modern technology
Is your system compatible with your business's existing infrastructure? Or the infrastructure your partners use? Is it capable of interacting and exchanging data with cloud solutions? Is it API centric but still able to work with EDI? If your answer to any of these questions is no, you most likely need to update your TMS.
- A lack of scalability
Scalability refers to the system's ability to handle the increased workload, users, transactions, and data without sacrificing performance. It is an essential consideration for any TMS implementation because it enables organizations to expand their logistics operations, add new partners to an ecosystem, and accommodate more customers. In contrast, with the lack of scalability, an efficient upscaling of operations and business growth is impossible. So, if you are working with a complex network of supply chain partners, your ecosystem is constantly growing, and your TMS lacks scalability, it will eventually become a bottleneck, making your operations costly and inefficient.
- Data silos and manual data processing
Endless phone calls and emails, as well as inquiring about the status of freight you constantly send to or receive from your partners, can be a sign that one of your or your partner's systems is operating in silos. Data silos slow down collaboration (applicable for internal and external data flows) and, more importantly, cause errors and missing data due to unavoidable manual data processing. As a result, data silos can hinder the efficiency of your operations. So, it is a clear indicator that you need to update your TMS.
- Inconsistent support and updates
A good TMS system is constantly evolving, or at least should, to make your business stay secure and flexible in a rapidly changing marketplace. If you have never heard anything about functionality updates from the vendor, it is likely badly outdated.
- New partner or system integration is painful
If onboarding a new partner or customer, or integrating new systems such as warehouse management systems (WMS) or order management systems (OMS), is often a daunting and laborious task, taking weeks or even months to execute, this is another sign your system is not up to modern industry standards.
- Inability to invite customers and partners to connect and collaborate in real-time
The purpose of any TMS is to bring together the supply chain connections into an ecosystem. Hence, the ability to invite and connect with partners and customers in real-time is a must, enabling faster decision-making and issue resolution, further enhancing the efficiency and effectiveness of the supply chain. If your software lacks this opportunity, the pace of your business growth might lag behind your competitors.
- The limited scope of supply chain operations your TMS covers
Coverage of full-spectrum of supply chain operations (including the complete order to cash workflow) should be one of the key benefits your TMS provides. If not, it is time to move away from your vendor.
- Blind spots in the end-to-end process visibility
Blind spots are the ultimate source of uncertainty, anxiety, and unproductive shipments. So, a modern TMS should enable visibility at every step of the shipment process to allow shippers and logistics service providers always know exactly what inventory is coming in or going out. Plus, allow them to monitor and track orders easily, in one place, instead of chasing down different shipments and systems. If your TMS lacks this feature, you know what it means.
- A rigid ecosystem of pre-built integrations
Pre-built integration connectivity to transport services of various modes and providers is a vital component of a modern TMS. While some providers differentiate themselves by offering a managed extensions library that they proactively build and maintain for all modes of transport worldwide, others can be focused on a specific modality, such as air, ocean, or road, and offer only integration in a particular geography. The ideal case would be a TMS that covers all relevant modes and geography and, besides existing integrations, can add new connectivity upon customer request.
As seen above, an inadequate TMS with limited functionality and poor integration capabilities is what you want to avoid. If you are experiencing any of these issues with your TMS, it may be time to consider upgrading to a more modern solution. Otherwise, you won't be able to match your business's needs from A to Z, as well as adapt to greater partner and customer demands in the future.
Is it time to buy a new TMS?
While looking at this list, you might notice sights indicating your system is outdated, you might start to wonder if it is time to buy a new TMS.
Due to several factors to be considered, and the complexity of each business case, there isn't a straightforward answer of Yes or No.
To answer this question, you need to carefully reevaluate your system to understand what you are missing now and how important that element is for your business. If you are in a situation with 1 or 2 points to address, you can consider adding some third-party solution capable of fixing the issues to your tech stack. If you have a "full house" or 5-6 points, your system might require a costly upgrade with a budget exceeding the price of adopting a new modern TMS. So, the migration to a new system would be the best choice. Also, if your system is over ten years old, migration to a new TMS could be a wise decision, as modern systems have improved efficiencies and provide better ROI.
The benefits of upgrading to a modern TMS are undisputable. However, switching TMS software is often a big challenge, so many try to avoid this decision and ignore the problem until the situation is unbearable for a business. As a result, they first enjoy the consequences of an outdated TMS, such as increased errors, decreased customer satisfaction, or missed opportunities, and then end up in endless projects requiring enormous investments and becoming an additional burden for both IT teams and the budget. Plus, most likely, those last-minute solutions will be temporary and last only a few years, which means an added future cost.
Fortunately, it is possible to get your system up to your requirements with no need to migrate or do anything in-house. Youredi, the leading provider of fully managed data integration services and solutions for logistics and the global supply chain, offers solutions for both - TMS providers who want to enhance their solutions and users of such systems who want extra functionality without the need to change a vendor. This way, stakeholders mentioned above can overcome all their data connectivity issues without needing to migrate or start endless in-house TMS modernization projects.
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