Executive Briefings

An Overlooked (But Critical) Component of Transportation Management Systems

Earlier this year, I wrote a piece highlighting the expanding footprint of transportation management systems (TMS)-i.e., how software vendors are transforming TMS from a fragmented collection of applications to a unified platform where users across the enterprise and value chain can execute role-specific processes via configurable user interfaces, workflows, and web services. As I prepared for a recent webcast, and as I continue to work on our annual TMS market study, I realized that our definition of TMS is missing a critical component.

Here's the definition we've been using for several years:

Transportation Management Systems are software solutions that facilitate the procurement of transportation services; the short-term planning and optimization of transportation activities, assets, and resources; and the execution of transportation plans. They address all modes of transportation, including Ocean, Air, Rail, Full Truckload, Less-than-Truckload, Parcel, and Private Fleet.  In addition to managing the physical flow of goods, they also manage the flow of transportation-related information, documents, and money. TMS also include performance management and collaboration capabilities.

Seems very comprehensive, doesn't it? In fact, I always make the point that no vendor fully meets this definition today, although the gap continues to narrow each year. So, what's missing?

Network connectivity.

Transportation processes (tendering, booking, track and trace, appointment scheduling, freight payment, etc.) are inherently network-centric, involving the exchange of information between carriers, logistics service providers, suppliers, and other external trading partners. Therefore, traditional, internally-deployed TMS solutions require companies to establish and maintain connectivity (via EDI, web portals, and other means) with an ever-changing set of trading partners. This is among the most labor-intensive and time-consuming aspects of a TMS implementation; connectivity is also something that many companies fail to consider when evaluating TMS solutions.

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Earlier this year, I wrote a piece highlighting the expanding footprint of transportation management systems (TMS)-i.e., how software vendors are transforming TMS from a fragmented collection of applications to a unified platform where users across the enterprise and value chain can execute role-specific processes via configurable user interfaces, workflows, and web services. As I prepared for a recent webcast, and as I continue to work on our annual TMS market study, I realized that our definition of TMS is missing a critical component.

Here's the definition we've been using for several years:

Transportation Management Systems are software solutions that facilitate the procurement of transportation services; the short-term planning and optimization of transportation activities, assets, and resources; and the execution of transportation plans. They address all modes of transportation, including Ocean, Air, Rail, Full Truckload, Less-than-Truckload, Parcel, and Private Fleet.  In addition to managing the physical flow of goods, they also manage the flow of transportation-related information, documents, and money. TMS also include performance management and collaboration capabilities.

Seems very comprehensive, doesn't it? In fact, I always make the point that no vendor fully meets this definition today, although the gap continues to narrow each year. So, what's missing?

Network connectivity.

Transportation processes (tendering, booking, track and trace, appointment scheduling, freight payment, etc.) are inherently network-centric, involving the exchange of information between carriers, logistics service providers, suppliers, and other external trading partners. Therefore, traditional, internally-deployed TMS solutions require companies to establish and maintain connectivity (via EDI, web portals, and other means) with an ever-changing set of trading partners. This is among the most labor-intensive and time-consuming aspects of a TMS implementation; connectivity is also something that many companies fail to consider when evaluating TMS solutions.

Read Full Article