The Transportation Management Systems (TMS) market has bounced back after the global recession. In 2010, the market grew significantly faster than the rate of inflation. Significant growth is forecast through 2015. Steve Banker, Service Director for Supply Chain Management at the ARC Advisory Group, is the principal author of ARC’s “Transportation Management Systems Worldwide Outlook: Market Analysis and Forecast through 2015”.
ARC segments the TMS market into three application areas. “Planning and Execution” solutions are end to end transportation systems used by shippers who utilize carriers to move their freight. “Fleet Management” is an end to end solution for shippers/carriers that own transportation assets and need to manage those assets efficiently and effectively. “Point Solutions” include any systems that cover only a part of the end to end transportation process.
Many people think of planning and execution systems when they think of TMS. This, indeed, is the largest and fastest growing part of the market.
Transportation is inherently a multi-partner collaborative endeavor. Net-worked style solutions, particularly SaaS solutions based on a multi-tenant architecture, facilitate:
- High quality electronic communication with partners. Many shippers find the data cleansing associated with EDI a burdensome task they are eager to outsource.
- Quicker onboarding of new partners. Preferred suppliers on a lane may not be executing properly or turning down too many tender requests. Shippers may need to quickly add new carriers to that lane. In a networked solution this is far easier.
- Enabling efficiencies in transportation procurement. Carriers who enter data into procurement bid optimization engines often have much data that is identical to that which they would provide a different shipper in a bidding opportunity. A networked solution can prevent them from having to rekey common data.
- Improvement in freight audit and pay. Once a bid has been accepted, a third party network can provide a neutral location for contract data to be hosted and thus facilitate a freight audit and pay process with fewer discrepancies.
- The ability to leverage data from the network to provide benchmarking data. Most suppliers agreed that providing reports on whether capacity on a lane is getting tighter or not is viable. Some suppliers argue that average costs per lane can be provided. Others say that benchmark data on average costs per lane is still not viable, because the average lane costs do not represent apples to apples comparisons. Increasingly, TMS suppliers will need to sign contracts allowing them to use their customer’s data as long as the source of the data is kept confidential.
There is some level of disagreement upon whether it is possible for a multitenant solution to be as functionally rich as traditional behind the fire-wall solutions. Most suppliers of networked TMS agree, tacitly or openly, that their solution is not as functionally rich as solutions from the leading behind the firewall planning and execution solutions.
However, two significant suppliers argue their networked solutions are just as functionally rich. Both say their architecture allows this. Meanwhile some of the leading suppliers in the market offer functionally rich solutions based on a single tenant architecture. Some of these large suppliers, such as Oracle, have partnered with network providers to allow execution to be based on a network solution provider, while planning will still reside behind the firewall. Oracle’s network partner is E2open.