What's driving the need for TMS? (page 2)

-- Logistics Management, 1/1/2005

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Caplice: I think visibility will start rearing its head again. That market was hot for a little while and then it cooled off. People are going to try to justify RFID expenditures, and that's going to show up in visibility and event management.

Maybe we'll also start seeing something that looks at the modal supply chain, because most TMS packages are set up for a single mode. And the real synergy is at the intersections where the modes touch, such as at ports. So having a system that manages across the modes and that looks at transfer points will get more emphasis.

Gonzalez: You highlighted the traditional definition of TMS, which includes functions like routing, shipment consolidation, and scheduling. In the past few years, that footprint has expanded and now includes things like order collaboration. That's a prerequisite for inbound transportation management. Visibility of the status of purchase orders and visibility of where the suppliers will be shipping from allows you to have some consolidation on the inbound side. In cases where it makes sense, it gives you the ability to shift from prepaid to collect (shipments).

That's seen as an extension of the traditional functionality. The same thing is true for appointment scheduling, another module that TMS vendors have added over the years to get a broader perspective of the execution side of transportation.

The area that's beginning to get some more attention is business analytics or intelligence, in terms of being able to link the operational metrics you have in transportation with the financial metrics. In some respects, [the] Sarbanes-Oxley [Act] is serving as a catalyst to provide visibility up to the CFO (chief financial officer) level. You'll see more investment by TMS vendors to provide that sort of visibility.

LM: There's a lot of buzz these days about RFID (radio frequency identification). How do you see that technology impacting TMS?

Caplice: I think there's going to be a significant amount of hype and confusion. RFID—and I'm talking passive tags—is essentially a technology for two pieces of information: non-line-of-sight recognition and SKU (stock-keeping unit) accountability. So the question is, what can you do with them in a TMS? Maybe you can go into some better level of tracking and visibility. The problem is that we already track every SKU and every item…and how that ties into an order number and into a shipment number for a carrier.… With the infrastructure that we have now, you can track and know how something goes through your system. So RFID will not help you with that.

RFID will do a bunch of other things. For example, it will tell you the status of the inventory level rather than building that out of laws of conservation—a "numbers in, numbers out" calculation. For transportation, it's going to provide a finer grain of visibility. I don't think any TMS is prepared to handle that now, because the amount of data coming will be tremendous.

We had a student…try to quantify the benefit from having RFID for truckload or LTL (less-than-truckload). And the answer was, not so much right now, unless the LTL had one hundred percent of shipments come through with the RFID technology.

My bottom line: I don't see it impacting TMS that much until the information on the tag can increase and we get more active tags. Continued...

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