How to navigate the TMS landscape (page 3)

-- Logistics Management, 2/1/2006

The good news, says Razat Gaurav, vice president of i2 Technologies' Global Transportation and Distribution Group, is that TMS solutions have a quantifiable return on investment (ROI). That return is made possible by consolidation, load shifting, and better utilization opportunities that come from improved visibility. A TMS also provides shippers with the ability to improve service levels as well as adopt and employ operational best practices.

Suppose a shipper wants to implement automated planning and execution for international freight movements. By making the most of a TMS solution's capabilities, Gaurav says, the shipper could not only reach its goal but could also reap cost and serviceimprovements along the way.

Growth Spurt

All signs point to more companies leveraging their existing TMS programs or purchasing new systems in 2006. Both Enslow and Gonzalez see persisting capacity, port congestion, and fuel cost problems leading an increasing number of shippers to rely on their transportation management systems to keep costs under control.

Add in the fact that TMS is being served up menu-style these days—and on the buyer's terms—and it's easy to see why the market is experiencing a growth spurt that's expected to last well into this year.

Author Information

Contributing Editor Bridget McCrea frequently writes about supply chain technologies.

TMS Vendors Continue to Consolidate

Consolidation in the TMS market is shaping the business models and product offerings that are available to shippers today. First are the traditional "license and install" vendors, says Beth Enslow, vice president of enterprise research for Aberdeen Group. She puts supply chain planning software vendors i2 Technologies and Manugistics, and supply chain execution firms Manhattan Associates (which acquired Logistics.com) and RedPrairie into that group.

Next up are the large ERP vendors, including Oracle, which last year acquired TMS vendor G-Log; SAP, which has a next-generation TMS under development, according to Enslow; and SSA Global, which acquired Arzoon and offers a hosted TMS that's now being integrated into SSA's ERP system.

Finally, there are stand-alone, on-demand TMS vendors like Nistevo and Lean Logistics. Other companies that offer transportation-focused software include Descartes (routing and scheduling solutions); Logility and HighJump Software (hosted transportation solutions); and Transplace, which combines logistics services and transportation technology. Specialized offerings include Cube Route's solution for private-fleet routing and scheduling, and Railcar Management Inc.'s TMS for rail shipments, to name just a few.

More consolidation is on the way in the TMS space, says Adrian Gonzalez, director of ARC Advisory Group's Logistics Executive Council. That's partly because shippers are realizing that transportation management is not a discreet function but rather is part of a larger picture that includes inventory management, purchasing, merchandising, and customer service.

"The consolidation trend will certainly continue in 2006, and it won't always be the 'usual suspects' involved in the deals," says Gonzalez. "We expect to see logistics service providers and financial institutions make some TMS-related acquisitions this year as they attempt to 'roll up' providers of complementary solutions in order to accelerate scale and growth."

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