It’s no mystery that logistics and supply chain managers have been hit hard by rising freight rates, fuel surcharges, and new demands that are stretching the limits of their supply chain and logistics operations. In fact, Logistics Management’s 2006 Software User survey found that 54 percent of responding shippers have increased their usage of supply chain and logistics technology to help them “hold the wheel steady” during the current rate and capacity maelstrom. (The study results will appear in the May issue.)

We also found that nearly half of the respondents are getting ready to invest in IT in order to help keep costs in line and streamline operations. But although shippers are ready to spend, our findings tell us that they need some help when choosing the technology that best meets their needs.

To move shippers along this critical decision-making path, LM asked four top analysts to bring shippers up to speed on the latest IT developments and offer practical advice on putting technology to use—and realizing some solid ROI in the process.

In this virtual roundtable format, ARC Advisory’s Adrian Gonzalez tackles the latest trends in transportation management systems (TMS); Greg Aimi of AMR Research digs into warehouse management systems (WMS); MichaelWitty of IDC’s Manufacturing Insights offers visibility into an evolving RFID push; and Aberdeen Group’s John Fontanella brings shippers up to speed on the “hot trends”—Service Oriented Architecture (SOA) and On-Demand.

TMS: More Important Than Ever

Logistics Management: Considering the current logistics and transportation landscape, has there ever been a better time for shippers to put TMS to use?

Adrian Gonzalez: I think it’s safe to say that the need for TMS is greater today than ever before. As supply chains become more fragmented and dispersed, transportation serves as the “glue” that links multiple parties and business processes together. Capacity constraints, shrinking order-to-delivery cycle times, and rate increases are among the many challenges transportation executives face. In short, there’s a stronger link today between a company’s overall financial performance and its ability to achieve operational excellence in transportation management.

As shippers go about either upgrading or implementing a new TMS, what do they need to understand about the technology before they make a decision?

First, the scope of TMS continues to expand beyond transportation. Many TMS now provide capabilities and value to users in other functional groups, such as inventory management, purchasing, merchandising, customer service, and at the C-level. Shippers can no longer view transportation as a stand-alone function; instead, they should view it from a more holistic perspective.

Second, TMS is a highly collaborative process that involves the flow of information between many parties. With that in mind, companies can’t overlook the importance of connectivity and data-quality management in transportation management—particularly when it comes to communicating with carriers. Getting away from faxes and phone calls has to be a top priority since connectivity impacts the total cost of ownership of a TMS.

It seems we cover a TMS consolidation news story once a month. With fewer stand-alone vendors, how has that changed the decision-making process for logistics managers?

The consolidation trend relates back to—and is driven by—the fact that companies can no longer view transportation as a stand-alone function. There are certainly pros and cons to consolidation. On the positive end, the remaining players are generally more financially stable, have a broader solution footprint, and have a global presence. On the negative end, there can be a loss of focus and a slowdown in product innovation if TMS is rolled into a much larger organization and solution footprint. At the end of the day, shippers want to be sure that the TMS vendor is committed to the solution. Continued...

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