Supply Chain & Logistics Technology: 5 trends driving TMS growth

Top supply chain software analysts break down the drivers that will keep the transportation management systems market on a steady upswing for years to come.
image

January 01, 2012 - LM Editorial

Relied on for their innate ability to handle transportation planning, decision making, follow up, and measurement for companies of all sizes and across all industries, transportation management systems (TMS) held their own by posting positive sales growth through the recession and are poised for growth in 2012.

Credit the fact that these systems can shave percentage points off of transportation spending, create efficiencies that were previously out of reach, and come in the attractive SaaS (software as a service) format with helping to keep many TMS vendors in the black during the last three tumultuous years.

image“In 2010, the TMS market grew significantly faster than the rate of inflation, or roughly 6.1 percent, and we’re forecasting an additional 6.8 percent compound annual growth through 2015 for the market,” says Steve Banker, service director for supply chain management at the ARC Advisory Group. “It looks like the market is holding up pretty well.”

Banker singles out planning and execution systems—the end-to-end solutions used by shippers who utilize carriers to move their freight—as the largest and fastest growing segment of the TMS market. In highest demand right now, says Banker, are the networked SaaS solutions that facilitate high quality electronic communication with partners, enable fast on-boarding of new partners, enhance transportation procurement efficiencies, and allow for freight audit and pay improvements.

In this article we’ll look at five key trends that will help cement TMS’ status as a growing supply chain software segment in 2012. According to our analysts, the demand for system upgrades, the growth in intermodal transportation, and a new focus on “big data” requirements are helping to sustain a healthy TMS market.

1. Older systems need facelifts
If there is a single, primary driver for the TMS market right now it’s the fact that many systems are outdated.

Many of the solutions in operation today were installed five to 10 years ago—before tablet computers and mobile technologies had come to the forefront of the business world.

That will pave the way for more TMS upgrades in 2012, says Banker. “The business case for supply chain application upgrades are often difficult to make,” he says, “but with TMS there are so many different ways to save money.” For example, Banker says solid arguments in favor of a TMS upgrade include the money saved when preferred carriers are used on a regular basis or when preferred procurement positions are successfully negotiated and orchestrated.

Other areas where TMS can assist include use of fully loaded vehicles and improved routing and scheduling tactics. To companies that will be upgrading this year Banker says to focus first on outbound transportation (load consolidation, better routing, and so forth) when making the case, “and then move into procurement negotiations and other advanced features that you can’t get from any other [supply chain] application.”

2. Intermodal in growth mode
Manual and aging transportation management systems may cut it when all shippers have to choose between are truckload and less-than-truckload moves. Throw a few more complications into the ring, however, and a company’s ability to efficiently manage freight movement up and down the supply chain becomes extremely difficult.

The growth in intermodal, which involves the use of more than one mode of transport during a specific journey, makes the situation even more complex. “We’re seeing a lot more companies shipping via intermodal,” says Dwight Klappich, research vice president for Gartner, “and many of the systems that those firms were using in the past don’t fit with intermodal movement.”

The brick-and-mortar manufacturer that begins selling directly to consumers online, for example, will likely find its existing supply chain solutions to be inadequate for handling the new line of business. “Add small-package shipping to the lineup and their TMS will no longer fit,” says Klappich.

The shipper that expands globally will face similar challenges when it tries to manage multiple rail, truck, and ocean shipments. “Intermodal can be a complicated process for the firm that hasn’t dealt with it in the past,” says Klappich, who expects the intermodal trend to continue into 2012. “We’re definitely seeing more of it, as well as a need for a more robust TMS to handle the multidimensional shipping approach.”



Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Even though some of its key metrics dropped sequentially from August to September, the outlook for manufacturing over all remains strong, according to the most recent edition of the Manufacturing Report on Business issued today by the Institute for Supply Management (ISM).

Company officials said that these planned changes, which will take effect on January 4, 2015, will provide for increases in current pay rates and reduce the time it takes for its nearly 15,000 drivers to reach top pay scale.

While the economy has seen more than its fair share of ups and downs in recent years, 2014 is different in that it could be the best year from an economic output perspective in the last several years. That outlook was offered up by Rosalyn Wilson, senior business analyst at Parsons, and author of the Council of Supply Chain Management Professionals (CSCMP) Annual State of Logistics Report at last week’s CSCMP Annual Conference in San Antonio.

Matching last week, the average price per gallon of diesel gasoline dropped 2.3 cents, bringing the average price per gallon to $3.755 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

A number of key topics impacting the freight transportation and logistics marketplace were front and center at a panel at the Council of Supply Chain Management Annual Conference in San Antonio last week.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA