This is the second in a three-part series that tracks the evolution of the TMS from the late 1990s to today. In last week’s piece I discussed the emergence of the TMS. Next week I’ll discuss the future.
When we last left transportation management systems (TMS), the high price and staff requirements of the early systems had created two groups of freight shippers, the haves, which could afford the high expense of on-prem big-box systems, and a far larger group of have-nots.
The needs of shippers struggling to replace manual processes with automation, drove widespread developments of new products, services and third parties. Most of these used different approaches for addressing the huge need for efficiency in supply chains. Meanwhile, the maturity of cloud computing was driving changes across industries and was just beginning to gain traction in logistics.
The lineup of options for shippers looking to improve their logistics operations included on-site system vendors, services from 3rd party logistics providers, and a shallow pool of companies looking to leverage the software-as-as-service model and approach to locating system intelligence.
Word from Above
But what lead to cold sweats for shippers was all the best practice and success stories that the tech trades and even the business media were running. They featured pioneering companies that had implemented a solution to cure their shipping ills and were said to be on the leading edge of technology use for business gain.
That started the deluge of direct questions from C-level executives.
Are we checking out TMSs? Is this something for us? Can we save money? Why haven’t we done this? C-level execs started believing that their companies could quickly turn their freight shipping into a profit center from a cost center.
It didn’t matter that the price for a TMS was too high or that many of the options covered one aspect of shipping but not many others.
You’d think for sure that a growing group of TMS options would benefit all shippers desperately seeking freight intelligence. The reality was that TMSs were still not accessible to most businesses in the U.S. The have-nots could find affordable freight handling options, but that meant paying a third party to handle their freight shipping function.
For most, price as in the TCO, was the single largest impediment to implementing a system that would enable logistics professionals to truly manage their freight transportation. Isn’t it ironic that the sticker price of TMS options and alternative is what was keeping the have-nots from cutting costs and generating new revenue?
With the maturity of the cloud, it became clear that locating a TMS software product on a platform in the network and sold as-a-(monthly)-service would break down the many barriers to implementation that so many businesses of all sizes were up against.
This opportunity sure got the attention of shippers who had all but given up on an on-site TMS and wanted something that was both flexible in architecture and easier to cost justify to their bosses.
An Easier Sell
Many enterprise freight shippers moved from controlled freight chaos to the cloud and found that advances in platform technology and automation from TMS software made for easier installation and a faster return on investment.
But while a growing mass of businesses were putting cloud-based TMSs to the test – and turning a cost center to a profit center, SMBs, which I believe make up over 90% of all U.S. businesses, still couldn’t justify a TMS spend. Some outsourced their operations to 3PLs. Others were stuck with their inefficient status quo.
Believe me, whether you’re a kid or a shipping professional nothing’s worse than watching someone else get, enjoy (and profit from), something great that you can’t have.
In the final installment of this three-part series, I’ll explain how important changes in the evolution of the TMS will define the future of freight shipping. Thanks for staying tuned!