Q&A: Why Make TMS an Enterprise Priority?
Transportation management systems have been around for a long time. Historically, proponents battled to have TMS recognized as an investment priority. Today, many companies are discovering – sometimes the hard way – a TMS needs to be an enterprise priority for variety of critical business factors.
The following interview of Gregg Lanyard, Director of Product Management at Manhattan Associates by Adrian Gonzalez of Talking Logistics sheds light on why transportation management systems are an enterprise priority.
VIDEO: Watch the full interview on making TMS and enterprise priority. (37:00)
Why is making TMS a priority more important today?
There are five critical reasons to make TMS a business priority:
- Supply chains are more dynamic than ever. We see more volatility in the world and that equates to more risk. To respond, companies need to be more nimble, more reactive, and more prepared for when change hits. We hear more about supply chain failures in the media than ever before. Whether it’s port closures or natural disasters, consolidations and mergers, new regulations – a TMS allows companies to adapt, prepare and facilitate these changes.
- Customer expectations are higher than ever. We see it throughout the industry with shorter lead times, next day and same day delivery requirements, and not just in our personal lives but in the business world too.
- Technology advancements. Technology has advanced in ways that we now have information available to us from systems and trading partners that we couldn´t get to or couldn´t get in a timely manner just a few years ago.
- Senior-level accountability. There’s also a new level of accountability at the top of organizations for transportation to be successful. Transportation systems are now being looked at as a competitive advantage.
- E-commerce fulfillment. Online shopping and ordering has made significant changes to transportation. There is a need to reassess your supply chain like never before. We hear these two questions most often: 1) How do I optimize transportation? 2) How do I optimize solutions that are interacting with the warehouse and transportation?
What still amazes me is how many companies do not own a TMS or have not made TMS an enterprise priority. What is driving this?
35% of companies are using a TMS and that's the number we’ve been using for many, many years. It is really hard to pin down why that number hasn’t changed. In my experience with customers and prospects, cost and change management are still hurdles. I think those are the two obvious ones.
Additionally, there may be perceptions that a TMS is too complex to manage and introduce to current talent. The truth is that TMS has become easier to implement/use and there are more supply chain management professionals coming out of college prepared to hit the ground running after graduation than ever before.
How does a TMS align with the challenges and objectives CIOs face today?
For CIOs it’s about making the decision to align platforms, align technology, and find a partner that’s right for today and years from now. They’re asking themselves “How do I find a flexible solution that scales with the business as it grows?”
Supply chain platform solutions really fulfill this requirement best. They get a common architecture with common business objects, and cloud deployment models help reduce the load on staffing and infrastructure needs.
Are CIOs thinking of cloud as an option for TMS and are they more willing to embrace it today?
Yes, they are. The concerns that were brought to the table early about security have gone by the wayside. It’s not as much of a roadblock anymore for companies because the benefits clearly out weight the negatives. The CIO can now fit a TMS project into the mix of other IT projects more easily than before.
Do you see these modern platforms having the ability to empower end users to do configurations themselves vs. IT staff?
Absolutely. You hit on two key points: one is that TMS has just gotten to a more mature point where there’s been a focus on usability and the user experience. The other is the fact that the tasks, actions, and the business processes supported by TMS are being built around the business user.
Why should CFOs make TMS an enterprise priority?
With CFOs we’re talking a lot about total cost of ownership, about return on investment, and about the financial stability of their chosen TMS partner. Talking numbers, five to twenty five percent is the accepted range of savings a company can achieve with a TMS.
The realized ROI from TMS is on the rise so people are starting to get more benefits than even before. The savings you get from TMS go beyond just than initial implementation. There’s incremental savings that can be realized year over year, which from a CFO perspective is a sweet spot. They’re looking for continued ROI not just a one and done scenario.
How can organizations leverage transportation as a way to drive top-line growth?
That’s exactly what companies are about when considering at TMS, using it as a competitive advantage. We have a structured means to easily evaluate your current operations and provide a value assessment, including where we think you can grow and help to achieve return on investment. All of these things are available today based on historical data.
How should supply chain officers view a transportation management system and its importance today?
I don’t think the value prop for a TMS needs to be explained to a supply chain executive by any means. They’ve probably been through it before if they made it to that level. A CSCO is an artist, they’re scientists, and they're mathematicians all rolled into one. Additionally,
- They are considering how new and innovative solutions can adapt to the business as the business changes.
- They’re looking at how complex algorithms are going to help reduce costs year-over-year.
- They’re evaluating how efficiencies are going to be gained by levering technology to break down barriers between the functional silos they own.
The CSCO’s job is to figure out the best combination of a bunch of different solutions. So a stand-alone TMS value prop is well known. The value of a supply chain platform that provides transportation management, warehouse management, yard management, order management and other complementary functions are the differentiators that can impact operations and that’s what’s important to a CSCO looking to make real change.