Transportation management system
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Transportation Management Systems, commonly known as TMS, are a category of operations software (often Web-hosted) under the “supply chain execution” grouping that aids logistics management in various modes along with associated activities, including managing shipping units; shipment scheduling through inbound, outbound and intra-company shipments; modelling and benchmarking, rate management, data base maintenance; generating bills of lading; load planning and optimization; carrier or mode selection; posting and tendering; freight bill auditing and payment; loss and damage claims processing; labour planning and building; documentation management (especially when international shipping is involved); and third party logistics management.
They often feature a main graphic user interface portal known as a "dashboard" that displays the user's selected key performance indicators.
TMS programs for optimal shipment planning and execution first appeared commercially in the late 1980s with the advent of Sure Shipping (led by Robert Shagawat, as derived from the Westinghoue acquistion of Innovative Computing of 1990, advancing from their first TMS of 1988 at Reynolds Metals, later sold to VC, then Sabre, then Logistic.com now part of Manhattan); ShipNet (backed by Wasserstein-Perella and Motorola funds, one of early fallouts by early 1990s), and Rover Technologies in PA (as acquired by what was to become Manugistics as basis for their first TMS offering). Early followers into the field included Weseley Software (a Load Builder DOS based point solution expanded by others before it was convered to Windows client-server and acquired by RedPrairie in 1996); InterTrans Logistics Systems (ITLS, an AS400 Canadian based offering oriented for 3PL's based on their first win at AmeriCold in early 1990s, acquired by I2 as the basis for their current TMS which has now been reacquired by Nulogx; a privately held Canadian company); Metasys (a weak Oracle-based offering built originally as "one off" for Celanese, which has since ceased operations), CAPS Logistics (more in the load building and local fleet routing space, as leader when founded and operated by Dr. Ratlieff and Richard Sharpe before its later decline after acquisiton), and others.
The earlier freight payment service providers (Cass, Commercial Traffic, what is now Data2, Transzact as now owned by Schneider Logistics and others) did not seize the opportunity to expand vertically into pre-shipment optimization and planning from their base in post-shipment freight audit, and have remained in the now commoditized field of freight settlement or have expanded horizontally to handle other non-freight non-PO payables processing.
The TMS market, still highly underpenetrated and still rapidly growing, has several tiers depending on capabilities and focus. Tier 1 TMS providers include Shippers Commonwealth and its partner RedPrairie; Manugistics; I2, G-Log (acquired by Oracle), Manhattan (via acquisition of original Westinghouse Sure Shipping via earlier transactions), Logility, and others. These solutions typically offer optimized planning for mult-modal shipping, shipment management and execution including tendering and tracking, and settlement and reporting options as integrated to a shipper client's enteprise systems. A group that offers TMS On Demand programs on subscription basis with Application Service Provider hosting include TransWorks, Nistevo, nxTier, Shippers Commonwealth, and Lean Logistics. There are also various point solution providers, like Freightquote.com [1], who offer limited lightweight execution functions without full optimization, but have the advantage of requiring lower investments.
The carrier market is dominated by TMW. Second tier, smaller vendors include McLeod Software and Innovative Computing. Various point solutions also exist for long-haul and local/metropolitan fleet management.
Specialty point solutions are still prevalent for rail, intermodal, the fragmented freight brokerage market, ocean, and parcel.
A separate market exists for so called International Trade and Logistics (IT&L) systems, which focus on export/import shipments including ocean and air with customs clearance, duties, and documents, where this field was started by Blinco, Vastera, Syntra (later ClearCross), and now has several new players in its midst.
The major ERP system providers have had various attempts to enter the TMS space, with SAP currently offering its own program and Oracle offering its own extensions to be augmented by its acquisition of G-Log. The ERP players are not yet taking any significant market share in the TMS space due to lack of specialty focus, price, and limitations of their capabilities, but are expected to expand in cases where the client already uses one of the large-scale ERP programs, as ERP module offerings in this space mature. The ERP based solutions are not expected to have a standalone life or market presence if the client does not use an SAP or part of the Oracle family (including J D Edwards and PeopleSoft), for example.
Collaborative logistics attempts for multi-shipper trading partner networks began with Westinghouse Sure Shipping in 1992- 1995, and is still a nascent market overcoming limitations of carrier base alignment, multi-shipper conflicts and cooperation, and difficulties of committing dedicated freight for shippres on multi-shipper basis for shippers who are risk averse. The decline in the popularity and carrier acceptance of continuous move programs since the late 1990s, as impacted by greater motor carrier power given the growing Truckload capacity shortage in the North American market, has also slowed the expansion of such programs. Recent or current players in this virgin market include Caravan Network (affiliated with Shippers Commonwealth); TransWorks; Nistevo; ONE (formerly E-Logex).
The TMS market is now covered by AMR, ARC, Aberdeen, Gartner, and other IT analyst firms, but their market statistics are conflicting and open to question, as they are based primarily on vendor self-reported survey data in a market still dominated by privately held firms or ventures which are owned by larger companies who do not report TMS results separately.
The main benefits of TMS are lowered freight costs through optimized mode, route and plan including consolidation, mode shifting, and pools for outbound and inbound freight; and productivity advantages of auto-tendering with customer service aid of shipment tracking, along with self-pay programs and increased management visibility and control through executive information systems. Typical TMS freight savings can run from 2 - 6% for a high volume TL shipper to 12 - 15% for an LTL/TL mixed mode shipper, along with significant gains in efficiency on planning and covering loads automatically vs. manually.
TMS programs are typically offered as perpetual software licenses with annual maintenance, or on an ASP subscription model, with client hosting vs. vendor hosting options for data center functions. Various moves by industy leaders and increased competition and maturity in the TMS market have translated into improvements in non-recurring implementaton times and costs in recent years, bolstered further by volume gains from the Tier 1 TMS players as the market penetration has expanded for TMS.
