Supply Chain Expertise and Technology Blog by TMC, a division of C.H. Robinson

TMS Managed Services Advancing as Expected. What’s Next?

TMS

Predicting industry trends is a risky business, and it’s gratifying when your view of the future turns out to be on track. In their most recent analysis of the transportation management systems (TMS) market[i], ARC Advisory Group introduces managed services as a growing product category. ARC also pays particular attention to software as a service (Saas)-based TMS models. We flagged these developments as the next phase in the evolution of transportation management services some two years ago.

Now comes the difficult part – looking into my crystal ball to figure out what comes next!

But before we get into the future, let’s take a closer look at ARC’s current findings. Here is what they say about managed services products such as TMC’s Managed TMS®. “We believe, based on anecdotal evidence, that transportation managed services are growing faster than the market as a whole or any of the existing revenue categories we are currently tracking.”

The research also highlights the rise of software as a service (SaaS) technology in the TMS universe.  “Many prospective purchasers of TMS know that a new style of TMS has arisen. These new TMS solutions are often simplistically labeled as SaaS solutions,” the analysis says.

As I argued in a blog post back in September, 2010 (Transportation’s Next Iteration of SaaS), SaaS “is an integral part of advanced transportation management systems and is largely viewed as providing the greatest time to value.”  Also, the next iteration in the development of TMS solutions, “is software plus services; a combination of SaaS and dedicated support teams that is designed to meet the changing needs of transportation managers,” I suggested.

To reinforce the point, a chart included in my 2010 piece shows how the new TMS variant – as adopted by best practice practitioners – represents the latest evolutionary leap forward in the market for transportation management services.

The two main drivers behind the rise of these products remain just as relevant today. First, shippers find that by adding services to their investments in TMS they can capture ongoing returns beyond the initial “honeymoon” phase of implementing the technology. Second, the managed services package takes some of the tactical load off shippers, freeing them up to deploy their staff resources more efficiently by, for example, giving more strategic assignments to their in-house specialist teams.

In addition, managed services can be leveraged quickly because part of the package is an external team of experts – based at the provider’s location or in situ on the shipper’s premises – that are brought on stream almost immediately.

As ARC points out, one of the advantages of this service category is that, “the service provider has planners that do not have to go through a planning period before becoming effective; shippers do not have to worry about substantial degradation in their planning capabilities if a power user leaves the company.”

So, what now? The chart published two years ago only goes as far as 2011; what can we expect over the next two years?  With continued global population growth and economic expansion in emerging countries, I believe that the need for global TMS technology will continue to grow.  As shippers navigate the complexities of global supply chain management and position themselves to grow in these expanding markets, global TMS technology is key to being competitive in managing freight transportation internationally.  I also believe that new cordless technologies and a shift to digital currency will also impact how we manage international transportation in the future.

What are your thoughts?  What trends do you expect to see continue in the next few years?  We appreciate your thoughts!


[i] Transportation Management Systems, Worldwide Outlook, Market Analysis and Forecast Through 2016, ARC Advisory Group