C. F. Lynch & Associates

Less Can Be More

By Clifford F. Lynch

DC Velocity, October, 2006

I recently went shopping for a digital camera, only to come home empty handed. The problem wasnít that I couldnít find a camera. The problem was I found too many. There are more than 200 models on the market today, and the choices proved overwhelming.

A camera-savvy friend counseled me not to let the decision become overly complicated, and he offered some simple advice: Donít spend a lot of money. Buy one thatís easy to operate. Decide how you want to use it and donít buy more than you need. (Or if I preferred, he said, I could just borrow his for an upcoming trip.)

As I reflected on that advice, I was struck by the similarities between shopping for a camera and shopping for a transportation management system (TMS).

Driven by the explosion in global trade and relentless pressure on managers to hold down transportation costs, the market for TMS has boomed in recent years, more than doubling from 1998 to 2005. As the market has expanded, so have the TMS offerings. There are more vendors with more products at a wider range of prices today than ever before. But as confusing as the choices may be, there are three rules of thumb to keep in mind when buying a TMS:

You donít have to spend hundreds of thousands of dollars to get a good system.

You can buy only the modules or applications you need.

There are excellent hosted systems available, eliminating the need for ongoing maintenance and enhancement of in-house or purchased programs.

All the fancy add-ons aside, a good TMS should handle two basic functions: transportation execution and information management. That is, it should enable the user to do the following:

Receive, revise, schedule and confirm customer orders

Print pick sheets and bills of lading

Optimize loads through consolidation, shipment planning and routing

Select the best carriers

Tender shipments electronically

Track shipments to delivery.

On the information management side, a good system should collect and compile data in ways that make it easy for users to do the following:

Benchmark current rate levels against alternative schedules

Model distribution networks and shipping methods, and analyze alternative shipping points and modes

Review the performance of the transportation function. (The TMS should provide regular reporting on key performance indicators.)

Analyze trends

Map historical traffic flows

Graph trends, performance and other data

Rate the carriersí performances.

As important as these may be, perhaps the most critical capability of all is freight payment. With Sarbanes-Oxley and other reporting requirements, it is essential to maintain financial integrity. By allowing experts (human or electronic) to manage contracts, audit bills, make payments, allocate charges and report the results, the client is assured of paying the correct amount, allocating accurately and receiving feedback on a timely basis.

Finally, consider "borrowing" a TMS. Be sure to look at the on-demand or hosted systems option. Virtually all the market research indicates that managers want a TMS they can understand, install quickly and easily at a reasonable cost, and add onto over time. Hosted systems fill the bill on every count.



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