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
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
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.)
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