Is an in-house TMS right for you?

In order to gain more control of supply chain operations, an increasing number of mid-cap companies are investigating the benefits of an in-house Transportation Management System (TMS).   An in-house TMS gives executives a sense of consistency in processes, compliance, and technology integration.  However, all of the risks and costs that come along with owning a TMS are not solely realized at the initial time of purchase.

Purchasing a TMS requires an initial large capital investment, before seeing any benefits. This initial investment is typically used to cover associated licensing fees, employee training, system infrastructure, system maintenance, support, integration of suppliers, carriers, and any other third parties involved.

As with any technology bolt on solution, ERP upgrades, data warehouse integrity, web portal compatibility, and ease of vendor solution updates must be considered.  However, a key question often overlooked is asking: “What areas of my business will a TMS touch?”.  With so much diversity among transportation suppliers in today’s market, no one solution can remain accurate, timely, and reliable across all silos of your business without continual communication maintenance and point of sale reprogramming.

Silos within your business typically affected include Customer Service, Accounts Payable, Procurement, Distribution, and Management.  Companies who purchase TMS Packages with the goal of a six month to two year return on investment quickly realize that a support team must be established around the technology in order to advance towards the desired ROI.  If an ROI is ever truly achieved, it is almost always well beyond the target date.

Many organizations only plan to invest and reconstruct their network once a year. The initial large capital investment leaves the purchaser feeling extremely overwhelmed and burdened by the system that they bought to alleviate their costs and make their business better, faster, and smarter.  Purchasing a system that doesn’t fit into your business could result in continually investing money into a sinking ship.