Autos

Top Transportation Management System (TMS) Trends for 2023 – Logistics Management


Managing transportation is getting more complex as everything from fuel surcharges to a driver shortage to capacity constraints have made selecting the best and most economical mode, carrier and lane choices extremely challenging.

The good news is that technology vendors have stayed in step with—and sometimes, even out ahead of—broader transportation trends, and now offer transportation management systems (TMS) that help shippers better operate this critical supply chain component.

Whether they’re built into a larger enterprise resource planning (ERP) system, served up individually by a best-of-breed software vendor, or offered as standalone, Cloud-based platforms, TMS helps companies plan, execute and optimize outbound and inbound shipments. The software helps shippers forecast their transportation needs, manage multiple carriers, track shipments and automate processes like tendering and load booking.

And due to the complexities that were created by the pandemic, shippers now truly understand the value of using TMS to automate their transportation activities. According to Peerless Research Group’s Warehouse Software and Automation Survey 2022, 26% of companies are currently using TMS and 72% of those organizations have had those systems in place for anywhere from one year to 10 years. About half of these TMS users say that they achieved a return on investment (ROI) on the software within 12 months or less.

AI in the house

“Historically, transportation management systems have offered a strong ROI,” says Chris Cunnane, research director, supply chain management at ARC Advisory Group. He says that the primary reason companies buy TMS is for freight savings that can be attributed to simulation and network design, load consolidation and lower cost mode selections, as well as multi-stop route optimization.

“As freight costs have continued to rise, companies have looked more and more to their TMS to mitigate these rising fees,” says Cunnane, who adds that another driver for TMS growth is the fact that the technology itself has been “steadily improving” over the last few years. He credits artificial intelligence (AI), real-time visibility solutions and the Internet of Things (IoT) with driving much of that software innovation.

“Artificial intelligence has been, and will continue to be, a key component of TMS,” says Cunnane. For example, AI can be used to “learn” about constraints, such as capacity, regulations, hours-of-service and properly planned shipments. This, in turn, provides a much more accurate estimated time of arrival (ETA) for shipments that are headed to warehouses, stores and end customers.

Using AI, shippers can also learn which carriers do or do not meet on-time service levels; which lanes typically carry more chances for delays; and whether there’s an optimal number of stops before shipments become late. “AI aids shippers in better understanding how to drive efficiencies,” says Cunnane, “and without sacrificing service levels.”

TMS just getting better

Brock Johns, a senior principal analyst at Gartner, Inc., says that TMS adoption has remained strong over the last few years.

“We’re in the middle of the research cycle for the 2023 Magic Quadrant, and based on our preliminary research and data, vendor growth has been strong in the TMS market,” says Johns. “Interest in TMS solutions continues to be very strong as well. We continue to forecast double-digit growth across the market, and especially for small- to mid-sized shippers where the barriers to entry for TMS adoption have receded over the last few years.”

As he surveys that TMS market, Johns sees a supply chain management software category that “just keeps getting better,” with much of that momentum being driven by end users that are continually asking vendors to fold more capabilities and functionalities into their software portfolios. What also helps is most TMS applications are now available in the Cloud and accessible to a wider swath of shippers.

One of the cooler TMS innovations that Johns has seen emerge over the last year or so is the use of AI and machine learning (ML) to help “connect” corporate departments that need information that a TMS can provide. Using AI and ML, vendors are blending chatbots and chat capabilities into their platforms.

The customer service agent or planner who needs updated status on an inbound shipping container, for example, can use the Slack-esque feature to get that information quickly. “It just makes life easier,” says Johns, “and it’s something we’ve been seeing more of over the last 12 months.”

With transportation accounting for the largest portion (27% in 2020) of total U.S. greenhouse gas (GHG) emissions, sustainability is another area where TMS vendors are being asked to step up to the plate and help solve problems. Shippers are increasingly being asked by their customers and business partners to reduce their carbon footprints and commit to net zero goals. Johns says TMS can assist with these sustainability efforts by helping shippers calculate and/or report on emissions.

“I’ve talked to a few shippers recently who have made sustainability their top criteria in the TMS selection process,” says Johns. “The fact that they’re putting sustainability that high on their lists is fascinating. It’s amazing how many RFPs and RFIs we’re seeing right now where sustainability has been given an elevated role.”

In response, Johns says TMS vendors are embedding more emissions calculation functionalities into their software, helping shippers capture sustainability-related data and using application programming interfaces (APIs) to connect to outside platforms.

Cunnane is witnessing a similar trend on the sustainability front. “Companies are looking at TMS to reduce costs while also improving sustainability initiatives. This is especially true for route optimization,” he points out. For example, load consolidation usually equates to fewer trucks on the road to deliver the same amount of freight.

This, in turn, helps reduce overall carbon emissions for transportation. And with route optimization, shippers can use algorithms to determine the most efficient route for every truck on the road—from cross-country deliveries to the final-mile.

More real-time visibility wanted

According to Cunnane, TMS vendors are also developing more real-time visibility solutions that help shippers better understand where products are in the supply chain.

“The rise of visibility solutions at the container level is helping to drive the TMS market to new heights,” says Cunnane, who sees real-time visibility tools as being most effective for over-the-road (OTR) shipments, but says they’re also being used across other modes, including ocean and air.

Cunnane is also seeing increased use of IoT-enabled fleet management solutions that can improve both visibility and versatility for companies across many different industries. The versatility piece is important, he explains because each industry has its own set of unique fleet management and integrated logistics requirements.

“The use of an IoT-enabled fleet management solution can boost performance by improving asset visibility and vehicle utilization,” Cunnane says, “reducing wait times at destinations and providing proactive maintenance-related cost savings.”

Siddharth Ram, VP of Capgemini’s consumer products, retail and services business unit, is also seeing significant demand for real-time visibility across multiple transportation modes. This is an opportunity area for innovative TMS providers.

“Companies aren’t just looking at trucking or rail independently anymore. Many of them want good visibility across multi-modal transport,” says Ram, who recently worked with a freight rail company that wanted to be able to track-and-trace shipments from the moment the ocean containers landed in a U.S. port until they are ultimately delivered to their final destination.

According to Ram, this particular company wanted to track the arrival of a shipment at the Port of Los Angeles and maintain that visibility as the cargo was loaded onto a freight train. That train makes its way across the country to a Midwest destination and is unloaded at a terminal. The freight is then transferred onto a container managed by a third-party logistics provider, which hands off the last-mile delivery responsibilities to a less-than-truckload (LTL) carrier or another provider.

“Factoring in the various different modes involved in these types of shipments, it’s difficult for a TMS to track-and-trace across those different modes,” adds Ram. “This is one area where TMS vendors are being asked to adapt their solutions and provide that multi-modal visibility.”

What’s next?

This year, Johns fully expects the TMS sector to “inch ever closer to the death of on-premises solutions.” An SCM sector that was an early adopter of the Cloud due to the many different outside “connections” that go into a complete transportation management setup, TMS has been moving toward this inevitable outcome for years.

“We’re at the point where vendors are trying to get companies to migrate to Cloud as soon as possible,” says Johns, who sees data security as a potential sticking point in this area, and particularly for companies that are making their first foray into Cloud-based supply chain management applications. “These companies should be thinking about how their data is being secured and what type of certifications the vendor offers. These are important points for anyone that’s choosing a new TMS partner in 2023.”

Johns adds that shippers should also factor in the specific solution architecture that their vendors are using, knowing that different providers use various types of frameworks. Some are embedded into larger ERP systems, others focus on best-of-breed applications and still others are using more microservice-type architecture, whereby the TMS application itself is developed as a collection of services.

Looking ahead, Ram sees advanced technologies like digital twins playing an increasingly important role in TMS and other supply chain applications. As digital representations of real-world products, systems or processes, digital twins can be used to map out transportation scenarios while AI can be deployed to help predict events and, ultimately, drive better decision making.

“Using a digital twin to complement existing TMS capabilities is one of the trends that we’re starting to see, but it’s still nascent,” Ram adds. “Adoption isn’t that high yet, but we are seeing more and more companies asking for these types of advanced capabilities.”





READ SOURCE

This website uses cookies. By continuing to use this site, you accept our use of cookies.