Mhlnews 2951 Questions

Is the Cloud Platform a Bridge to Investing in Our Own TMS?

Sept. 17, 2013
QUESTION: Is the cloud platform a bridge to investing in our own TMS or will cloud make that an antiquated idea?

Is the cloud platform a bridge to investing in our own TMS or will cloud make that an antiquated idea?

James A. Tompkins, Ph.D., CEO, Tompkins International, supply chain consultants

We do see shippers asking this question, as the Cloud Platform becomes more popular for many applications, and the TMS is one.

When shippers have contracted with Logistics Service Providers (3PL’s), most of these have their own TMS, and if they are under a Service Level Agreement to manage shipments, then they would use their TMS to enable that on behalf of their customers.

The increasing popularity of Cloud Platforms, however, does not materially change the correct answer to that question.  Whether or not the application is used in a Cloud Platform is only one factor.  While Cloud processing can improve and speed the sharing of data and information among trading partners, the business needs for a TMS are more important.

For example, consider these questions:

--does the shipper want to manage and control its freight shipments – either inbound or outbound?  Is shipment total visibility necessary for its products or customers?

--does the shipper want to plan its transportation, even while outsourcing its execution?

--is the shipper more incented to minimize its overall transportation expense?

--is transportation viewed by the shipper as important enough for competitive advantage and customer service to justify a TMS to plan and manage it?

--does the shipper have special needs, such as e-Commerce fulfillment and final mile delivery issues, that it must plan and execute directly?  Further, is it consumed by complex, multi-stop routing needs?

--can transportation be tightly integrated with the shipper’s WMS, and its ERP or Financial and Sales systems, if it is owned by the LSP?  For example, carrier selection, rating and routing, BOL labeling, freight bill audit and payment?

--are there frequent changes in real-world transportation patterns made necessary by changes in products, promotions, customers, suppliers, distribution, or origin/destinations, where scenario simulations are important?

Shippers must answer these business questions before addressing their interest in Cloud processing with service providers and/or trading partners.

John Hill, Director, St. Onge Company

Generally quicker and less expensive to implement, hosted (now called SaaS or Cloud-based) TMS have been available since the mid-1990's as viable alternatives to the on-premise variety, including those offered as optional modules within ERP systems.  They should not be looked at as a "bridge", but rather as a potentially robust alternative to purchasing an on-premise TMS.  Making a choice starts with detailed documentation of functional requirements as well as the interfaces needed to exchange information with other corporate systems and trading partners.  Once these documents have been prepared and validated by the internal groups affected, they can be used to prepare an RFI (Request for Information) for use in reaching out to the market (including the company's current ERP and supply chain system(s) suppliers) to identify prospective Cloud and on-premise TMS packages.  Responses to the RFI will permit preliminary evaluation of the trade-off's, likely costs, implementation schedules and risks – and set the stage for more detailed analysis of the value proposition and, as appropriate, procurement.

Alex Scott, Member
Supply Chain Management Ph.D. Program
Penn State University

I believe the idea of developing your own TMS is an antiquated idea.  Similar to my response about using 3PLs, TMS developers are able to realize economies of scale by selling to many purchasers.  Hence, they are able to hire advanced software coders, be on the forefront of technological developments, etc.  I don’t think there are many companies for whom investing in this would make sense, unless you are planning to be a TMS provider yourself.

I believe the cloud is a great development for many things, but it’s not really new (think of the early days of internet development in the 1970s, there were central mainframes connected to remote terminals…this is the same thing, essentially, rebranded as the cloud).  The cloud is expanding in popularity because the internet is now so fast, data storage is so cheap, and remote applications are so much more advanced.  But fundamentally, this is nothing new.

Join the ConversationShare your insights and opinions on the questions and the Experts answer(s). You must be logged in to the website in order to post your comments.