Pros and Cons of Using a TMS Platform for Managing Freight CostsWritten by Paul Forand
If your company isn't utilizing a Transportation Management System (TMS) to optimize your shipping, there's a good chance you're losing money because of it.
In recent years, companies around the world have been discovering just how much they're spending on freight. It's generally among the top three costs at most businesses and one that can be controlled. When individual departments source their own shipping or make many small orders rather than one large order, the result is higher freight costs.
The problem, of course, is how to keep track of this. A centralized source for routing, rating and shipment information—a TMS—is effectively required for a company to be able to keep tabs on all its shipping costs, especially one with many offices or departments. Once employed, a TMS can pay off with huge cost benefits.
So let's take a look...The Pros and Cons of Installing a TMS
We'll start here because the list is really only one item: it's expensive. Installing a TMS in a modern business is likely to be a five-figure spend, including computer hardware, software licenses, maintenance and required expertise to manage the software. You can probably expect a minimum cost of $10,000, and upwards of $50K is a possibility.
That said, there are alternatives to buying one outright. But let's look at everything you'd get, even if you did budget for a big tech investment.
- Shipment information is centralized and retrievable from any office, at any time.
- Day-by-day updates on the status of an order.
- Automatic lookups and comparisons between carriers/routes/prices.
- Far more accurate freight quotes.
- A system for comparing quotes to final bills.
- The potential of linking directly to your carriers to send orders instantly.
- Improved records handling and retention, which can be a lifesaver in case of an audit or potential legal actions.
- The ability of your customers to track their shipments as easily as you can, via online portals.
- Paperless processes reduce or eliminate the bulk of paperwork, saving money and speeding shipments.
- Get a true all-in-one overview of all shipments across all departments, to actually get a handle on all your freight charges.
The reason a TMS is so beneficial is that it can create cost benefits at practically all levels of the organization, from marketing to post-sale support and everything in-between. If a department EVER purchases or ships items, or even just interacts with customers who are doing so, a TMS will lower their long-term costs.
Why Pay More for a TMS?
If this sounds good, but you're not sure you can sell a five-figure tech spend internally, there's another alternative: partnering with a total logistics solutions provider! Modern 3PLs have systems in place to assist you with your transportation management at a much lower cost.bristol lad via photopin cc photo credit: Richard Drdul via photopin cc