Why Purchasing Your Own TMS Platform May Not Be Your Best OptionWritten by Paul Forand
There are a lot of options on the market right now for optimizing and cutting costs on your freight expenditures. For many companies, the Do-It-Yourself approach seems best, and they decide to purchase a Transportation Management System so they can get a handle on their shipment processes themselves.
For some companies, this is a good option. However, we also hear from companies that attempted to install their own TMS, but ended up getting in over their heads. Changing over to one is a difficult process, and it's not always the best choice for many businesses.
From our experience helping companies with these processes, we know a few situations where a TMS is usually not the best option.
Scenarios Where You May Not Want A TMS
1 - Time is of the essence.
It may seem like stating the obvious, but moving your systems onto a TMS platform isn't a simple software rollout like installing Microsoft Office. The process requires converting a large number of processes from paper to digital, as well as making changes to workflows throughout a company.
In the end, of course, these changes result in a much more efficient freight operation. However, in our experience, the minimum time to implementation is around six months, especially if a company is attempting to do it without outside consultation. If you're including the time it takes to iron out the bugs after implementation, a year may be more realistic.
If you need to see real improvement in your freight expenditures, quickly installing a TMS isn't a good option.
2 - You lack onsite computer hardware.
A TMS doesn't require cutting-edge equipment, but it does need a computer network built and installed within the last few years. If you're still using paper processes, a TMS install may entail outfitting departments with entirely new equipment. Plus, of course, the server on the back end needs to be able to handle large new amounts of traffic.
All of this can add considerably to the final bill, as well as the time required to install/ deploy.
3 - You're short on manpower to manage the system.
Beyond the labor needed for the initial rollout, a typical TMS needs 1-2 dedicated staff watching over it on a day-by-day basis. This isn't a job the network administrator can be expected to handle. A TMS, especially in a large operation, will be at least as complicated to manage as the main network.
Additionally, you would almost certainly need someone serving as a Transportation Manager. This person would be tasked with ultimate responsibility for the TMS, including keeping up with all regulatory\scheduling changes and implementing updates to the system as needed.
4 - Money is tight.
What all of this adds up to is a project that's going to be far more expensive than the price of the software licenses alone - and that's likely to run into the five figures by itself. Depending on the size of the company and the amount of hardware needed, this can easily become a high end six-figure spend.
An alternative is partnering with a Third-Party Logistics partner! We can rapidly implement improvements to lower your costs with an efficient and affordable TMS rollout.