A recent survey conducted among shippers indicated that Transportation Management Systems were a good investment because over time they lowered freight costs enough to more than pay for themselves.
More than 40% of the transportation professional polled said TMS systems saved them between 5% and 10% on their freight costs. And 23% said their total freight costs not under the control of the TMS would increase more than 10% if they were forced to give up their transportation management software.
TMS systems focus on process enforcement, visibility, optimization and analytics to provide key data shippers can use to make important decisions that can save them money in both the short and the long run, according to Steve Banker, director of supply chain solutions for ARC, the research firm that compiled the report.
“TMS is one of those applications that has all good payback,” Banker told Logistics Management. “When a company installs a TMS, the savings expectation is about 8% for most industry verticals.”
So a company that spends $100 million on freight every year could save between $8 million in freight costs. Compare that to the typical cost of installing TMS into a shipping operation — an estimated $1 to $2 million — and the savings immediately become obvious.
“That’s a pretty good return,” Banker said.
Many shippers today are exploring their options with TMS because they want to realize that kind of return on investment. Two of the most common TMS options are the traditional purchase-and-install format or one that resides online in the “cloud” and can be accessed from anywhere at anytime.
The report, “2012-2017 TMS Global Marketing Research Study” was compiled by the research firm ARC and published in 2013.