TMS optimization has been a key focus for Tier 1 TMS providers for the past three decades. These providers have invested heavily in developing transport planning engines capable of solving complex logistics problems efficiently. The early adopters of TMS technology were large shippers with complex, multi-modal freight networks. For them, the primary driver for acquiring a TMS was better load planning.
The Changing Landscape of TMS Users
Over the years, the profile of a typical TMS user has changed significantly. While large shippers have mostly already implemented TMS technology, the majority of new TMS buyers are smaller shippers. These shippers are more interested in process automation, trading partner connectivity, and enhanced visibility into their freight operations. They also prioritize the overall usability of the application and quick “time to value.”
The Need for Sophisticated Optimization
Sophisticated optimization remains crucial for a subset of shippers. Top choices for the largest and most complex shippers are highly sophisticated solutions from providers like Oracle, Blue Yonder, SAP, and Manhattan. These providers have dedicated operation research teams who continuously refine their solvers based on client needs and advances in their science, including the use of AI.
Identifying the Need for Sophisticated Optimization
Four factors can help identify shippers who will truly benefit from sophisticated optimization: a freight spend exceeding $100 million, usage of private and/or dedicated fleets, dynamic through-point determination, and significant demand variability.
The adoption of operations research techniques by logistics practitioners and solution providers has provided great value over the past 30 years. However, the freight characteristics of many SMB shippers implementing TMS technology today are fundamentally different from the early adopters. These shippers gain value from TMS through process automation, trading partner communications, enhanced visibility, analytics, and auditing. Therefore, each shipper needs to identify and quantify the value levers that will truly improve freight operations, leading to the selection of the best TMS for their business.
