Trouble Justifying a TMS?

Based upon my conversations with customers, industry analysts and others, you would think that TMS justification shouldn’t be an issue. But it still is. In the recently completed transportation management benchmark “Transportation Management Strategies and Tactics of Top Performers”, only 1 in 4 respondents indicated that they had no issue justifying a TMS, but half did. Responses to other questions clearly demonstrated that companies are not thinking broadly enough about the value that a TMS can bring. It’s time to expand the benefit horizon beyond the transportation department and even beyond the supply chain organization.

Figure 1 shows the breakdown of the survey respondents that said that they had obstacles justifying a TMS. For those companies struggling with justifying a TMS, “Payback not clear” was the top issue. However, “Not a priority to the executive team” was number 2 and is a proxy for not having a compelling value proposition to get management’s attention. Clearly, the potential value of TMS is being short-changed.

Figure 1

                                                                                                                                                                        Source: Descartes

Why the disconnect? There are 2 other questions from the survey that point to the challenge that companies face.

The first one addresses how TMS value is measured (see Figure 2). The top measures of customer service (71%) and cost (63%) are just focused on transportation itself and not its impact to the greater organization. Metrics that get executives’ attention are revenue- and competitively-focused. There are many instances where transportation-based services are making a difference, but if you don’t measure them you won’t know the true value that a TMS can deliver.

Figure 2

                                                                                                                                                                          Source: Descartes

The second question addressed the use of TMS information across the enterprise and beyond. Transportation management is a multi-party process. Keeping the valuable transportation bottled up in the transportation department or even the supply chain organization diminishes TMS value and management understanding of its strategic role. See how, in Figure 3, there is a drop off in the sharing of TMS information with some of the most critical company organizations, like sales and even customers – the ones that get the “lion’s” share of management focus. Some of the problem is self-inflicted. If a company does not believe that transportation management can provide competitive differentiation, then it is considerably less likely to broadly exploit that information.

Figure 3

                                                                                                                                                                        Source: Descartes

The value of transportation management is there, but too many transportation organizations struggle to externalize that value in areas where management will give it greater emphasis and more readily buy-in to new transportation strategies and technologies. Top performers – the ones who see the competitive advantage opportunities - are much more likely to act and measure their success more broadly. The results are a self-prophecy.

If you would to learn more, join us on February 22nd at 2:00 pm ET for a web seminar where we review the results of the “Transportation Management Strategies and Tactics of Top Performers” study. See how top performers’ transportation strategies, tactics and technologies differ from the rest of the pack and what recommendations will make a difference for yours.