Supply Chain Leaders Evaluating Transportation Management Systems PDF
Supply Chain Leaders Evaluating Transportation Management Systems PDF
Supply Chain Leaders Evaluating Transportation Management Systems PDF
Overview
Key Challenges
● Disruptions such as the capacity crisis of 2018, the COVID-19 crisis and future
disruptions that might occur in the transportation industry have created a bigger
focus on transportation management.
● Supply chain leaders continue to adjust their logistics strategy to adapt to these
disruptions and to meet the changing needs of the market but struggle to align
their technologies to these changing business strategies.
● Companies looking for a transportation management system (TMS) often don’t
understand the differences in TMS solutions on the market, as offerings vary
significantly. These various TMS offerings focus on different end users, levels of
transportation complexity, transport modes, industries, regions, implementation
methods and even company sizes, making the selection process increasingly
complex.
Recommendations
Supply chain logistics leaders responsible for logistics strategy and operations should:
● Review the role of transportation technology by identifying the gaps that recent
disruptions have highlighted and their impacts on the transportation management
function. Create a roadmap with the technologies that can help address these
needs and prioritize them based on the company’s technology maturity.
● Select the right transportation technology by aligning the correct capabilities with
the organization’s business strategy.
● Take advantage of the growing and diverse TMS market landscape, as well as
new capabilities, by investing in a new TMS solution either as a first-time buy or
replacement. Focus on affordable cloud-based solutions with shorter time to
value.
● Identify and understand the key considerations when selecting a TMS by gaining
a deeper insight into the differences between the various TMS offerings. Choose
the solution that fits your organization’s level of complexity and supports your
strategic imperatives.
Introduction
This document was revised on 27 August 2020. The document you are viewing is the
corrected version. For more information, see the Corrections page on gartner.com.
Analysis
Understand the Impacts of Disruptions on the Role of
Transportation Technology
The recent disruptions have created a lot of flux in the transportation industry. All the
challenges and inefficiencies that have been highlighted during the pandemic have only
served to showcase the importance of technology in transportation. In a recent survey
by Shipping and Freight Resource, 67.6% of participants indicated that they will invest
in technology.2 Supply chain organizations that had already made the investment in
foundational transportation technologies have been in a better position to manage the
recent challenges (see Figure 2).
While not every organization requires or utilizes all these technologies, for those that
already use one or more, the benefits had already been proven prior to the pandemic. In
some form, each of these technologies helps organizations to improve:
Transportation management systems are one of these technologies. Supply chain and
transportation are often among the first functions tasked with finding cost savings during
a downturn. However, supply chain has been in the spotlight during the pandemic and
may be at its zenith in terms of respect and appreciation. Supply chain leaders must use
this as an opportunity to ensure they have the right technology in place for future crises.
Align the Transportation Technology Selection to the
Logistics Strategy by Selecting the Right Transportation
Management Solutions
Transportation leaders should look at their transportation strategy and maturity when
making the right TMS selection. Gartner’s model for holistic multimodal TMS is
designed to help buyers of modern TMS applications better understand their key
components and capabilities (see “Gartner’s Model for Holistic Multimodal
Transportation Management Systems: Core Capabilities”). The model describes how
different TMS capabilities are distributed based on operational complexity and
sophistication in transportation operations. The more complex the transportation
network operations, the more advanced the TMS needs to be and the more capabilities
it includes. In addition, the importance of integration or convergence with other supply
chain functions increases with higher levels of complexity to maximize the required level
of efficiency (see Figure 3).
● Industry factors:
○ Increasing flux in the transportation industry.
○ Tightening/loosening of transportation capacity (different by mode and
region).
○ Increase/decrease in transportation rates (different by mode and region).
● Technology factors:
○ More user-friendly, easier to implement cloud-based TMS solutions with a
lower cost.
○ Solutions that provide low time to value and high ROI.
○ New technologies, such as artificial intelligence (AI)/machine learning
(ML), visibility and analytics, creating more value.
Gartner
Gartner has noticed a growth of TMS adoption across all segments of shipper sizes in
the market due to the above factors. This is referred to as the “Democratization of
TMS.” This democratization affects the adoption, networks and capabilities of the TMS:
● Market adoption:
○ Continued growth in all segments of the markets.
○ Adoption drives larger networks and better visibility into the market.
○ Increased opportunity and attracting more vendors in the market.
● Networks:
○ Expansion of the logistics networks.
○ Need for integrated collaboration across the supply chain (SC) network.
● Capabilities:
○ Newer vendors mixing TMS with freight capacity and visibility.
○ Partnership with complementary solutions, such as real-time
transportation visibility platforms (RTTVP) and multicarrier parcel
management systems.
Companies who are looking to invest in technologies give preference to solutions that
are cloud-based and can be implemented quickly. They should also allow the
companies to achieve value in a short amount of time.
“Projects that have low cash needs and a short time to value may be
allowed to continue, while those with a longer time horizon, regardless of
their return on investment, will be canceled or paused.”
As noted before, carrier networks’ access to capacity and visibility have become more
important factors for transportation leaders to consider when looking at transportation
management solutions.
Carrier networks have increased in importance when shippers select a TMS. Several
vendors continue to expand their organic carrier base, while others build partnerships to
provide the required carrier networks. More often, shippers leverage the already-built
carrier networks offered on cloud platforms and lose momentum for creating one-to-one
carrier connections due to budget and resource constraints. Carrier networks also can
provide an avenue to additional capacity. In the last year, we have seen many TMS
vendors connect with digitized freight networks, such as Convoy, InstaFreight,
Loadsmart and Uber Freight. In time of tight capacity, the TMS is a conduit through
these digital freight partners to provide easy access to capacity and real-time rates.
Visibility remains an issue, even with companies that have implemented TMS solutions.
Even though the situation has improved over the past years with the development of
new solutions and the usage of analytics and AI, visibility in TMS applications remains
an issue. Shippers have relied on the carriers sending electronic data interchange (EDI)
messages or providing manual system updates to get visibility to the status of their
shipments. In many cases, this was a matter of too little, too late — especially in
over-the-road transportation where there are millions of fleets and it is very difficult to
get real-time updates to shipments. As carriers become more sophisticated in their
technology, RTTVP is becoming much more relevant and important. Some companies,
such as FourKites,Trimble, project44, Descartes, Shippeo and Sixfold, have come into
the market to try and solve this issue (see “Market Guide for Real-Time Visibility
Providers”). The real-time visibility market is thriving with several vendors growing at
100% and even 200%, year over year. That being said, even the larger RTTVP vendors
are still growing and are continuously adding connections to carriers onto their
platforms. This enables the shipper customer to have direct access to real-time
information. Most of the leading TMS providers have partnered with one or more of
these companies to provide better visibility during transportation execution.
Type of Description
TMS
Multimodal Mostly used by shippers and third-party logistics (3PLs) for
Domestic managing the domestic transportation (mainly full truckload
TMS [FTL], less than truckload [LTL]).
Source: Gartner
Existing users looking for a TMS replacement and new users of TMS need better insight
into this technology market as it continues to grow at a strong rate. Companies that
aren’t yet looking at TMS as part of their technology investment strategy should look
into this to avoid falling behind. This has an impact on what markets technology vendors
should focus on as well as possible investment in TMS vendors that are looking to
expand their coverage, and therefore, need new capital.
The gaps in core North American TMS solutions for planning, execution and settlement
functionalities have narrowed across many vendors, but several continue to distinguish
themselves with a more compelling TMS vision regarding functionality, mode coverage,
technology and globalization.
Although functionality remains at the top of the list of user evaluation criteria, there’s
near-functional parity for core TMS capabilities across the major TMS providers.
However, vendors that focus on the small and midmarket typically don’t need to offer
the same depth and breadth of functionality. On the other hand, factors like simplicity,
ease of implementation and the quality of the user interface (UI) and user experience
(UX) become inversely important. Only a few vendors focus on both the enterprise and
midmarket, which requires them to have an extensive library of capabilities, while at the
same time, offering ease of use and implementation at a lower price tag.
We see notable differences between European vendors and North American vendors;
historically, North American vendors have had much more focus on planning and
optimization, where European vendors were more focused on the execution and the
carrier networks. Several North American vendors have started selling more in regions
outside of North America. At the same time, several of the large European players are
focusing more attention on the North American market (see “Critical Capabilities for
Transportation Management Systems”).
Evidence
1
Gartner’s Supply Chain Technology User Wants and Needs Survey. Results presented
are based on a survey conducted between November 2019 and December 2019 to
explore the role technology plays in supply chain, how supply chain organizations
leverage technology for competitive advantage and their views on exploiting as well as
investing in supply chain technology. A sample of 350 respondents completed a
web-based survey, with the organizations qualified according to their industry, annual
revenue of their organization being $100 million and above. The sample mix by region
was North America (40%), Western Europe (40%) and APAC (20%). Respondents were
required to be a manager or above, as well as involved in decisions regarding supply
chain management processes, strategy and supporting technology. The survey was
developed collaboratively by a team of Gartner analysts who follow the IT market and
was reviewed, tested and administered by Gartner’s Research Data and Analytics
(RDA) team.
2
“42% Will Change Supply Chain Strategies Post COVID-19 — Impact Survey,”
Shipping and Freight Resource.
Bart De Muynck