One and done?
“Don’t worry, Mike. Phase 2 never comes.” That was the guidance whispered to me by a fellow consultant I was working with at a TMS kick-off meeting in the mid-1990s. The shipper, a large consumer package goods company, had just acquired our TMS solution. We were in a conference room discussing project scope and the client’s long-term objectives, and I was worried about our ability to deliver Phase 2. The very limited scope of Phase 1 was to be followed by Phase 2, which included virtually everything NOT included in Phase 1. I was worried about integration issues, change management challenges, the scalability of the software and basic product gaps, all of which would need to be addressed. How would we be successful? How will the customer deliver the financial benefits that were promised to senior leadership?
We look smooth on the surface but underneath, our legs are moving a mile a minute.
I contemplated the meaning of my colleague’s statement – “Phase 2 never comes.” Was it overly cynical or was it an accurate depiction of a large scale, multi-phase, enterprise software implementation? Since then, I have come to the conclusion that in too many cases, my colleague was correct. The ultimate vision of the TMS becoming the technological foundation in which transportation operational excellence is derived remains only partially fulfilled for far too many shippers.
Are you under-utilizing your TMS? If so, you’re not alone
Over the past 20 years, I have had the good fortune to work with some of the largest shippers and transportation service providers in the world, both as a consultant and a TMS product manager. When we talk candidly, an all too common theme amongst these organizations is the belief that they should be getting more from their transportation systems. A VP at a large retailer told me, “We’re like the proverbial duck. We look smooth on the surface but underneath, our legs are moving a mile a minute.” For him, part of the vision focused on process automation, which had yet to be attained.
This retailer is not alone. In many instances, the vision that originally funded their TMS initiative has only been partially fulfilled as other corporate initiatives have taken precedence. “Phase 2” initiatives, such as implementing new divisions, geographies, advanced functionality or simply doing a software upgrade require budget approval tied to a compelling business case and quantifiable ROI. As these are often times multi-month or even multi-year projects staffed by both internal and external experts, they are expensive and like any enterprise-level project, inherently risky and subject to delay or cancellation.
I found the above chart developed by ARC Advisory quite interesting. It buckets shippers into how much of their freight savings were consumed by the cost of the TMS. On the positive side, 86% of the shippers surveyed stated that they their TMS project paid for itself. However, the costs for TMS software/subscription, services and on-going maintenance of the solution are anything but trivial. Over 40% of respondents stated that those costs ate up more than 25% of the total savings generated by their TMS. I would guess that that number is higher than what was budgeted for the majority of these shippers and may signify that the ROI associated with “Phase 2” never came.
Do TMS software providers deserve some of the blame?
To their credit, the Tier 1 TMS software providers continue to invest in and expand on the functional capabilities of their offerings. They have built out holistic transportation management solutions designed to support the entirety of a shipper’s transportation operations, from procurement and tactical planning, through payment, and from international air and ocean planning through last-mile delivery.
However, the functional richness of these solutions comes with a price. Implementing new capabilities can be difficult and costly. Additionally, for too many TMS providers, usability has taken a backseat to feature function, which further exacerbates one of the most common issues that derail projects, namely change management and end user adoption.
TMS Implementations are too Discrete
Whether you believe that implementation work around your Transportation Management System seemingly never ends, anecdotal evidence suggests otherwise. Shippers across all industries suffer from stagnant TMS capabilities, incomplete roadmaps, and unrealized value. The core problem with traditional implementations is that they are discrete in nature – they have a specific start and end. Once the “project” ends or funding has been extinguished, a huge deceleration of capabilities happens. Things stop…become stagnant.
Given the considerable expense that freight transportation represents to the shipping community (Typically, 3-6% of COGS), transport professionals need to continuously determine what improvements need to be made to their freight operations and then make a determination as to the viability of their current system(s) to meet these needs. The good news is that today’s TMS capabilities are underutilized, so there is an excellent chance that your existing systems’ capabilities can meet these needs.
How can you fight back? Here are some ideas…
- TMS Audits & Assessments – these are very quick, targeted initiatives that can become the catalyst your TMS needs to catch up. The assessment can be as broad or as narrow as needed, but should address the following:
- Achievement relative to expectation (what you thought the TMS would do for you)
- Specific ‘pain points’ the organization believes the TMS is not doing correctly
- Solution or integration gaps that have developed over time (e.g. you added a new business, but didn’t make all the necessary changes in the TMS)
- Determine areas of potential cost savings
- Recommend a plan of action!
- Create Basic “Health Check” Metrics that can help you identify immediate, tactical areas of system performance that you can address:
- What percentage of the TMS output gets changed by a planner?
- How long does the TMS take to solve my problem?
- Is it taking longer for the TMS to solve the same amount of input?
- What percentage of total organizational freight spend is controlled in the TMS?
- Network and benchmark with other organizations that use the same TMS platform:
- Oh, you guys do that???
- Oh, it takes you that long???
- Yes, we have the same issue!
- We figured out how to solve that problem…
- Create a strategy to ‘go beyond’ the original TMS implementation & focus on how your organization can ‘assimilate’ the TMS
- Think of your TMS as a child that will mature if you help guide it correctly. If you ignore a child, what happens??? (Answer: nothing good!)
- Adopt a continuous improvement mindset – stagnant Transportation Management Systems are far too prevalent and often lead to very costly technology change (e.g. implementing a different TMS and expecting that will solve your problems)
- Leverage a core group of internal SME’s to help guide you, or if you don’t have those…call in the experts to help create and facilitate your post-implementation strategy
In order to maximize your TMS investment (or any technology investment for that matter…even a home entertainment system) you have to understand what it’s capabilities and limitations are, introduce these capabilities to meet your requirements, and you must update your systems as your environment changes. Implementations by themselves don’t address what happens next – so don’t be surprised when “Phase Two” never comes.
About the Author
Mike Mulqueen is a partner at JBF Consulting and leads the Transportation Strategy Practice. Mike has 25 years of experience designing and implementing logistics focused supply chain solutions. Prior to joining JBF Consulting, Mike was with Manhattan Associates, where he served as Senior Director of Product Management with responsibility for the company’s transportation product line. Prior to Manhattan Associates, Mike held transportation leadership positions at Accenture, Manugistics, UPS Logistics Technologies and C&S Wholesale Grocers. He has a Masters of Engineering in Supply Chain Management degree from MIT.