Financial pundits warn of a looming recession across the economy. But talk to the supply chain executives and managers of a company in the $500 million-$5 billion sales bracket and they will tell you that there is pressure to manage more transportation and more complex transportation requirements.

That means—recession or no recession—that the pressure to improve service performance and reduce costs is greater than ever. Not that they typically get support for more resources from their executive teams, or the Information Technology (IT) staffs. The transportation function at most companies remains, as one wag put it, the “Rodney Dangerfield” of corporate life: it doesn't get much respect.

The roots of the challenges facing supply chain and logistics managers are many:

• Deregulation in the 1980s led to such a rapid drop in transportation charges that many companies thought special business processes, people and technology to manage the transportation function weren't needed.
• The push to cut costs further led to outsourcing transportation entirely, often without much regard to the task of managing the quality of outsourced services.
• Spending patterns in technology have, until the last two to three years, been focused more on financial and planning systems, such as Enterprise Resource Planning (ERP). Yet the paybacks on these investments too often failed to materialize as planned, dampening the prospects for large IT investments.
• Early transportation technology offerings were expensive and thus only adopted by much larger companies.

To respond to these challenges, more and more companies are seeking to acquire or improve transportation management systems (TMS). The heightened interest in this has been particularly noticeable among companies in the bracket below the big multinationals. For those companies in the $500 million to $5 billion range that are increasingly “going global,” choosing and implementing a TMS prompts many questions:

• Perpetual software license or Software-as-a-Service (SaaS)?
• In-house or hosted?
• Single business unit or enterprise-wide?

Furthermore, TMS is not just a business decision; there often are significant IT strategy, deployment, and support issues, never mind corporate governance related to Sarbanes-Oxley compliance for publicly held companies. This article will explore these issues and their economic, technological and organizational implications. It lays out a “Business Process Outsourcing” approach that can help companies accelerate the choosing and implementation of a TMS, and improve transportation performance. Finally, we explore in detail one particular TMS option, partial outsourcing with private software as a service.

Next page: Using supply chain software to meet today's shipping challenges

In this article, Which Transportation Management System is Right For You?