The importance of scalability for a TMS
By: Phil Sneed
The U.S. trucking industry is in a period of growth. In the summer of 2015, the American Trucking Association released a report stating the industry is expected to grow approximately 29 percent over the next 11 years.
Such numbers are worthy of taking note, especially the projected 28.6 percent increase in freight tonnage. Executives and fleets will be able to properly prepare for the added business by purchasing more equipment and hiring more drivers when the situation arises.
Trucking will still maintain its dominance as the preferred mode of freight transportation from now until 2026. All told, the ATA estimates freight revenues will increase 74.5 percent to $1.52 trillion in the next decade.
The increase in business will have an impact on how the industry operates, including small and medium-sized fleets.
Specifically, transportation management systems are likely to be the most effected with the increased workload and information. Moving forward, fleets will have to ensure their systems are scalable, because not doing so can be a damaging business move.
"Fleets will have to ensure their systems are scalable."
What is scalability?
Scalability refers to the notion that a program and system are capable of handling an ever-increasing amount of work, according to Microsoft's Developer Network. The capacity of a TMS or system to handle higher workloads is important because the ability to collect data and execute deliveries may become hindered, which would then have a negative effect on profits.
Fleets that utilize a scalable program can increase efficiency and process and fulfill more orders.
Scalability also works the other way, as transportation companies can scale down so as not to lose money when business is slow.
Predictions from the ATA should help fleets and others ensure they have the necessary resources to meet the expected increase in freight tonnage.
Scalability and inventory control
If there is an increase in freight tonnage every year from now until 2026, companies will have to put a robust system in place to handle the extra inventory, and not just in one location. As such, a scalable TMS must be able to handle additional inventory, locations and users.
Inventory and scalability go together because without the ability to expand to multiple locations, a fleet will not be able to properly manage and expand to new warehouse locations. A TMS that is scalable can help organizations reduce the workload of inventory control and meet the needs of the current shipping season's demands.
What to look for
When looking for a TMS, transportation companies may want to look at systems that are software as a service, otherwise known as SaaS. This model is cloud-based and involves an ongoing subscription for usage.
According to Inbound Logistics, the SaaS model has many positive impacts on a TMS. A cloud-based system has many aspects that enable fleets, carriers and shippers to adopt within a short period of time, or gradually ramp up their resources to handle the increased tonnage.
Cloud-computing platforms are increasingly becoming more relied upon for many companies, and not just in the trucking industry. One benefit of a cloud-based TMS lies within its name: Because it is a service, it provides an accelerated return on investment for the user and there are no costly upgrades. When business conditions dictate more resources are needed for managing inventory, routes and fuel efficiency, fleets will not have to scramble to spend hundreds, maybe thousands, of dollars on equipment.
When tonnage increases, all partners in the supply chain must coordinate to handle larger and more frequent shipments. When a cloud-based TMS is utilized, shippers, carriers and vendors can all work together to share assets, create economies of scale and more.
"When tonnage increase, a company can easily adjust."
Collaboration and scalability rely on each other because without talking with partners, the supply chain may hit rough patches. In other instances, there may be miscommunication about inventory levels and other factors that are influenced by higher workloads.
SaaS and scalability
However, perhaps a cloud-based TMS helps a transportation company improve their scalability. When tonnage increases, a company can easily adjust by onboarding more customers and add services on demand.
While the ATA is projecting long-term growth, companies can gradually ramp up their resources over the next several years. The transition doesn't need to occur immediately, but knowing there can be a gradual change can be seen as a positive, as companies can plan their future growth and determine when more assets will be needed.
The demand for shipping will always change, but if predictions hold true by the ATA, the industry can expect a big increase over the next decade. To help meet the demand, companies should keep scalability in mind, particularly when it comes to transportation management systems.
Doing so will help to make sure future workloads and inventory management can be met without risking profits.