4. Transportation Management Systems in India: What works here?
India as a large diverse nation has complex logistical needs which are further supplemented by the nature of the worker class in the industry and also the practices in the industry till now. The industry is starting to see a transformation in the way global practices are being introduced. These will have definitive impacts on the way technology is being leveraged.
AquaMCG believes there are still a few key trends that will be seen in the choice of Transportation Management Systems.
- Niche Transportation Software and Custom-Built solutions will continue to be popular along with the mainstream vendors:
Until the mainstream vendors such as SAP and Oracle are able to
customize their solution and their pricing to suit Indian logistics
players, the trend towards building a custom solution in-house or using a
niche solution from an Indian vendor who has a solution that can cater
to the nuances of Indian business will continue to be prevalent. It is
expected that the transportation software will be point-solutions that
will be integrated to other enterprise solutions like Warehousing
Systems, ERP, Financial Accounting Systems.
- Transportation Software will be a potential candidate for increasing number of Software-As-A-Service (SaaS) solutions:
Indian logistics players are at the crossroads looking at an
exponential growth situation in the next few years. However current size
of the companies may deter large capital investments in Transportation
Software. Though the number of software vendors who offer a full-scale
SaaS solution are very less in number, it is expected that an increasing
number of vendors will offer this as a cost-effective solution for the
Indian firms.
- Customers will influence technology investments in
Transportation software especially in the visibility and tracking
technologies: As companies start to expect more sophisticated
services with better consistency from their logistics service providers,
they will require the service providers to be having the necessary
technology platforms to offer visibility solutions such as
track-and-trace, consignment tracking including international shipments.
In this context, logistics companies will look at leveraging Mobility
Solutions (GPRS based) and Global Positioning Systems (GPS) for road
transportation. High-end technology solutions like RFID may become more
prevalent in the long term though the adoption will be slower in the
short term.
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Transportation software will be first used for execution activities rather than for optimization:
Indian customers and logistics providers will aim to leverage
transportation software firstly for execution (carrier selection, route
scheduling, visibility) rather than for optimization (route planning and
fleet optimization) since most customers (especially the medium
enterprises) are yet to set up the basic technology platforms to run
their operations.
Figure- Capability Maturity Model for a Transport Management System (Source: The Forrester Wave™: Transportation Management Solutions, Q1 2008, Patrick M. Connaughton)
5. Key Take-Aways
- Know your need before investing in a software system such as a TMS. Engage experts to help in the decision
- Be clear on what functionality is required from the TMS suite and how it fits in with the overall IT Strategy of the organization
- Consider integration needs as an important factor while making the decision for a TMS especially in the Indian scenario where some ‘home-grown’ solutions for Visibility may still be prevalent
- Look at overall Total Costs of Ownership rather than just licensing costs. Use expert help to articulate a business case for the software