Shifting times and advancing technology always spurs industry change. This is especially true for the shipping industry. There is a great deal of change coming to the industry accompanying the development of new and innovative shipping technology advancements. One shipping technology that has changed in a lot of ways is the transportation management system (TMS).

Shipping software has come a long way, and in-house transportation management systems seem to be on their way out. While it provides the ability to completely customize the shipping software, there are problems. It can be tailored to a company’s personal needs precisely, but it’s often found to have issues communicating with shipping software used by carriers or third-party partners. Beyond system interaction, the speed of development in shipping software can leave custom in-house TMS obsolete in just a few years.

The cloud has changed the shipping software industry a lot. More shippers than ever can afford transportation management systems to improve their logistics management operations. Software-as-a-Service (SaaS) makes advanced TMS software and logistics management services available at a reasonable price, so all shippers can utilize the same services and shipping data and analytics as the giants. Using a TMS through the cloud from a vendor enables improved communication with business partners, because shipping data and analytics are in a standardized format for easier integration.

It also provides improved shipping technology performance by providing automatic and remote updates through the cloud. This up-to-date TMS shipping software makes for better reporting, better tracking, and supply chain visibility. Shippers often feel concerned about using a third-party TMS vendor, because they don’t want to give up control over their data. Hosted solutions, however, generally allow for either easy access online, or the ability to back up data on the company’s own servers. The company does own the data that the cloud-based transportation management system collects on them, not the vendor.

It’s possible, though that some shippers will need a custom in-house system. For example, if they have unique or rare shipping requirements that standard hosted shipping software isn’t designed to handle. For the most part, however, shippers will save time and money by using an outsourced shipping software vendor. So, what should you ask yourself about your supply chain and shipping operations to determine which TMS plan is best for you?

It depends on the shipper, because they’re obviously all different, so it comes down to the requirements and available resources to decide whether they need in-house or outsourced TMS. These four considerations will help determine what shipping software should be used.

  1. Budget:
    One of the greatest advantages of SaaS shipping software, is cost efficiency. Custom, in-house solutions have huge up-front costs, and requires maintenance costs for life. Cloud-based transportation management system shipping software costs less, and maintenance costs are the vendor’s responsibility, but they do usually require ongoing use fees.
  2. Partners:
    If a shipper works with a substantial number of partners, like carriers or third-party logistics providers, easy to integrate shipping data and analytics reports of a hosted TMS. If a shipper has their own fleet, this won’t be as much of an issue.
  3. Knowledge:
    Using a cloud-based transportation management system vendor also provides services. They will provide you with industry best practices for supply chain management, key performance indicators, service levels, pricing, and benchmarks gathered on a scale larger than most shippers are going to be able to manage. It would require a large and knowledgeable in-house staff to process it all yourself.
  4. Support:
    Cloud-based transportation management systems have support teams to help provide solutions and functional support and updates. With in-house systems, you have to provide your own maintenance team or hire personnel to keep it up-to-date and running at top speed.


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