How much does a TMS system cost? – HebronSoft • hebronsoft.com

The global logistics industry is undergoing some crucial changes, and businesses need to implement new market solutions to remain competitive. A transportation management system (TMS) is among the key trends of the sector. Such a system leverages big data volumes to make all interconnections within a supply chain effective. The efficiency leads to even more benefits – a TMS enables business owners to save costs on every stage of a supply chain.Let’s be honest: every business is steadily moving to higher cost-efficiency, and TMS systems help you jump to the next level. Eventually, a TMS is the necessary condition for today’s logistic company. As of 2020, 34% of businesses are utilizing such systems, and 50% more companies are going to purchase this software, according to  CTSI. Meanwhile, what are

the key requirements for such systems?

What does the right TMS include?

Logistics has many variables adjusted to diverse goals. This is why it’s hard to describe an ideal system that corresponds to expectations of all business participants. On the other hand, companies distinguish some basic features a good TMS should include: 

1. Contract management: A TMS system speeds up your contracts and agreements, sends alerts when agreements are about to expire, and enables your managers to track contracts in real time. TMS systems improve your document flow

2. Vehicle park management/freight settlement: A TMS system speeds up your contracts and agreements, sends alerts when agreements are about to expire, and enables your managers to track contracts in real time. TMS systems improve your document flow

3. Timely reports and analytics: TMS systems help business owners to increase their company efficiency through up-to-date analytics built into the software. Get regular reports on shipment data, tariffs, market prices, etc. to enhance your services. 

As for the other services, they are usually customized, depending on certain business needs and requirements.

Two main types of TMS systems

Such software is divided into two key types: cloud and on-premise ones. What are the differences between those types of Transport Management Systems? The comparison is usually based upon 5 factors: 

At present, both types are equally demanded, while Gartner expects the percentage of cloud solutions to increase to 65% by 2022.

Key stages of a TMS development

The process of software implementation requires the following stages: 

1. Scoping You need to identify all your expectations and highlight business needs a system should correspond with. A development team offers some ideas, discusses the functionality to come up with the solution that satisfies both sides.

2. Project start When all the details are discussed thoroughly, a team starts to develop software in correspondence with terms and conditions.

3. Implementation A development team implements the system to your business, setting up all the processes. Such a stage requires testing services as well.

4. Maintenance and support When the agreement includes this stage, business owners get constant maintenance from a provider (developing) company.

Transportation Management System benefits are evident but TMS solutions continue to develop further. The following trends are in-demand now: 

• – Blockchain. This technology builds up a chain of commands, and no one is able to make changes within a chain. Blockchain-based TMS solutions provide the highest protection and may serve as ready-made payment ecosystems.
• – Big Data. The technology enables business owners to leverage giant data volumes to predict the load of storehouses, shipping time, and other important factors.
• – AI and Machine learning. Artificial Intelligence is about to become a synonym of progress, and AI-based TMS systems effectively identify issues and adjust to any conditions instantly.

Therefore, an up-to-date TMS management system needs to be able to add innovative and revolutionary technologies as they are available.

A TMS implementation cost

While talking about transportation solutions cost, you need to select between ready-made or custom systems. Ready-made solutions require a fixed price for every unit connected to the system. This is why beginners get cheap and effective software that costs about US$36-40, 000 within the first year but in case of scaling, overall expenses may grow to US$900-1,000,000 in 5 years. 

As for custom systems, a business owner faces huge expenses from the beginning (US$130-150,000), but within other years, expenses increase slowly no matter how many units are connected to a TMS. For instance, in five years your company may spend just US$300-400,000 that is almost 70% lower than ready-made solutions demand. 

What about the savings? Both types of TMS solutions cut your expenses and increase your company efficiency:

Factors to influence end prices

The average price of a TMS system varies from US$36K to US$150K within the first year, and from US$300K to US$1M within five years. What are the key factors that influence pricing? 

1. Type of a system (cloud/on-premises, ready-made/custom)

2. Number of internal and external users

3. Overall number of carriers

4. Number of customers

5. Number of software modules

6. Implemented technologies (AI, blockchain, etc.)

This is why business owners need to discuss all the details first, with experienced developers to understand what is a perfect solution to fulfill their demands.

HebronSoft to stimulate your business development

When you need to implement a TMS system to be ahead of competitors, you need to apply to experienced and professional developers. HebronSoft welcomes business owners powering them with high-end solutions that exactly correspond with requirements. Get your customized or ready-made software to ride a wave of success. Drop us a line now to commence your climb towards new peaks!