Insider's Guide to Reducing Costs and Enhancing Efficiency With Your TMS Integration

Almost exactly 1 year ago, I wrote an?article?for Talking Logistics regarding my top tactics for estimating TMS implementation duration and budget. Readers seemingly latched onto this single statement with some skepticism:

…the quantity of integrations is the #1 driver of implementation duration and cost.”

The Impact of Integrations on TMS Implementation

While I can understand the skeptics’ perception that the cost of licensing or?subscription fees?to acquire the?TMS?would be the primary ‘cost’ line item, in my?25 years?of implementing logistics technology like?TMS, it is very rarely the case.

In fact, for most?shippers?with annual freight under management (FUM) greater than $250M, the implementation line item can be 2-3x the subscription. Furthermore, the “long pole of the tent” of implementation time, and therefore cost, resides in the design, build, and testing of integrations.

If a TMS investment is on your radar, in this article I will reveal some key tactics we leverage with our clients to help better understand and quantify integration effort before they become “budgetary shock” issues during an implementation. I will also lay out some emerging tactics for the?shipper?to understand how to mitigate these integration costs.

A Brief History of?TMS?Evolution

First a quick?TMS?history lesson to help us get anchored on the realities of modern TMS integration requirements.

Implementing a TMS 25 years ago was simple: orders came into the black box, loads came out (2 integrations).

Back then, TMS were designed to be “planning systems” and some other enterprise application was responsible for the “execution” and “payment” of the freight (usually an?ERP). Implementation timelines circa 2000 were 3-6 months, and most of the time and complexity was “inside” the TMS – configuration and validation of solution quality.

In the early 2000’s,?TMS vendors?began rapidly expanding capabilities into supporting transportation?workflows?such as inbound, tendering, and freight?invoice?audit. In this period of time, TMS sales greatly accelerated as the market matured with “mainstream” buyers outpacing “early adopters.” Vendors took these dollars and reinvested into yet more capabilities and?workflows?including global planning, global multi-modal tendering, and contract freight procurement.

The Current State of?TMS?Integrations

Fast forward to today, and?shippers?are looking to connect their?TMS with myriad solutions like fuel indices, real-time visibility, yard management, dock and appointment scheduling, traffic and weather, and many more.

So, for a “basic” domestic?shipper?looking for a?TMS?to automate planning, execution and payment for primary and secondary network over-the-road freight (i.e. TL and?LTL), we would estimate at a minimum to be between 10-15 integrations.

For each integration object, there needs to be a design, documentation, the integration coding, and?unit test. Depending on complexity, 10 integrations could total between 1000-1500 hours of labor. The math is simple, but it quickly becomes meaningful – especially considering most?shippers?today are prioritizing requirements for an average of 40 integrations. In 2022, one of our more complex implementations recorded over 140 objects, most of them integrations.

So, what can a modern?shipper?do to minimize this cost, while still achieving some level of automation?

Five Strategies to Minimize Integration Costs

Early Integration Planning

• Determine your operation’s integration requirements before you select the TMS vendor. Most shippers?will ignore integration requirements until well into the TMS implementation design. By that point, budgets are typically fixed, and the implementation timeline is set. Given integrations are the largest driver of implementation time and cost, this is completely backwards.

Understand the Basic Math

• When Design + Build + Document + Test Time is <= 2 years of accumulated manual effort to Extract + Transform + Upload + Troubleshoot?the same process, then automate the job with an integration.

Use the ‘Crawl, Walk, Run’ Model for Automation

• Consider retaining some manual effort while still providing your system with data import & export capabilities. Nearly all TMS will have some form of ‘file uploader’ that typically leverages file formats?that most?business analysts will be able to decode. Leverage this method until development resources free up to chip away at integration development.

Leverage Agile Methodology?for Post-“Crawl” Development of Integrations

• This approach may work better in some organizations where IT resources are already deployed in sprints or increments. Agile approaches can yield quick and effective results without the significant overhead of a project team organizing around 40-100+ integrations in one go.

Consider Purpose-Built iPaaS Solutions for Logistics

• Many Integration Platform as a Service?(iPaaS) solutions exist, but only a couple focus exclusively on logistics and transportation data flows.These platforms can attach directly to existing?IT infrastructure, including legacy?middleware?applications you likely already use. In many cases,?iPaaS?allows?shippers?to connect one integration platform to the TMS and have many integrations ready to deploy “out of the box” or with light configuration. Some iPasS even have pre-built connectivity to carriers for shipment execution (i.e. Tender, Accept/Decline/Shipment Status/Invoice), which greatly minimizes or removes the need for dedicated?EDI?connectivity.

Conclusion: Balancing Complexity and Cost in?TMS?Integration

While the days of non-integrated?TMS?are definitely behind us, there are myriad ways to decrease the complexities and costs associated with TMS integration and automation. The best approach starts with proper design and planning, to help?shippers?avoid missed implementation deadlines and several incremental requests for capital approval for project overruns.

Once you have committed to a strategy, leverage pragmatic options like ‘Crawl, Walk, Run’ and purpose-built?iPaaS?solutions to minimize costs while still gaining?marginal benefit?for your desired future state capabilities.

A version of this article was first published in Talking Logistics

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About the Author

Brad Forester, Managing Partner & Founder of JBF Consulting, is a highly recognized senior supply chain leader with 30 years of managing, designing, and implementing freight transport technology, Brad has a unique mix of carrier, shipper, software, and consulting experiences that benefit clients.

With functional expertise in Global TMS Programs, Change Management, Organizational Design, and Systems Integration, he has been leveraging these skills to benefit clients since he founded JBF in 2003. Brad has a BA in logistics management from Michigan State University.

About JBF Consulting

Since 2003, we’ve been working with shippers of all sizes, from any industry to select, implement and squeeze as much value as possible out of their logistics systems.

Our leadership team has over 100+ years of logistics and TMS implementation experience. Because we operate in a niche — we’re not all things to all people — our team members have a very specialized skill set: logistics operations experience + transportation technology + communication and problem-solving skills + a bunch of other cool stuff.

We speak your language — not consultant-speak – and we get to know you!

Fine Print to Keep the Lawyers Happy??:

The information discussed in this session represents the views of the individual/s and does not constitute legal advice.?You should consult with your organization’s leadership and legal counsel.