More and more businesses embrace cloud-based TMS -instead of on-premise solutions- to manage their logistics. These systems bring all the benefits of cloud computing into supply chain management. Regardless of your business size, a cloud TMS can satisfy all your needs in automating logistics processes. But you should consider its pros and cons to ensure it fits your business.
Transportation management systems are generally software packages that allow you to manage your supply chain processes. Traditionally, a software package is a program we install on our computers, networks, or servers. These are what we know as legacy programs limited to each device on which they’re installed.
Cloud-based software, including cloud-based TMS, use cloud computing to run software on multiple devices simultaneously. You and your staff only need a reliable internet connection to access the platform.
Instead of installing the software on your company servers or devices, a cloud-based TMS is housed on the vendor’s servers. You access the system via the internet anywhere, anytime. That means you can go remote and track your work even after hours.
Even a legacy TMS solution should offer a cloud platform to enable various users, including drivers on the road, to access the required data. As a result, you can give all the parties access to the software from the get-go and tap into the vendor’s already-established infrastructure.
A cloud-based TMS helps businesses pretty much in the same way as a traditional TMS program. Businesses use cloud TMS to manage and optimize their supply chain processes.
It can reduce your transportation costs by optimizing the delivery routes and reducing on-the-road time and fuel costs. In addition, by giving you visibility over your fleet, you won’t lose money over empty trucks on the road.
A TMS shows you where a truck is at a specific time, how much fuel it has, and where it can go next. Then, you can plan the truck’s next journey, taking the best route to get to the destination faster without going empty.
A cloud TMS enables real-time communication between drivers and the warehouse/dispatcher. Thus, everyone knows what they should do exactly and adjust to unforeseen issues on the road.
A good cloud-based TMS gives you a significant competitive edge by helping you increase customer attraction and retention. Your customers receive flawless and fast delivery services by planning, optimizing, and managing the supply chain and delivery processes.
Finally, it can lead to employee satisfaction because it eliminates most of the manual work. Replacing human work with technology will reduce errors and gives your staff more time to focus on other areas.
Cloud TMS platforms offer so many benefits over legacy software that they have turned TMS from a luxury into a necessity. They have become so accessible and affordable that every company should consider one for logistics planning and management. Here are the primary benefits of cloud TMS:
Compared to on-premise, legacy software, cloud TMS costs less. On-premise software requires purchasing the license, incurring a massive upfront cost. It may not be cost-effective if you want a TMS for a small or mid-sized business. A small business may not have enough transactions to create an acceptable ROI.
On the other hand, a cloud-based transportation management system is offered on a subscription payment model. Depending on the vendor’s payment plan, you may need to pay a monthly subscription regardless of the number of customers you serve in a month.
Some vendors may charge you on a per-customer basis. Regardless of the payment plan, cloud TMS is more affordable than licensed TMS. That’s because you only pay for the features you use. In contrast, using an on-premise TMS means paying for features you may never use.
Legacy TMS programs are notorious for requiring advanced infrastructure that small businesses may not have. You should house them on your servers, which can be costly to set up and rent.
On the other hand, a cloud-based TMS doesn’t require any hardware infrastructure. The vendor houses the software on their servers, giving you access to the features over the internet. This means you don’t need your own servers and data center because the vendor takes care of all the necessary resources.
The only hardware you need is computers or smartphones through which staff can use the software and automate their tasks. Most cloud solutions don’t require installing dedicated software, as you can access them via a browser.
When a cloud-based TMS is housed on the vendor’s servers, you don’t require any staff for maintenance and support. You don’t need a dedicated IT team to solve your employees’ technical issues with the software. In addition, the vendor installs all upgrades, which they typically offer every quarter. They get feedback from their customers in real-time, so they can act quickly and solve issues and bugs. As a result, you don’t need to worry about resources to implement these upgrades.
You may still need a dedicated IT team to train your staff on how to use the software. However, they have a much simpler job than offering constant support and doing maintenance jobs. This way, they can focus on more critical IT tasks.
Traditional TMS software was preferable over cloud-based solutions because of the broader range of functionalities. However, that’s not the case anymore. Today’s cloud TMS programs offer as many features as the on-premise software does. In addition, they fit all business sizes by allowing them to choose the features they want.
More importantly, unlike on-premise software, you don’t have to pay for these functionalities upfront. You may need basic functionalities to manage your shipment if you have a small business. As your business grows, you can add the feature you need by paying for them.
Since the vendor takes care of maintenance tasks, you can rely on them to provide reliable and secure services. Many other users access these services, so the vendor has enough resources to ensure the highest security to prevent cyber-attacks and data losses.
Cloud computation allows you to store your data in an encrypted form, offering the highest level of protection. In addition, since they store user data on multiple servers, there’s a low chance of downtime due to crashes and outages.
This redundancy isn’t something you can ignore in on-premise scenarios. You’d have to use the same cloud services, such as Amazon AWS or Google cloud, driving up the costs and increasing complexities.
As mentioned, you’re not the only customer that uses a cloud TMS’s services. Due to the wide range of users with different technological skills, the software has to be user-friendly and easy to use.
In addition, this large user base means the software doesn’t require a long time to implement. The features have already been used and configured on other systems, so they can be deployed faster. Although implementing any TMS software can be lengthy, cloud-based versions take less. You also cut off the installation time because everything is ready to use out of the box.
Although cloud-based TMS is becoming the go-to solution for many businesses, some may decide it doesn’t fit their purposes and requirements. It has potential shortcomings that make it a deal-breaker. So, it’s up to you to weigh all the pros and cons and choose the best software.
Here are the primary disadvantages of a cloud TMS:
As mentioned, cloud-based TMS can offer high protection again cyber-attacks. However, some users are concerned about their data privacy. Cloud TMS saves all user data on cloud servers, which means the vendors have access to this data. As a result, you must review the vendor’s privacy settings carefully to ensure your data remains safe.
Today’s cloud-based TMS programs have a wide range of features to satisfy the needs of their various users. Still, they may have fewer fleet management capabilities than in-house or on-premise solutions. If you have specific business requirements, you may have to use a more customizable option or develop your own tool.
In addition, since all users can have the same functionalities, you may not have a competitive edge over your rivals.
When you buy an on-premise tool’s license, you’ll own the software. However, a cloud-based TMS doesn’t give you such ownership. As a result, you may not have the control you want over the software.
You’re not free to make your desired changes or configure the software the way you want. That’s why you should carefully review the functionalities and the level of freedom the vendor gives you in changing its configurations.
Cloud services rely on an internet connection to work and connect the users. While this may not be a serious issue in today’s connected world, you may experience some limitations. As a result, the tool doesn’t update when offline, leading to inconsistencies for different users.