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What options do you have?
As you start automating your transportation management processes, you have three main options: buy an on-premises TMS, use a cloud-based TMS, or invest in a custom TMS development.
Buy an on-premises TMS
This option was the most popular in the past but was uncrowned by cloud-based TMSs. On-premises systems are installed and run locally on your hardware. A hosted TMS provider physically installs the TMS at your company’s headquarters.
Security. This option gives you full control over all the data you have, and third parties have no access to it. Knowledge of systems and data resides solely in-house. With an on-premises solution, the company’s data is stored locally which means that a disaster might result in the complete loss of data if you don’t back it up properly.
Functionality. On-premises optimization software offers a certain set of features for a fixed price. Sometimes the functionality is a bit excessive making the product way too complex. Also, on-premises software is highly customised, but the customization may lead to reliability and support issues that should be handled by the outside experts from the company you bought it from.
Scalability. Scaling an on-premises TMS requires purchasing additional hardware. And, if you open offices in another location, you’ll also have to purchase new hardware and software for them.
Data exchange. Enabling the exchange of data between departments or offices in different locations is a tough cookie and requires additional setup or the use of additional software for remote access. Also, it may not be easy for your employees to access an on-premises TMS from outside the office to, say, work remotely.
Cost. On the one hand, this option doesn’t require you to pay monthly for using software — you buy it once and use it forever. But on the other hand, there’s a significant upfront cost for hardware and ongoing costs for software maintenance. To get an on-premises TMS, you first need to pay for installation. You’ll also have to pay each time for upgrading the system to new versions as these are not normally included in the initial price.
Use a cloud-based TMSNowadays, you can find dozens of feature-rich TMS solutions hosted in the cloud.
Security. Most cloud providers put security first, so all security concerns, including data encryption and regulatory compliance, lie on your provider’s shoulders. But in this case, control over your data actually depends on a third party. Also, you’ll have to use the latest version of the provider’s software application and can’t defer upgrades or feature changes.
Functionality. TMSs available on the market are stuffed with a plethora of features. So you can cover almost all your business needs, but sometimes vital features go hand in hand with the ones you don’t need. And understanding what features you’ll use becomes a real challenge.
Also, this variety of features coupled with a poor UX can make an application complicated, requiring businesses to spend lots of time teaching staff how to use the system. Customization is possible, but it requires additional money spent.
Scalability. The great advantage offered by SaaS is that scaling an application is as easy as possible — it’s handled by the SaaS provider, while transportation companies only need to upgrade to the next payment plan. But mind that the costs may ramp up dramatically together with scaling the app.
Data exchange. Most cloud-based TMS platforms can integrate with external Warehouse Management Systems (WMSs), invoicing systems, and proprietary solutions, enabling fast data exchange. But your stakeholders and internal departments may use some kind of different software. For instance, your finance department may be on an invoicing app that stores data in a different format than your TMS. Due to this, you may need to spend time reformatting data.
Cost. Most companies providing third-party logistics software offer a subscription-based business model, meaning you pay a fixed monthly price instead of purchasing software upfront. Often, TMS providers offer several payment plans based on the functionality you need. And the good thing is that cloud-hosted TMS tools free you from the necessity to pay for hardware maintenance.
Custom logistics app developmentThough there are a great deal of ready-made solutions for third-party logistics (3PL), lots of companies build their own TMS solutions. For example, one of Yalantis clients asked us to create a SaaS transportation management system specifically for their business needs. Why is that?
Despite the fact that choosing existing tools seems cheaper and easier, there are some pitfalls to this option (we’ve mentioned them above). A custom TMS software development, on the contrary, brings a whole set of benefits:
Functionality. With transportation management system development, you can choose only the features you need and create a simple interface with built-in onboarding and hints. If you want to extend your functionality, you can ask your technology vendor to implement new modules and quickly integrate them into your existing solution.
Data exchange. By building transportation management software with custom APIs, you can exchange information in a standardized data format with stakeholders’ warehouse management, enterprise resource planning, and other software solutions within your organization.
Security. With the custom TMS solution, you become the owner of your product and can be sure that no third parties get access to your data. The security of your application is the responsibility of your technical partner, so you should choose the development team very carefully. In our article, we’ve already shed the light on the core elements of data security.
Scalability. From the very start of building a custom TMS software, you should highlight the necessity of building a scalable application. And scalability should be put in the architecture of your software, otherwise, scaling your solution will become a real challenge.
Qualified technology providers apply best practices for making software for logistics scalable. For instance, for making a delivery and logistics system easy to scale, we adopted the microservices approach instead of using the traditional monolithic one. Also, we made this solution cloud-based, so now we can add the required capacity by simply configuring AWS services.
Cost. The initial investment for building your own system is higher than the cost of a monthly subscription. But in the long run, expenses on a monthly subscription will surpass the cost of ready-made solutions.
We recommend making the list of features you need for your TMS and then checking if third-party software covers your needs. If so, calculate how much it will cost to use the software for a number of years. Also, reach out to some trustworthy technology partners to get an estimate of your custom logistics management software. For example, we’ve found a third-party TMS with the very basic functionality and calculated the cost of using this solution for five years. After that, we estimated the cost of building a custom app with the same functionality.
Cost of custom TMS vs third-party solution
As you can see, the custom TMS solution will cost you less in the longer term. Also, we don’t take into consideration the cost of customization a third-party solution, so the cost of using it may grow in case you need additional features. If you need to build a TMS with another functionality, you can drop us a line. We will provide you an estimate of an app with features you need.
You can go beyond simply building a solution for your needs by offering your software product to other logistics service providers. Licensing your shipping software will help you recoup your investment by becoming a managed third-party logistics firm. And your game-changing software can be used by multiple shippers to lower costs and facilitate service.
For instance, such leading logistics service providers as C.H. Robinson, XPO Logistics, and J.B. Hunt provide their own TMSs for their clients.
For me, logistics is a difficult issue. I would not have been able to organize the delivery process like that.
Well, I feel that if you are going to do such a project you should first check with some lawyers about how your situation will be I send you the following detailed information so that you have knowledge of how you should proceed on another point if you need something else you should make sure that your location you must always be favored by law.
I think that almost any process can be automated now. The only thing is, I couldn’t do it on my own, so I turned to a company with a discovery phase of a software project for help. You know, I really liked that because I didn’t think that their estimation of my business ideas would increase efficiency that much.
Great post!
Modern supply chains and passenger flows are difficult to manage without the help of reliable software. Therefore, now more and more large companies are applying for logistics-related services.Warehouse management mobile apps are like tiny warehouse management systems you can carry around. These apps help you through most of the warehousing workflow, from scanning products to labeling goods for shipment.
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