5 ugly hidden costs of implementing Transportation Management System

Updated: Oct 9


Transportation Management System (TMS) is one of 5 best software every logistics manager needs. Once a TMS opts, installation, training, reports, and notifications may cost you 25 - 30% more than initially estimated. You also need to take into account the cost of the TMS long-term operation. Are there charges for technical support, system updates, and software upgrades? The cost to operate a TMS over time may end up higher than the original purchasing price. The true price of a TMS implementation might be attributed to 5 relevant phases you should pay attention to while negotiating and before choosing a TMS solution.



1. Setup Cost


First, you need to make sure whether or not TMS software is set up for free. Setup is a fundamental step and paves the way for getting-to-know and using hereinafter. As usual, setup is not charged at this stage but made quick and simple instead. Users stand chances of exploring the solution themselves. It is noted that you ask your TMS provider if the setup is for free or not. In order to attract customers and provide better services, TMS providers may offer a one-month free trial package of setup, support, and training.

Remember to make sure whether or not TMS software is set up for free

2. Maintenance and Support Costs


The second thing you should consider is the maintenance and support fees. Your TMS provider may not mention them from the start but they can be the part costing you millions in the future despite starting with a seemingly low expense today. In some aspects, such expenses are the same as tuition fees to get the training, support, and answers for the important questions regarding software accessibility. In some deals, these costs will be included in the contract price as a unique motive to maintain the long term business.


Maintenance and support fee are part of Transportation Management System hidden costs

3. Training Time and Cost


TMS costs might be hidden in training time and cost. This amount depends on the number of users, the complexity of the software, etc. In process of TMS integration into your supply chain management system, you and your staff have training from getting used to proficiency. It is undeniable that this phase takes you and your TMS partner a lot of time and effort. The more users, the more complex, the longer time, the higher cost. Hence, for ease of getting to know procedures, it is important to choose an easy-to-use software as well as make a detailed agreement with your TMS provider about this affair before using the software.

TMS costs might depend on the number of users, the complexity of the software, etc

4. Hardware Cost

One more factor of hidden costs is related to hardware specifications. For example, some TMS only support iOS or specific versions of Windows or Android operating systems or require installing unique hardware devices. It is essential that you download apps with special purposes APIs as drivers for hardware devices. Because some TMS software demands a corresponding hardware base, your company may have to update the core processor or make replacements, which can substantially add up to your expenses. Otherwise, incompatibility can trigger corruption. To mitigate such risks, a good TMS should be able to run well on low-end PC/web and a variety of mobile devices.

One more factor of hidden costs is related to hardware specifications

5. Dispute Settlement Cost


Last but not least, you should be careful with arisen expenses from matters beyond the contract. Therefore, the contract should be clear and detailed, regarding fleet size, the number of users, cost per month… It is much better if parties can foresee issues and negotiate contract terms in advance as well as their settlement. In the event of disputes, both parties can look into the contract for the settlement, which can save much money for arbitration and litigation.


The contract should be clear and detailed, regarding fleet size, the number of users, cost per month

In addition to operation optimization, a TMS helps companies monitor freight efficiently, guide drivers, schedule deliveries, and improve services, which provides you 4 valuable benefits. As a TMS acts as a core processor related to your business functionalities, it can’t be easily changed. If you choose an incompatible TMS, which is not fit for your purposes, you might bear repercussions in all aspects (for uninstallation and replacement), not to mention resources and time wasted. Thus, choosing the right TMS solution and more importantly, a reliable TMS software provider is of great importance to your business.


Transportation Management System (TMS) has always been a core strength of Abivin vRoute. The latest version (2018) is packed with new features like easier trucks, motorbikes dispatching, establishing multiple plans and transportation schedules at once. Abivin vRoute is the only system that comes with Route Optimization with AI-powered capability, which effectively solves the Vehicle Routing Problem. With Abivin, all setup, maintenance, and training costs are provided transparently upfront, since we want to make sure you get great values out of every single dollar invested in implementing a TMS. Abivin Team accompanies your business and ready for support in case of your inquiries.


Sign up for a free demo of Abivin vRoute - Supply Chain

Optimization Software


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Reference:

  1. http://info.plslogistics.com/blog/6-quick-questions-to-ask-before-buying-a-tms

  2. http://dreamorbit.com/5-important-questions-to-ask-from-your-tms-solution-provider/

#AbivinvRoute #AbivinVietnam #TransportationManagementSystem #routeoptimizationsoftware #hiddencost #machinelearning #artificialintelligence #solvevehicleroutingproblem #supplychain #english

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