A recent article out of Logistics Management had something very interesting to say about TMS adoption in small-to-medium-sized companies (which includes most freight brokerages).
Here’s what the article had to say:
“Historically, TMS adoption rates for smaller shippers have hovered in the 10% range, according to De Muynck, while about 25% of medium-sized firms and 50% of large organizations used the application to manage their freight activities.
“These adoption rates are now rising thanks to the fact that most TMSs are now available in the Cloud and on a subscription-based model. ‘Recently, we’ve seen about 15% growth in TMS usage within the small- to mid-sized businesses market.’”
If you’re a new freight broker trying to break into the industry, or even if you’re an experienced broker who’s always hovered around the small-to-medium market, this means that the competition is starting to gain a technological advantage, and they’re doing so quickly.
Cloud TMS services, like our flagship product, BrokerWare™, allow the little guys to get a leg up on the competition. It used to be the case that small brokers were basically competing with each other on the basis of customer service — there just wasn’t a big difference price-wise or quality wise between different freight brokers.
Even 10 years ago, dealing with a TMS, the management of which and the implementation of which could be costly, time consuming, and of unclear value to the few small brokers who could afford it, was just not something that made a whole lot of sense.
Even in the mid market, you just didn’t see it very often — the price was high, training was a nightmare, and unless you had a huge list of recurring clients, it wasn’t even something you really needed.
That’s all changed now thanks to cloud-based TMSs.
TMS UTILIZATION ISN’T AS DIFFICULT AS IT ONCE WAS
Nowadays, many smaller freight brokers are adopting TMSs, often before they even get up and running, which allows them to be highly efficient from the get go and to differentiate themselves from the competition.
Now, I do want to take a step back here and make it clear that this only applies to paid TMSs — free TMSs just aren’t robust enough to help you set yourself apart.
That being said, one of the biggest factors that used to keep small-to-medium-sized businesses from adopting a TMS was the need for training — day-to-day TMS management just wasn’t something you could pick up easily, the systems were clunky for a long time, and getting buy-in from staff could be a nightmare, especially as you got towards the mid end of the small-to-mid market.
But it’s not 2003 anymore — we’ve come a long way, and
Simpler is better, especially if you already have a lot of employees. The last thing you want to do is to have to undergo weeks or months of training sessions, which not only can cost you up front, but which also costs you in lost productivity.
The truth is, a quality system, especially a cloud-based system that isn’t going to require a huge investment upfront, is going to be easier to implement. When it comes to a TMS, management needs to be as simple and straightforward as possible, and the less you have to manage on-site (and the more your TMS provider is managing on their end), the fewer problems you have to worry about.
A TMS DIFFERENTIATES YOU FROM THE COMPETITION — BUT SOON IT WILL BE REQUIRED FOR BUSINESS
As it stands now, a TMS is something that can really set you apart. For most freight brokers, it’s difficult to compete on price, it’s difficult to compete on quality, most of your customers view you as a commodity, and even providing excellent customer service can be just enough to keep people from hating you.
It’s sad, but it’s the truth.
All of this means one thing — you need to be as efficient as possible in order to make a buck.
A TMS is one of the few ways you can really achieve higher levels of efficiency. Many brokers find that they can reduce staffing levels by using a TMS.
They also find that they can more regularly achieve higher profit margins because the TMS quickly and efficiently compares clients and carriers.
Add to that auto-generated paperwork and a reduction in the amount of data entry required (which reduces errors), and you can see why more and more brokers are adopting TMSs.
LEARN MORE ABOUT HOW SIMPLE IT CAN BE TO IMPLEMENT A TMS IN YOUR BROKERAGE
If you’re ready to become a more efficient and effective broker, we’d love to help.
Contact us today to find out how our TMS BrokerWare™ can help you jumpstart your business.