ARC sees visibility and control of financial performance driving growing demand for transportation management systems
Dedham, MA September 19, 2005 The transportation management systems (TMS) market grew to about $910 million in 2004 and is forecasted to exceed $950 million this year at the need for better visibility and control of financial performance drives continued growth, according to a new report from technology consultancy ARC Advisory Group.
According to Adrian Gonzalez, director of ARC's Logistics Executive Council and author of the new study, "Transportation Management Systems Worldwide Outlook," chief financial officers (CFOs) are becoming better educated about the role and impact of logistics on financial performance, driven in part by the need to comply with the Sarbanes-Oxley Act (SOA).
"Many companies, however, do not have a clear and accurate understanding of their transportation costs," Gonzalez said. "They're often bundled together with other costs and reported at an aggregated level, thus preventing companies from allocating transportation costs to specific products, customers, or business units."
ARC is forecasting the market to reach $1.2 billion by 2009, representing a cumulative annual growth rate (CAGR) of 6.4 percent.
Transportation No Longer an "Infinite" Resource
Companies can no longer treat transportation as an "infinite resource" in their planning processes. Other than investing in a private fleet, organizations can't build up transportation capacity like they can inventory; instead, companies have to plan for it like other constrained resources.
Converting demand forecasts into logistics and transportation capacity forecasts is one of the trends highlighted in the study. Said Gonzalez" "Companies often implement collaborative planning and forecasting with upstream vendors and manufacturing partners, but they rarely translate these demand and production forecasts into transportation capacity requirements and share them with carriers."
Now, however, some shippers are providing forward visibility to carriers and securing capacity in advance. "These shippers are receiving priority in capacity allocation over shippers that do not if only because carriers appreciate the effort these shippers are making to keep them informed," Gonzalez said.
Other key trends discussed in the study include:
Additional information on this study can be found at: www.arcweb.com/res/tms.
Additional Articles of Interest
Hard data and sophisticated planning are key when goods and materials start flowing upstream through the reverse supply chain. Read more in "Meeting the Reverse Logistics Challenge" in the June/July 2005 issue of Supply & Demand Chain Executive.
Forecast accuracy is important, but enterprises must look beyond it to realize their demand and supply chain objectives. For more information, read the exclusive SDCExec.com article "The Accuracy Trap."
How can you beat the trends and lower your less-than-truckload costs, even in a seller's market? For a guide to help you get started, read the SDCExec.com article "LTL Sourcing: Success for Buyers in A Seller's Market."
Dedham, MA September 19, 2005 The transportation management systems (TMS) market grew to about $910 million in 2004 and is forecasted to exceed $950 million this year at the need for better visibility and control of financial performance drives continued growth, according to a new report from technology consultancy ARC Advisory Group.
According to Adrian Gonzalez, director of ARC's Logistics Executive Council and author of the new study, "Transportation Management Systems Worldwide Outlook," chief financial officers (CFOs) are becoming better educated about the role and impact of logistics on financial performance, driven in part by the need to comply with the Sarbanes-Oxley Act (SOA).
"Many companies, however, do not have a clear and accurate understanding of their transportation costs," Gonzalez said. "They're often bundled together with other costs and reported at an aggregated level, thus preventing companies from allocating transportation costs to specific products, customers, or business units."
ARC is forecasting the market to reach $1.2 billion by 2009, representing a cumulative annual growth rate (CAGR) of 6.4 percent.
Transportation No Longer an "Infinite" Resource
Companies can no longer treat transportation as an "infinite resource" in their planning processes. Other than investing in a private fleet, organizations can't build up transportation capacity like they can inventory; instead, companies have to plan for it like other constrained resources.
Converting demand forecasts into logistics and transportation capacity forecasts is one of the trends highlighted in the study. Said Gonzalez" "Companies often implement collaborative planning and forecasting with upstream vendors and manufacturing partners, but they rarely translate these demand and production forecasts into transportation capacity requirements and share them with carriers."
Now, however, some shippers are providing forward visibility to carriers and securing capacity in advance. "These shippers are receiving priority in capacity allocation over shippers that do not if only because carriers appreciate the effort these shippers are making to keep them informed," Gonzalez said.
Other key trends discussed in the study include:
- Integrated fleet management and common carrier solutions
- Increased focus of financial supply chain
- International parcel shipping gains importance
- Stronger focus on logistics service providers
Additional information on this study can be found at: www.arcweb.com/res/tms.
Additional Articles of Interest
Hard data and sophisticated planning are key when goods and materials start flowing upstream through the reverse supply chain. Read more in "Meeting the Reverse Logistics Challenge" in the June/July 2005 issue of Supply & Demand Chain Executive.
Forecast accuracy is important, but enterprises must look beyond it to realize their demand and supply chain objectives. For more information, read the exclusive SDCExec.com article "The Accuracy Trap."
How can you beat the trends and lower your less-than-truckload costs, even in a seller's market? For a guide to help you get started, read the SDCExec.com article "LTL Sourcing: Success for Buyers in A Seller's Market."
- More research from ARC Advisory Group.
