Their industry's track record may be more than respectable (growth of nearly 7 percent in 2002) and the forecast bright (projections call for cumulative annual growth of 11.6 percent over the next five years), but players in the transportation management systems (TMS) market may s oon be feeling some pain. According to a study released last month by ARC, a Massachusetts-based market analysis firm, many vendors will watch their fortunes fall even as sales in their market begin their climb toward a projected $1.4 billion in 2007.
In fact, Adrian Gonzalez, director of ARC's logistics executive council, questions whether a stand-alone TMS vendor can survive in the future when customers are demanding holistic solutions that incorporate order management, order fulfillment and performance management capabilities. "The competition will intensify as vendors with broader footprints, such as ERP (enterprise resource planning) and SCM (supply chain management) vendors, as well as third-party logistics providers (3PLs), place a stronger emphasis on this market ," says Gonzalez . "For example, a vendor like Microsoft, with no TMS capability today but [that is] making inroads with its other enterprise offerings, can conceivably become a dominant player in the future if it becomes interested and develops a smart strategy."
Gonzalez adds that in his view, long-term success for a TMS vendor will be defined by four factors: scope of its solution (expanding beyond basic transportation functionality), net value (realized benefits minus total cost of ownership), the provider's financial stability and its global presence.