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LQ’s Executive Interview Series:  Excellence in 3PL Technology
Scott Vanselous

A Conversation with Scott Vanselous, Senior Vice President, TMW Systems Inc.

LQ: Effective supply chains are comprised of balanced, actively-managed flows of goods, funds, and information. In the economic downturn of the past year, the funds flow has become constrained for many businesses. What effect has this had on the corresponding information flow? Will the management of supply chain information be different in 2010 than it was prior to the downturn?

Scott Vanselous: Business environments like the one we find ourselves in today tend to highlight the real value components in processes and relationships, those items that we truly cannot manage without. Information flow throughout the supply chain is one such necessity. The Internet has reduced the cost of data communications to a negligible commodity; where information costs are measureable, they are usually associated with data security, data acquisition and data integration for the support of automated processes. The need to manage supply chain information won’t change significantly in 2010, but the price we are willing to pay for that management has been seriously recalibrated. Many companies, especially mid-sized enterprises without significant overseas transportation exposure, have delayed TMS (Transportation Management Software) investments to conserve capital in the face of current business uncertainty. Even larger shipping entities have slowed the rate of investment in their TMS integrations and are casting a critical eye on the attendant customization costs and ROI from many of those projects.

The difficult economy has actually been an excellent time for shippers to discover the very strong value proposition offered by TMW Systems software for transportation management. The lower total cost of ownership for TMW solutions, coupled with their robustness and flexible configuration for a wide range of transportation operations and business processes, make a compelling case for their consideration by any shipper or logistics provider that may be planning a TMS investment or upgrade these days.

Information flow is critical to modern supply chains, and assuring that information generates the greatest opportunities for cost containment and cost reduction absolutely requires a very capable TMS. Information integration supports greater efficiency and productivity, allowing the business to do more with less staff, and increases visibility and measurement for continuous process improvement. TMW Systems offers proof that sophisticated TMS technologies are no longer synonymous with high prices. The cost savings that these technologies can provide are now easily accessible for even mid-range and smaller shipping and logistics businesses.

LQ: IT consulting costs are perceived as being expensive. Given the recent turbulent economic environment, what have IT firms done to address this perception? Scott Vanselous: Well, perception often is reality, and if a shipper or 3PL has put off investing in software technology to improve their transportation management process, it’s probably because they haven’t been able to overcome the investment hurdle for that technology with a strong benefit calculation.

The growth in SaaS (software as a service) solutions for new TMS implementations has been ascribed by at least one industry analyst as simply the logistics organization’s best means to circumvent their company’s internal IT department in order to get their business needs addressed in timely fashion.

TMW Systems has proven with many, many customers that application capability designed specifically for the needs of transportation departments can deliver sizeable ROI, and is usually much more affordable than conventional ERP solutions. The perceived challenges to integration with corporate systems or IT support processes can be addressed in many different ways, in varying degrees of complexity, and have never proven to be a roadblock to system success for our customers.

In fact, when evaluating the total cost of ownership for a TMS solution from TMW Systems against those from suppliers who may have greater visibility in the manufacturing and retail systems world, prospects have found themselves able to increase the size and scope of project reach and benefits because our systems prove so much more affordable. We have a very sizeable cost advantage in delivering transportation management solutions with the 1,600 customers that we already serve in North America and in Europe and China. Spreading R&D costs over such a large population and diversity of transportation businesses has helped us keep our systems and services very competitively priced and yet extremely current with information technology advances.

The questions for this executive interview have been developed by the following members of LQ’s Board: Graham Allen, Senior Program Manager, Supply Chain Secretariat, Treasury Board Office, Ontario Ministry of Finance;Bruce Danielson, Executive Communications Manager, UPS.

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