Over the past few years, retail companies in various sectors have increasingly automated their logistics processes. They try to reduce the time for each operation, create the most effective algorithms, and eliminate the human factor and the possibility of errors. For this, businesses use transportation management systems – for example, individually developed by Acropolium or buy ready-made software. Let’s figure out which is better.

What is a TMS system?

By synchronizing with the company’s website, these systems receive information about purchases on them: what goods need to be delivered and where. Next, they determine the characteristics of the products, their weight and dimensions, the desired delivery area, traffic conditions, available cars, drivers and many other parameters. It was thanks to them that logistics became the way we are used to seeing it – with fast delivery at certain intervals. For business, these systems create optimal routes and ensure that cars do not drive half-empty or overloaded; automate and speed up the work of logisticians.

Even if the company is not that big – say, it has about 100 shipments per month, without automation, there is always the risk of human error – or simply choosing the wrong tariff from several offers. This can lead to a significant increase in the logistics budget. For a business that has more than 500 shipments per month, this is already a necessity. It is impossible to imagine all modern large online stores without such solutions.

Difficulty in choosing TMS systems

TMS systems can be both internal (worked on by a team of a specific organization, for example Acropolium), and external (an IT company creates and complements its solution, and other businesses gain access to it). Now, we are seeing a real race in budgets for internal development. But what is better and more correct: write your own system or implement a ready-made one? There is an opinion that the cost of external systems is falling, and the maintenance of your own is only increasing but is this true? Let’s look at the pros and cons.

Development nuances

On average, to create a simple TMS solution, you will need at least a staff of two Backend developers, one Frontend developer, one analyst, and one tester. If a more specific and complex solution is needed, the cost of its development increases significantly. The task is divided into the following stages.

1. Analyze and describe all business processes. Understand how they can change in the near future, what must be in the system;
2. Select an IT team using your own HR or an outsourcing company;
3. Build the architecture of the solution: describe how all its parts will interact with each other;
4. Provide a server for storing data, determine where it will be located;
5. Develop a solution system;
6. Test it;
7. Launch a pilot version;
8. Check the functionality of the final version;
9. Correct inaccuracies and errors;
10. Launch the final version of TMS.

Even with a minimum set of requirements, the implementation process of the project, from idea to operational efficiency, will take at least a year. From a financial point of view, during this period, the estimate may significantly go beyond what was planned. Rental of premises, servers; programmers’ salaries are growing almost every month.

Pros of your own solution:

• The solution will be written for your own business processes and will fully comply with all customer operations. It is very convenient to have your own TMS.
• You can ask for specific functions needed by a particular business.
• Using your own TMS system is often more convenient to scale your business.
• Data remains in the company’s corporate system, reducing the risk of data leakage or loss.

What should you consider when developing your own TMS system?

The company must be ready to pay for the services of the IT team, not to mention the costs of servers, integration, and additional services. Not all companies can afford such expenses. You can’t just create a solution and then just use it. Technologies are improving, and the IT team will have to supplement its infrastructure by adding new capabilities. Plus, we must not forget that systems with a huge amount of data can become a tasty morsel for attackers who can scan them looking for vulnerabilities.

It is also necessary to take into account that not all TMS parameters are known in advance when writing technical specifications. It is difficult even for very experienced specialists to take into account all the nuances. Additional requirements can appear at any stage – and each can break the logic of the system and lead to additional rework and corrections. In the worst-case scenario, you will have to start development all over again – and waste time and money.

Only one development company will be able to use this solution. It is unlikely that any competitor would be willing to hand over all of their data to the stakeholder’s system. This means that the chance to “recoup” development costs with the help of other organizations is very small. As a rule, such systems will only pay off if they are designed for a large number of players.

What’s the result?

A company is suitable for its own TMS system if:

• You have a large and sustainable business with a wide supply chain.
• Most of your turnover comes from online sales.
• You have a very experienced team that is able to perfectly analyze all business processes.
• You are ready to increase the costs of your IT team every year, and this is included in your plan for the near future.
• You realize that mistakes are inevitable from time to time, and the solution will have to be adjusted – and an additional budget must be allocated for this.

It is recommended for companies to use a ready-made solution if:

• You just enter the market and start working.
• You understand that the system may not pay off.
• You cannot afford to pay for experienced programmers and are willing to consider beginners or intermediate specialists. In this case, errors and failures are inevitable, for which you will have to pay both financially and reputationally.

A project to create your own solution may seem like a very promising, large-scale, and very profitable solution, but only at first glance. Being professionals in their field (trade or any other), it is almost impossible to cover the IT industry and take into account all its nuances. Therefore, we recommend that you analyze each business process very carefully and calculate which solution is more profitable for you.