For many in logistics and supply chain management, winning finance approval for a TMS feels like attempting a game-winning play in the final seconds.
The challenge lies not just in understanding the details of the proposed system. You have to translate the TMS value into a language that speaks both to logistics’ tangible, day-to-day chaos and the numbers-driven realm of finance and risk.
Here’s a playbook to help you win finance approval for a transportation management technology investment.
Breaking Down TMS Barriers: Address Finance Concerns Head-On
Finance teams often get nervous about new tech investments.
If you know what they’re most concerned about and address it with the right approach head-on, you can build an ironclad case for investing in a TMS.
Build vs Buy: Weighing the Internal Option
Be prepared for the “build vs. buy” question.
In-house development of a TMS can cost $300,000 to $800,000 in direct costs for hardware, project management personnel, consulting, and software education & training. Add indirect costs for:
- Ongoing maintenance & support to keep software secure, usable, and current.
- Continuous training and education for new employees and customers.
- Lost opportunities when resources and staff are diverted from core competency.
Like many do-it-yourself projects, an in-house technology build often runs over budget and past deadline.
Upfront Costs: Breaking Down TMS Pricing Models
- On-premises systems require a hefty upfront investment for software licenses and hardware — potentially six or seven figures.
- Cloud-based options typically have lower initial costs but come with recurring fees.
Then, get into the pricing structures.
Some TMS providers use a “pay-per-load” model, charging for each shipment processed. Paint a clear picture: “If we ship 1,000 loads a month at $5 per load, that’s $5,000. But if we hit 2,000 loads, we’re looking at $10,000.” This model can benefit businesses with fluctuating shipment volumes.
Contrast this with subscription services. These charge a fixed recurring fee, often monthly or annually.
TCO (Total Cost of Ownership): Uncovering Hidden Expenses
Pull back the curtain on the total cost of ownership and the sneaky costs of outdated systems.
Hit them with hard numbers. “Our current legacy system costs us $150,000 annually in maintenance fees alone. That’s money going down the drain for outdated tech.”
Spotlight the operational inefficiencies of the countless hours you’re losing to manual data entry and subpar route planning. Mention how studies show that TMS solutions can cut time spent on freight invoice payments by 90-95% and save up to 8% in total transportation spend.
Be sure to hone in on compliance risks as well. Stress how one regulatory slip-up due to your outdated system’s limitations could result in significant fines.
Risk Mitigation: Built-in Safeguards for Long-term Stability
Now, show how modern cloud-based TMS platforms like MercuryGate are financial safeguards in disguise.
- Address security concerns: Explain how these systems employ risk mitigation features like multi-layered cybersecurity protections, 24/7 monitoring, and regular security reviews. Emphasize that these measures protect sensitive financial data and maintain system integrity.
- Highlight the TMS’s role in ensuring regulatory compliance: Describe how it automates customs clearance processes, minimizing the risk of costly violations and maintaining smooth cross-border operations.
- Focus on the TMS’s ability to drive profitability: Use concrete examples and hard numbers to illustrate its financial impact. Mention how centralized data and customizable reporting in claims management can help identify and prevent claim trends and save money over time. Then, paint a picture of streamlined operations, reduced errors, and real-time visibility into transportation costs.
Speak the right language to win finance approval, address concerns directly, and you’ll be moving to the next step in getting your TMS approved.
Win Finance Approval: The Essential TMS Business Case
With the right data and approach, you can make an irrefutable case for a new TMS.
Here’s how to present a compelling argument that speaks directly to your finance team’s priorities and concerns:
- Quantify the ROI: Present a precise, numbers-driven analysis of the expected return on investment. Calculate potential cost savings on freight spend, labor hours saved through automation, and improved cash flow cycles. Provide conservative estimates backed by industry benchmarks and case studies.
- Highlight Risk Reduction: Emphasize how a TMS mitigates financial risks associated with compliance violations, billing errors, and supply chain disruptions. Quantify the potential costs of these risks and demonstrate how a TMS protects the company’s financial health with faster payment cycles and fewer disputes.
- Demonstrate Scalability: Show how a cloud-based TMS can scale with your business without requiring additional capital over the long term. Such an approach aligns with financial planning and showcases the system’s ability to meet future needs and protect the initial investment.
- Address Total Cost of Ownership: Break down the total cost of ownership, including implementation, training, and ongoing support. Compare this to the current costs of manual processes and legacy systems to show the long-term financial benefits.
- Align with Strategic Goals: Connect the TMS investment to broader company objectives such as digital transformation, market expansion, or operational excellence. Show how the system supports these goals as a strategic asset rather than an operational tool.
Calculate your potential Saving While Using an enterprise TMS
Win Hearts & Wallets: The Finance TMS Approval Playbook
Getting finance to greenlight your TMS investment takes more than fancy spreadsheets and rosy projections. You need a story of operational transformation that speaks to even the most skeptical and numbers-driven CFO.
Master the total cost picture, show how the TMS aligns with company-wide goals, and prepare for tough questions. Your finance team gatekeeps company resources. Respect their perspective and blend hard data with compelling examples.
MercuryGate offers powerful tools to fortify your case further:
- ROI calculators bring potential savings to life.
- Case studies showcase real-world wins from companies like yours.
- Ebooks provide the ammunition you need to seal the deal.
If you’re ready to transform your transportation management, schedule a demo to get a personalized look at MercuryGate’s TMS before pitching your number crunchers.
