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ARC Sees Visibility and Control of Financial Performance Driving Growth in Transportation Management Systems (TMS) Market

Posted on: Wednesday, 14 September 2005, 09:00 CDT

According to ARC Advisory Group, the Transportation Management Systems (TMS) market grew to about $910 million in 2004 and is forecasted to exceed $950 million this year. The need for better visibility and control of financial performance is one of the factors contributing to growth.

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. 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, you can't build up transportation capacity like you can inventory; you 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. Gonzalez comments, "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. But some shippers are now 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."

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

The study also includes market shares by solution type, geographic region, customer tier, and vertical industry, plus forecasts and supplier profiles.

Additional informationon this study can be found at: www.arcweb.com/res/tms

Note to Editors: This document can be used with attribution to ARC Advisory Group. For a graphic titled, "Total Shipments of TMS License, Services and Recurring Revenues in Millions of Dollars", please send an email to press@arcweb.com .

Founded in 1986, ARC Advisory Group has grown to become the Thought Leader in Manufacturing and Supply Chain solutions. No matter how complex your business issues, our analysts have the expert industry knowledge and first-hand experience to help you find the best answer. We focus on simple yet critical goals: improving your return on assets, operational performance, total cost of ownership, project time-to-benefit, and share-holder value. Further information can be obtained from ARC, Three Allied Drive, Dedham, MA 02026, 781-471-1000, Fax 781-471-1100, E-mail info@arcweb.com, Web www.arcweb.com.

Source: Business Wire

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