What is Transportation Management Systems Software (TMS)?
Transportation management systems, or TMS, has taken hold of logistics and global trade within the last decade, and for good reason. The growth of TMS has, essentially, become enterprise software, allowing companies to scale through information exchange across the world, with different operations, languages, currencies, etc. (TMS has risen as an enterprise software, allowing companies with different operations and languages in multiple countries to streamline and centralize their systems.)
For those that move freight regularly, such as distribution companies and e-commerce shippers, a TMS is the best way to optimize and streamline shipping management. But what exactly is a TMS? If you’re trying to decide if a TMS is right for your business, read on.
What Is a Transportation Management System?
Transportation management system software is a subset of supply chain management and is sometimes encapsulated with enterprise resource planning (ERP). Its function is to streamline shipping and logistics, reduce costs, and improve supply chain visibility in real-time for distributors, manufacturers, wholesalers, third-party logistics (3PL) companies, e-commerce, and retailers.
Some areas where TMS system tools can help are:
- Route planning and optimization
- Load building
- Management of the yard
- Order and supply chain visibility
- Carrier management
- Freight rating and shopping
Instead of calling and emailing partners, the TMS system sits between your company ERP and WMS (warehouse management system), allowing information and orders to flow between the two, speeding up processes and making your supply chain more efficient and faster.
Benefits of Having A Transportation Management System
While we’ve discussed some of the benefits in the section above, like streamlining your communications or speeding up your supply chain, that isn’t all there is to transportation software and doesn’t fully explain why it’s important to have.
TMS technology affects every part of your supply chain, from planning and orders all the way to lifecycle management and payments. Naturally, an improved, efficient system raises the experience of the customer, which in turn leads to further growth of your business. Transportation management solutions allow you to meet growing demands and compete on a global scale. It also helps you deal with the intricacies of global trade policies and regulations.
Save Money & Grow
One major benefit of having a transportation management system is the savings and growth you’ll experience. Saving time reduces your labor and management costs, and improved efficiency helps to improve your response to customer demands.
The new insights into your operations also help to make strategic changes that further refine your business and your bottom line.
Technology has accelerated many industries and created others. Within transportation management and supply chain management, the best TMS software can provide data to make better routing decisions and coordinate transit time and carriers. This might otherwise take time and experience, and considerable amounts of stress, to understand and manually order. Instead, the work is all handled in a central location, with data and real-time information.
With good transportation management software, carrier selection is simplified. You’ll be able to match merchandise with carriers easily, revisit shipments, and so much more. Of course, all aspects of the supply chain are simplified and made more efficient because they’re all accomplished in one place, communicating over lines, providing data and reports in real-time, and finding errors that would be harder to spot manually.
Improved Customer Service
The analytics and reporting that come with a TMS system will make it easier to see the impact of your decisions. You’re able to see delivery times from carriers and evaluate their consistency or lack thereof. Then you can make informed decisions about your carriers based on the data, which ultimately affects your bottom line.
You can use TMS data to improve customer service and ensure that your customers are consistently receiving products on time, but you can also use it to plan your inventory. The accuracy of the shipments allows you to better track demand and forecast your needs.
You are likely to have multiple shipments out at once, to multiple locations. This produces a lot of invoices and requires a lot of overseeing. TMS distribution management and payment tools will be able to analyze and customize these reports and identify errors.
TMS Freight Tracking
You’ll get real-time alerts when shipments are delivered, when there are delays, for transit exceptions, etc. There are a lot of things that can happen to shipments while in transit, and TMS system tracking will give you the advantage of knowing immediately when it happens, so you can adjust accordingly.
TMS tracking also helps to optimize your shipments. You can use data to appropriately create pool point distribution programs and save on costs. It may also help to set up inbound programs for better efficiency.
Supply chain visibility provides alerts and updates that help stakeholders plan and adjust in real-time. The shared system also helps to plan inventory effectively, move shipments and match carriers, and improve management. Overall, having visibility through a shared system makes it easier to move parts around and make adjustments as they’re needed.
Challenges You May Face With TMS
There are many transportation management solutions, but not all will provide the kind of benefits you see above. To find the best TMS, be wary of the following.
Modes Of Transportation
Not all modes of transport are covered by every transportation management system. It’s important that, before you take on a TMS provider, you ensure that they support your transportation needs.
If the tech wasn’t built on the cloud, it’s hard for it to support cloud-based technology, which ensures the same system and data for your entire company. There are many traditional or legacy transportation management software options that either haven’t made the transition at all, or haven’t done so smoothly.
If the TMS is owned by a carrier or third-party logistics company, you may not be able to negotiate your own carrier rates, or you may not be able to add the negotiated terms into the technology to be viewed for comparison. Some systems may also have preferred rates, which could cut into the savings.
You should always get reviews on TMS providers to ensure that you’ll receive the best service. These insights will also help you evaluate whether the specific system will fit your business. The addition of a TMS alters your supply chain, which can be costly if done incorrectly. The costs grow exponentially if you have to suddenly switch again once you realize it’s not a good fit. Get it right the first time by checking out the reviews.
The Future of TMS
As technology and software continue to improve with demands and advancements, TMS will also get better. Some expectations you may see are:
- Faster responses
- More detailed information
- Even better visibility
- More accurate predictions
- Better recommendations
- Internet of Things (IoT) devices for real-time monitoring (already an optional feature)
- Digital assistance and chat features
- Cold Chain Management (already a feature in some TMS software) to maintain temperatures for perishable items at various checkpoints along the supply chain.
A freight management system streamlines your business, saves time and costs, improves customer support, and makes it easier to scale your business. However, you must find the right one in order to reap all the benefits.
3G is a TMS partner you can trust. We allow you to self configure your TMS, rapidly integrate your timelines, and get maximum control from costly support contracts. Get industry-leading optimization with TMS software from 3G.