What Is a TMS?

Jan 12, 2020

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Volodymyr Rudyi

A TMS, which is also known as a transportation management system or a transportation management solution, is a logistics platform that takes advantage of modern technology to assist businesses with executing, planning, and optimizing the movement of goods both into and out of the business.

Why Transportation Management Systems Are Important

Having a high-quality transportation management system can offer benefits throughout the entire supply chain process. It can affect planning, logistics, procurement, and lifecycle management.

The visibility provided by the integration of a TMS can lead to a higher level of execution and planning which ensures that customers are happier with a business’s offerings.

When customers are satisfied with a business’s work, this can lead to additional sales which provides a means for the business to grow. In a world with a dynamic global trade environment such as the one we work in, a system that helps native trade politics and compliance processes is crucial.

The world of today is characterized by real-time tracking and same-day shipping, which means that customers are used to getting what they want as soon as they want it. Traditional businesses may find that keeping up with the demand is challenging, especially when it comes to the supply chain.

One of the most critical parts of an efficient supply chain is moving goods from one place to another. A transportation management system can help manage this for businesses of all sorts.

Who is Using a TMS

While a transportation management system can be used by any business, it is typically best suited to a business that often moves, receive, or ships goods. These include:

  • Distributors
  • Ecommerce businesses
  • Manufacturers
  • Retail businesses
  • Companies offering logistics services


Businesses in a wide swath of industries, from life sciences to construction, are finding benefits in using transportation management systems. While the largest users are businesses that do at least $100 million of business in freight, cloud-based TMS solutions have also made this technology open up for smaller businesses to get started with. This allows businesses of all sizes to add a transportation management system to the supply chain.

Types of TMS to Choose From

As a business, there are standalone transportation management systems that offer integration with their existing on-premises or cloud SCM solutions or enterprise resource planning software.

Some of the TMS options out there offer trade documents capabilities while others may require the use of a separate global trade management (GTM) application. Some TMS have fewer features and may be available as modules within other SCM and ERP suites.

Main Features of TMS Automation

The biggest things that a TMS can do for a business is planning, optimizing, and executing how physical goods move across the supply chain.

Planning – With the right TMS, a business can easily determine the best carrier and mode of shipment based on distance, cost, efficiency, and the need to use multi-leg carrier routes. A high-quality TMS will offer visibility at every stage of the supply chain. When used with global trade management functionality, it may also offer information on tariffs and trades. It can also offer information about potential delays related to trade regulations and customers.

Execution – Every transportation management system has its own features for execution. Some of the most common include assistance with freight settling and billing, communicating and matching loads with carriers, and tracking and documenting shipments. The most advanced versions may also offer to trace and to track services, which means having real-time information for distributors, carriers, customers, and warehouses alike. These systems also may have API functionality to work with complex logistics on an international level such as being sure shipments are trade complaint and there is proper export and important documentation.

Optimization – TMS has optimization capabilities that help measure and track performance using various reports, analytics, dashboards, and transportation intelligence. This means spending less time on these details and more on bringing in new customers and keeping current ones.

Reasons to Consider a Transportation Management System

With customers who are looking for instant gratification, having things in stock and shipped out immediately is crucial for businesses. The various TMS solutions can offer an easier way to stay on the cutting edge of this issue. There are many benefits to choosing a TMS that works for your business, which we’ll explore below.

Improvement to Cash Flow

Having an efficient and useful transportation management software can offer help for a business when looking to reduce shipping costs. The best TMS is going to look at each logistical route that can be chosen and determine that financial aspects of going with one or another. This software offers automation to generate user-related options for reducing expenses in certain areas such as driver overtime or fuel consumption.

Integration of Execution and Planning

The modern transportation management systems available on the market are capable of integration with existing systems to assist in managing the transportation needs of a business. Many integrate with various systems including:

  • Customer relationship management
  • Order and purchasing management systems
  • Supplier relationship management
  • Warehouse management

The integration and automation through API allow businesses to execute orders while only going through a cost-effective carrier. This offers advantages like improved load optimization and route planning for the business. This means that the planning and execution of orders will be more efficient and done in a better way.

Lack of Paperwork

When using TMS, a business has a view into the lifecycle of every shipment or order in real-time. A business can choose to get status updates to each of them so keeping up doesn’t require extra thought. Businesses can get an accurate forecast of the inventory availability and have a better accountability of the supply chain network.

Visibility Through the Supply Chain

The latest generation of transportation management systems offer integration across the full supply chain. This means a business has a constant view of the entire supply chain system. When a business has this operational visibility along with access to real-time data, it is much easier to keep up with everything that is going on. Managers who are working with the system can quickly resolve any issues that occur and act on opportunities that show themselves. This ensures customers are happy and the best performance is possible at all times.

Better Routing Using Pool Distribution

Nowadays, shipment sizes are smaller and order cycles are much shorter than ever before. Because of that, routing is something that is highly critical to a business. Using the right TMS lets a business implement pool distribution, which is a faster and less expensive method of delivery for increased control and better visibility. Choosing the best pool point makes it simple to decide which shipments need to be delivered or picked up. The most complex order can be split up and routed to different places, which results in savings of money and time.

Ability to Track Drivers

TMS makes it possible to track drivers as they are en route to reaching their destination. It also lets the business look at the different routes possible and which is most optimal for the situation. This makes it easier to generate an efficient schedule. On top of that, assessing drivers as individuals can be done quickly and easily. Businesses can track efficiency and even offer feedback in cases where improvement needs to occur. Tracking in real-time also offers safety benefits, especially in cases where an accident happens.

Accuracy in Order Fulfilment

A reliable form of TMS will help ensure that shipping is more accurate than ever. With visibility of the entire supply chain along with real-time tracking, order fulfillment accuracy is bound to increase. The software also helps reduce or remove shipping discrepancies and errors. If small errors do occur, these things can be easily resolved without any impact to the customer.

Improved Customer Experience

The customers who are ordering things today expect customized delivery times, as quick as possible delivery, and last minute order changes. These aren’t just things that a customer wants, but things that are expected to be possible from businesses when any kind of order is placed. Businesses can find it hard to adapt their operations to meet all of these new expectations that customers have. This is where a TMS can make huge changes in making those things possible. It can be a bridge between warehouse management and order management systems. This sort of system consolidates orders to find the best price through the best carrier possible. This offers advantages for both the business and the customers.

Referrals and Repeat Businesses

Having the right TMS can help save a business money and time. It also contributes to the efficiency and productivity of a company. What might be even more important is that each of those things helps you get repeat business, something that is the aim of any kind of business. Having customers who choose your services repeatedly is a must and the right TMS will help you get there. The better customer experience possible through a transportation management system will also help increase potential referrals.

Why Consider Cloud-Based TMS

Just like other cloud solutions, transportation management systems n the cloud can help offer a faster return on investment, improved economies of scale, no upgrade fees, and lower total cost of ownership. In terms of IT, cloud-based TMS offers other benefits in terms of improved security, faster deployments, automatic updates with the newest features, and l3ess hours needed for installation and training.

For a smaller business that doesn’t spend upwards of $10 on freight on an annual basis, the typical method of managing transportation was manual methodology such as spreadsheets. With cloud-based systems available, there are now high-tech options that allow smaller companies to invest in a TMS for less than ever before.

The Future of TMS

As customers continue to increase their expectations for two-day and even same-day delivery along with real-time updates at every step of the process, TMS is the best option to meet those needs. These systems also offer a way to keep up with constantly changing global trade regulations. Keeping pace with changes is something these systems make easier, but they may need to change in the future.

For example, transportation management systems may need additional features to offer more detailed information to businesses and faster responses to customers. With machine learning, a TMS will be even more intelligent and capable of offering more accurate predictions and better recommendations.

Businesses can also choose to integrate their global trade management and transportation management systems with upcoming technologies for better customer service and improve visibility. Some of the technologies currently available include IoT fleet monitoring, cold chain management, digital assistants, adaptive intelligence and machine learning, and blockchain.

Conclusion

Having a TMS offers a huge number of benefits for any company that does large amounts of shipping and receiving. In order to keep up with the changing landscape of business today, TMS is a necessity. It may not offer a huge amount of savings right away, but the incremental benefits will create improve business practices and ensure you meet the promises you make to your customers. Through cost control, warehouse efficiency, invoice tracking, and inventory management, TMS can make a huge difference and offer the ability to make more money and keep customers in the long term.