What Is Transportation Management System?

transportation management system

A transportation management system (TMS) is a logistics platform that assists organizations in planning, executing, and optimizing the physical movement of goods while also ensuring complete compliance and adequate paperwork. 

A TMS offers prominence in everyday transportation operations such as trade compliance information, documentation, and confirming the well-timed delivery of goods and freight. Transportation management systems also help streamline the shipping process and make it simpler for businesses to optimize and manage their transportation operations, whether they are by air, land or sea.

Why to use a Transportation Management System?

Transportation management systems play a vital role in supply chains, impacting each part of the process—from preparation and procurement to logistics and lifecycle management. A robust supply chain’s deep and broad visibility results in thoughtful and productive transportation planning and implementation, resulting in greater customer satisfaction. And that, in turn, results in higher sales, helping the business grow. With such a dynamic global trade environment in which we live and transact, it is critical to have a system that will help you manage intricate processes involving trade policies and compliance successfully.

Who actually needs a TMS?

Transportation management systems are chiefly used by businesses which require to ship, move, and receive goods and chattels consistently, including:

  • Manufacturers
  • Distributors
  • Ecommerce companies
  • Retail businesses
  • Companies that offer logistics services, for instance, third-party and fourth-party logistics companies (3PL & 4PL) and logistics service providers (LSPs)

A TMS is used by companies in practically every industry, from construction to life sciences. Enterprises that spend $100 million or more a year on freight are the most common customers. Still, the availability of cloud-based TMS systems has made it cheaper for smaller businesses to benefit from the advantages of implementing a transportation management system into their supply chain.

benefits of TMS

Functions of Transport Management System (TMS)

1. Automatic Order Fulfilment

Businesses can exchange their PO(Purchase Order) detail information with vendors directly through advanced TMS software and file electronic export information or EEIs using an automated export method. They can also use data from previous orders to automate their sourcing and procurement processes.

2. Routing and Dispatching

When looking through maps, speed limits, traffic data, and gasoline prices in real-time, logistics managers can locate more efficient routes and save money on transportation. Shippers will be able to find the most cost-effective carriers for each of their shipments using this information, which will allow them to consolidate their shipments into single, more economical loads.

3. Cargo and Shipment Tracking

Stock keeping unit or SKU tracking is a valuable function offered by TMS for organizations that need to track things while in transit. Customers are going to be more satisfied if they know precisely where their conveyance is at all times. Weak links in the supply chain can also be highlighted using this feature.

4. Generate quotations

Quotes for all kinds of transportation can be generated and sent using the TMS software. In addition, quotations can be tracked and converted into orders as needed with this feature. Email templates, impromptu quotes, and one-click shipping production are all options available in some TMS.

5. Advanced Transportation Intelligence

Analytical tools aid companies in obtaining valuable data from transportation-related processes. User involvement, profit and carrier margins are all included in the transaction data. You can see what’s working and what isn’t by keeping an eye on these KPIs. Better and more informed decisions can be made with the help of a good TMS.

Speaking of smartphones and other mobile gadgets, they have become ubiquitous in today’s world. As a result, tablets and smartphones should be able to access TMS software. Informed business choices can be made, trucking timetables can be viewed, and driver performance can be monitored in real time.

6. Load Management

TMS helps companies to keep their loads and trucks organized in a single place and update their load data at any time. The TMS solution often highlights data on customer loads, drop dates, load statutes, carriers, drivers, and the goods being shipped, among other things. The system should also sort loads based on matching criteria such as carriers, drivers, clients, reference numbers, cities, and different keywords.

7. Driver Management

The TMS technology allows dispatchers to swiftly and efficiently generate, schedule, and track shipments using direct and real-time wireless connectivity for truck drivers’ dispatch and deployment.

Advantages of using a TMS Software

Many manufacturers, distributors, retailers, and anybody else who ships freight may be unaware of the advantages of TMS. Benefits of TMS go beyond mere freight shipping cost reductions. If you consider transporting freight to be more than just a necessary cost, you’ll be well on your way to maximizing your overall ROI with the help of a TMS. 

To that aim, we’ve compiled a list of key benefits of integrating a TMS into your supply chain.

1. Reduce Transportation Costs

A transportation management system enables a corporation to have a cost-effective logistics system and reduce transportation costs. This is most likely the most significant benefit a TMS can provide to your company. The latest or most recent version of TMS software can combine current frameworks for dealing with an organization’s transportation needs, such as order processing, inventory management, and customer relationship management. Any business can use the integration.

  • Selecting the most appropriate carrier for their transportation needs.
  • Choosing the most appropriate path
  • Increasing the pace and efficiency of your operations.

A TMS aids firms in delivering goods quickly to ensure that their cargo is delivered cost-effectively and with the most effective services possible.

2. Pay Bills Accurately

Traditionally, invoicing and payment procedures took a lot of time and effort. It could also be costly while delivering very little. Electronic billing, accounting, and payment processing are all possible with a modern TMS. With the help of a TMS, auditing procedures now take less than a few seconds to complete a job that used to take hours and also reduces the error margin.

The invoice you receive can be compared to the shipping rate at any time through a TMS. The bill is generated, and the invoice is accepted if the figures match. The case is then handled in the exception queue if the statistics don’t match. A TMS can streamline payment processing in this way.

3. Understand Freight Spend

One of the most significant advantages of a TMS is the analysis of the freight costs. By using analytics and optimization, a TMS can help you save money. A TMS  makes recommendations for cost-cutting techniques  and leverages data to deliver helpful information.

4. Optimizing Routing Capabilities

Optimized routing has become more critical than ever as order cycles have shortened and package quantities have shrunk. A corporation can deploy pool distribution with the correct TMS software. This is a less expensive and faster delivery technique that gives you more visibility and control. Operators can identify which shipments need to be picked up and delivered by selecting the best pool point. More complicated orders can be broken down and routed independently, which saves time and money.

The Bottomline

In today’s brutally competitive business world, every company requires modern technical support to survive and prosper. Transport management software is a must-have tool if you deal in logistics. It will boost the company’s overall production and efficiency of the supply chain. In addition to optimizing your supply chain and increasing customer satisfaction, a good TMS will also reduce supply chain costs and help your business achieve the next milestone.

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