Transport Management System or TMS: All You Need To Know
All companies, big or small, must monitor their supply chains. A TMS, or transportation management system, aids this by enabling users to gather vital data and make quick decisions. This article explores how TMS systems enhance supply chain management.
Why is it essential to have a Transportation Management System?
The increasing share of the e-commerce vertical in the retail market has resulted in an end-consumer fixation that pushes businesses to provide deliveries quickly and within promised schedules. Effective transportation management is key to keeping customers happy. In this regard, a good Transportation Management System (TMS) changes the game.
Here's why a robust TMS is crucial for well-planned transport operations:
- Cost savings: A TMS finds the cheapest routes, carriers, and transport methods. It reduces costs by combining shipments, cutting empty trips, and negotiating lower rates.
- Better tracking: Companies see their shipments' real-time locations and statuses. This helps solve issues quickly and improves customer communication. It also means more accurate delivery estimates and happier customers.
- Efficiency: A TMS automates carrier selection, rate talks, and document handling. This slashes errors and paperwork.
- Compliance: This is a major benefit of a TMS, as it is up to date on transport regulations. For instance, the laws that cover processes around shipping hazardous materials. A good TMS can help prevent fines.
- Smart decisions: The TMS collects and analyses supply chain data. This helps identify transportation trends, issues, and areas for improvement. Companies can make informed decisions and boost efficiency.
A TMS is key to increasing revenue, cutting costs, and reducing errors. It's a must for logistics and supply chain experts.
Key features of a transportation management system
A TMS software manages supply chain functions. It uses real-time data to maximize impact and cut costs. Here's what to look for in a TMS:
- Route Planning and Optimization: TMS systems plan routes efficiently. They use factors like traffic and delivery windows to cut transport costs. By finding the best routes, they reduce fuel use and boost on-time deliveries.
- Load Planning and Consolidation: TMS aids in loading trucks. It considers weight, volume, and safety rules. This way, trucks carry more, travel fewer miles, and save on costs
- Carrier Selection and Rate Negotiation: TMS links to many carriers. It lets businesses compare rates and services. They can then pick the best carrier and negotiate rates, saving time and money.
- Shipment Tracking and Visibility: Real-time tracking is crucial. It informs customers and manages exceptions. TMS offers visibility into ship locations and statuses, making communication and planning easier.
- Freight Audit and Payment: TMS automates payment and auditing. It checks invoices against rates and ensures timely payments. This cuts admin costs and maintains control.
- Analytics and Reporting: TMS provides insights. It analyzes carrier performance, costs, and more. This helps companies improve logistics.
- Integration with Other Systems: TMS connects smoothly with ERP, WMS, and CRM systems. This ensures a seamless flow of information and full supply chain visibility.
- Regulatory Compliance: TMS helps with compliance. It manages documentation and safety requirements. This ensures adherence to regulations.
- User-Friendly Interface: A well-designed TMS is easy to use. It offers customizable dashboards and mobile access. This boosts productivity.
By using these features, a TMS helps businesses cut costs, improve service, and gain an edge in logistics.
Benefits of a transportation management system
A transportation management system (TMS) delivers numerous benefits to businesses. These include:
- Improved customer service
- Tracking freight real-time
- Lower shipping costs
- Aligned dock scheduling
- Accurate order fulfillment
- Reduced documentation
Companies can gain a competitive edge in supply chain management by implementing a robust TMS.
Functions of a TMS system
The functions of a typical TMS system can be grouped into the following categories:
Freight Management
A TMS system usually acquires, stores, and updates carriers' shipping rates in real time online. Current rates can all be found in one place, making it simpler for logistics providers and businesses to select the suitable carrier. This TMS function proves invaluable since trucks can reach tens of hundreds for large enterprises, logistics providers, or 3PLs.
TMS also handles the paperwork required with freight management, including contracts held with individual carriers. The TMS system also manages load tendering, offering carriers the necessary details to bid for a load and serving as a record of the agreed terms. Specific TMS systems also support order management. Finally, a TMS can also be automated with workflows to book carriers and loads.
Freight planning
TMS systems allow businesses to analyse critical factors such as price, service levels, delivery times, and more when shortlisting carriers. It also provides relevant data on routes, updated in real-time, to help businesses choose the best possible road to quick deliveries. A TMS system also allows supply chain managers to control every aspect of their loads and shipments.
For example, they can consolidate or resize loads and redirect orders to optimize carrier resources in less-than-truckload (LTL) shipments. Additionally, they can plan multileg or linehaul trips and avoid empty miles between stops to save on fuel and labor costs.
TMS systems also consist of reporting and analytics capabilities. They can monitor carrier performance, check on drivers and freight in real time, and provide insight into essential improvement areas. These systems can also import and export data from ERP systems to seamlessly collaborate with other team members and managers.
Administration
Transportation involves complex paperwork for transactions, including regulatory compliance documentation and auditing. A TMS offers features to assist businesses in these areas, incorporating billing and payment details for financial reporting. This ensures accuracy by comparing a carrier's published rates with the invoice amounts.
Additionally, a TMS can generate a bill of lading (BoL), a document that specifies the items in a shipment and the terms of the contract. BoLs are also essential for customs and insurance purposes.
A transportation management system also handles documentation for processes like proof of delivery, pick-up, and time in transit. If any conflicts arise, all this data is used for settlement purposes. Supply chain managers and businesses can leverage settlement data to negotiate better prices, gain an upper hand in negotiations, and more.
Finally, a TMS system also provides performance data. This can be used to check if carriers comply with state or national laws, and businesses can use this data to gauge which carrier is better suited to their needs.
How does a TMS work?
A Transportation Management System (TMS) is software that plans, manages, and improves moving goods in the supply chain. It is a central hub for shippers, carriers, and logistics providers, enhancing cooperation and efficiency. The TMS often works with systems like ERP and WMS. It can be applied in various supply chain areas.
Shipment Planning
- First, the TMS receives order details from sources like ERPs, WMS, or manual entry. It then uses smart tools to find the best routes, modes, and carriers. It checks delivery times, cargo, and costs.
- The TMS helps to choose and book carriers, negotiate rates, and tender loads. This ensures the best and most cost-effective options are selected.
Shipment Execution
- During transit, the TMS provides real-time tracking. This lets shippers and providers monitor their goods and quickly respond to issues.
- It also automates tasks like document management and payments. This cuts down on manual work and errors.
Shipment Reporting
- The TMS connects with WMS and ERPs. This allows seamless data sharing and full visibility.
- It collects and analyzes data for insights. These insights support better decisions and ongoing improvements.
A TMS helps businesses save costs, enhance service, and stay competitive in the supply chain.
Who uses a TMS system?
TMS software mainly serves shippers and carriers. However, it's also popular among manufacturers, distributors, e-commerce, wholesalers, retailers, and 3PLs.
A TMS is key in supply chain management (SCM). It works with supply chain execution (SCE) and supply chain planning (SCP) systems. You can get TMS software alone or within ERP or SCM packages. Some TMSs focus on one transport mode. However, most offer multimodal and intermodal options.
How are TMS systems deployed?
Initially, TMS solutions were on-premise. Now, many are available in the cloud as Software as a Service (SaaS). Managed service providers (MSPs) also offer TMS services.
Cloud-based TMS solutions are on the rise. They help small businesses avoid the high costs of traditional TMS setups, and cloud deployment boosts TMS connectivity. Some vendors offer unique SaaS options. These aim to cut costs and integration challenges compared to single-tenant SaaS and private clouds.
Many organizations are drawn to cloud TMS. It offers improved connectivity and potential IT labor and infrastructure savings. However, some large manufacturing and distribution firms still prefer on-premise setups. They cite security and control reasons. Hybrid solutions, mixing on-premise with cloud TMS, are also popular.
Transportation management systems of the future
Emerging technologies are expected to create substantial breakthroughs in TMS technology in the future. Routes and processes will be further optimized using artificial intelligence (AI) and machine learning (ML), allowing for increasingly complex predictive analytics and autonomous decision-making.
Internet of Things (IoT) integrations is already making inroads into supply chain processes. The technology is also set to enhance real-time asset and condition tracking. Blockchain technology will offer more security and transparency of the supply chain.
Furthermore, last-mile delivery methods will change as autonomous cars and drones become more common. As the logistics landscape changes, TMS systems will advance in intelligence, connectivity, and adaptability. Companies using these technologies can stay ahead of the curve in a constantly shifting supply chain environment.
While these trends shape the future, investing in a robust TMS system is now. No matter how small a business is, a TMS can be used by organizations of all sizes. Until several years ago, the TMS was the domain of large enterprise businesses. But now, thanks to cloud computing, smaller companies can benefit from TMS systems. As we go forward, investing in a TMS solution to handle your eCommerce and shipping needs is no longer a choice but a necessity.
Unlock transportation efficiency with a powerful TMS
Optimizing transportation operations is crucial for businesses seeking a competitive edge.
Leveraging advanced features such as route optimization, load planning, carrier selection, real-time tracking, and data-driven analytics can give businesses a significant competitive edge.
At Tata BB Matrix, we understand the importance of efficient transportation management. Our cutting-edge TMS solution meets the changing and dynamic nature of modern supply chains and promises up to 99.9% on-time deliveries.
Our TMS connects with other systems with seamless integration capabilities, ensuring end-to-end visibility and control across your logistics operations. Our solution enables intelligent decision-making capabilities to make data-driven choices that optimize transportation processes.
Whether you're a small business or a global enterprise, our scalable and customizable solutions can adapt to your unique requirements. We provide the flexibility you need to stay ahead of the competition. The Tata BB Matrix advantage brings you several benefits:
- Up to 50% lower cost per unit
- Up to 60% lower lead times
- Up to 100% shipment visibility
