A transportation management system (TMS) is a logistics platform that helps businesses plan, carry out, and optimize the physical movement of their products while also ensuring full compliance and sufficient documentation.
A TMS plays a significant role in routine transportation operations, providing paperwork, information about trade compliance, and assurances of on-time delivery of cargo and goods. Systems for managing transportation operations, whether they are by air, land, or sea, make it easier for firms to optimize and manage their shipping processes.
Who is TMS for?
Businesses that must consistently move, ship, and receive commodities, such as:
- Ecommerce businesses
- Retail establishments
- Enterprises that provide logistics services include logistics service providers (LSPs) and third- and fourth-party logistics enterprises (3PL & 4PL).
Businesses in nearly every sector, from construction to healthcare, employ TMSs. However, smaller businesses may now more affordably take advantage of the benefits of integrating a transportation management system into their supply chain thanks to the availability of cloud-based TMS systems.
Functions of TMS
A TMS collects, archives, and updates shipping rate information from carriers, frequently in real-time online. Comparing prices is much simpler than it was in the days before TMS, when goods managers had to manually call or fax carriers and record rates. Instead, it is possible to handle carrier connections, the prices that were agreed upon with them, and delivery schedules largely online.
Although order management is often handled by ERP or independent order management software, some TMSs do support it.
Users of a TMS can also carry out the main tasks of freight management, such as scheduling shipments with carriers. Tracking shipments and sharing that information with clients and suppliers are made feasible by real-time visibility into how freight is moving throughout the transportation network.
While the majority of TMS capabilities are focused on execution, the system’s real power lies in the tools it offers for organizing and streamlining the shipping process. It offers information and analytics on vital aspects, such as cost, quality of service, and transit time, enabling consumers to select the carriers and routes most likely to deliver goods quickly and affordably.
The order and load levels are also subject to these optimisation possibilities. Users can size cargoes or reroute orders, for instance, to make the most use of the carrier’s resources for less-than-truckload (LTL) shipments. By eliminating empty kilometers between stops, they can also design multi-leg trips to reduce fuel and labor costs.
The administration of transportation and logistics is a complex process that requires a lot of documentation for B2B transactions, regulatory compliance, and audits. As a result, a TMS needs to have enough administrative functionality to satisfy the requirements for financial reporting and documentation.
Common features include tools for billing, payment, and accuracy verification, such as comparing an invoice’s amounts to a carrier’s advertised rates. To reduce processing of bills, a system of automatic payments might be used. A bill of lading is a sort of receipt that a shipper or carrier can give to detail the components in a shipment and the terms of the contract. A TMS can also produce one. Customs and insurance also utilize bills of lading.
A TMS must also handle settlement, a more complicated process that necessitates the documentation of certain freight milestones and metrics prior to payment, such as evidence of delivery, pickup, and time in transit. The performance management and optimisation procedures of the TMS use the data gathered throughout the settlement process as raw material.
Benefits of TMS
It’s possible that many producers, distributors, retailers, and anybody else who ships goods is not aware of the benefits of TMS. The advantages of TMS go beyond only lower freight delivery costs. With the assistance of a TMS, you’ll be well on your way to maximizing your overall ROI if you view freight transportation as more than just a required expense.
In order to achieve that, we’ve created a summary of the major advantages of incorporating a TMS into your supply chain.
1. Reduction in Transportation cost
A company can save transportation costs and have a cost-effective logistics system thanks to a transportation management system. The most recent or most up-to-date TMS software can integrate existing approaches for taking care of a company’s transportation requirements, including order processing, inventory management, and customer relationship management. The integration can be used by any business.
2. Pay Bills accurately
Historically, the processes for billing and payment required a lot of time and effort. A contemporary TMS can provide electronic invoicing, accounting, and payment processing. With the aid of a TMS, auditing procedures now take only a few seconds to complete, cutting down on the amount of error that could have occurred.
Through a TMS, you can always compare the invoice you receive to the shipping cost. If the figures match, the invoice is approved and the bill is generated. If the statistics don’t match, the case is then processed in the exception queue. In this way, a TMS helps speed up payment processing.
3. Understanding Freight Spend
The analysis of freight costs is one of the TMS’s most important benefits. A TMS can assist you in making financial savings through analytics and optimisation. A TMS uses data to give useful information and makes suggestions for cost-cutting measures.
4. Optimizing Routing Capabilities
Due to shorter order cycles and decreasing package numbers, optimized routing is now more important than ever. Pool distribution can be implemented by a company with the right TMS software. You have better visibility and control with this quicker, less expensive delivery method.
By choosing the optimum pool point, operators can determine which shipments need to be picked up and delivered. It is quicker and less expensive to segment and route more difficult orders separately.
Every firm needs modern technical support to survive and thrive in the fiercely competitive business environment of today. If you work in logistics, transport management software is an absolute must. It will increase the company’s overall output and supply chain effectiveness. A good TMS will optimize your supply chain, boost customer happiness, save supply chain expenses, and assist your company in reaching the next level.