In simple terms, a transportation (or transport) management system – usually shortened to TMS – is a software program that enables efficient digital processing, logging, ordering, and fine-tuning across all aspects of a company’s freight movement. Whether a business is conveying goods by land, sea or air, a robust TMS will provide a comprehensive real-time overview of inbound and outgoing cargo movement between suppliers, warehouses, delivery fleets, and customers.
In most cases, a TMS plays a key role in a wider suite of programs that collectively make up a full supply chain management (SCM) system. It will often sit between other complementary pieces of software, such as a warehouse management system (WMS) and an order processing or ERP (enterprise resource planning) module, creating a seamless workflow that links together all the various facets of professional goods handling and movement.
In this brief guide, we will look more closely at precisely what a transport management system is, as well as listing some of the main features and benefits of a well-implemented TMS for procurement, warehousing and shipping companies of all sizes.
What does a TMS do?
Ultimately, the aim of a good TMS is to filter out and automate a great deal of the time-consuming busywork that has traditionally been a mainstay of the shipping and handling business.
Working with data pulled in through other supply chain and logistics modules – for example a WMS – the transportation management system will automatically handle planning and execution for numerous tasks in the overall freight movement workflow. Depending on the program’s feature set and the specific needs of the company in question, this might typically include such fundamental aspects:
Like most powerful pieces of business software, a TMS will often cut down dramatically on the need for continual enquiry emails or phone calls between in-house departments and external contractors. It smooths out many potential areas of bottlenecking or delays, and provides immediate monitoring, logging and feedback data for greatly improved performance metrics reporting.
Well-implemented TMS solutions mean that orders are shipped faster and more efficiently, resulting in lower overheads and an improved relationship with clients at both ends of the supply chain. Although TMS software has been around for some time, the complexity and cost of a fully bespoke, locally installed package once meant that they were chiefly used only by larger corporations with huge annual investment in shipping and delivery processes.
Today, though, more flexible and lightweight cloud-based versions have enabled businesses of all sizes in almost every sector to make use of transportation management programs – which is increasingly important, as the parcel shipping industry has been growing steadily in recent years. The result of picking the best TMS for any given business will be drastically improved performance, increased revenue and profitability, and the ability to plan accurately into diverse areas of future company growth.
What are the main features of a good TMS?
The exact feature set of a given solution will depend largely on the needs of the business in question, as well as the extent to which the TMS software is required to work alongside other digital management programs in the overall supply chain. They can potentially offer extremely broad and deep control over any phase of the cargo shipping and delivery industry, including procurement, logistics, real-time tracking and lifecycle management, KPI monitoring and freight audit.
At various different tiers, TMS packages can offer an extremely versatile range of functions and capabilities. The key areas they tend to focus on can broadly be assigned to the following general categories:
1. Planning and organisation
The software will filter various options by important parameters (defined by the user) to find the best providers, services, and routes for given types and values of freight. This can generally be prioritised according to various metrics – fastest time, lowest cost, fewest stops, most efficient multi-drop routes, one-click mileage calculators, and so on. It can even help with contingency planning around background issues like fluctuations in the driver hiring economy.
2. Execution and delivery
Any aspect of the in-transit phase of deliveries: order batching and load assignment, optimisation of routes and rounds in response to changing circumstances and cost-control measures, real-time global tracking of all land, sea, rail or air fleets, and instant communication updates with individual drivers and handlers.
3. Post-delivery admin and follow-up
Can include a wide range of functions such as full logging procedures to track and trace every stage of an individual item’s journey from depot to door, receipt processing and invoice management (carrier and customer), alert systems to respond with minute-by-minute incidents and delays, deep integration with a range of third party accounting, payroll and human resources management programs, and rolling vehicle maintenance and repair schedules.
4. Process assessment and measurement
A diverse array of systems for measuring, reporting and feeding back on KPI targets – including such valuable metrics as on-time percentages, costs per unit or mile, monetary and operational productivity rates, individual employee performance data, customer ratings, mapping for quality control measures, and more.
Benefits of a TMS for companies of all sizes
As previously noted, integrating a robust and reliable transportation management system into your existing supply chain – and having it work seamlessly alongside other packages such as warehouse management systems or ERP modules – is no longer only realistic for enterprise-level freight companies.
In fact, due to the rapid advances in the scope, versatility and accessibility of cloud-based software, they’re now readily available to help even smaller businesses plan for maximum efficiency and create room for organic growth. With clear, user-friendly interfaces to take the headaches and guesswork out of route planning, load optimisation, external contracting, customer care and KPI measurement, the best TMS packages ensure that every single delivery can quickly be implemented from start to finish with an optimal sequencing of costs, steps and variables.
The longer-term benefits are of course significant cost reductions, higher bottom-line ROI, and an improved relationship with clients and customers (both before and after the physical shipping phases of the delivery process). Important factors a TMS introduces in helping to achieve this include:
- Instant comparison of competing rates and costs from within a single platform
- Fewer opportunities for inventory management, loading or routing errors
- Elimination of contact delays between departments or with external suppliers and contractors
- Better customer service and aftercare, thanks to the powerful logging, monitoring and alerts systems that most TMS programs incorporate
- Removal of the need for manual data entry, assignment and logging
- More logical and actionable KPI-related reporting, auditing and prediction systems
- Real-time access to fleet intelligence, including individual minute-by-minute shipment tracking and resource management overviews, with the ability to communicate adjusted plans instantly
- Enhanced potential for business growth, by streamlining processes to enable handling of more complex and rewarding contracts
Due in part to the so-called Amazon effect, businesses across all sectors are increasingly moving towards adoption of fully digital TMS solutions with each passing year. This in turn means that the scope for developing these programs to offer even more advanced capabilities is growing exponentially.
In the near future, cloud-based systems will be updated on client networks to incorporate more and more cutting-edge technologies – examples we expect to see implemented more widely over the next few years include hyper-efficient AI machine learning algorithms, and the increased use of smart digital assistants to provide automated live updates and query-handling for global customers 24 hours a day.
Just as supply chains must continually innovate to stay in line with the competition, so too will the software. The result, powered by the best TMS and ERP setups, will be a continual refining of the core systems that support these day-to-day freight infrastructures in getting cargo to wherever in the world it needs to be.