22 Sep 2022

Optimize Your Business Logistics with Transportation Management System

A transportation management system, a part of supply chain management, is a platform designed to streamline the shipping process by automating the shipping process and providing shippers valuable insights to save time and reduce future shipments expense.

Optimize Your Business Logistics with Transportation Management System

Logistics, in any business, are an essential part of being successful. Be it customer satisfaction, timely delivery, or overall, logistics are vital for supply chain management optimization. As a vast amount of data needs to be processed to ensure optimized logistics, every business needs to place a transportation management system (TMS) capable of providing that help in planning, execution, and optimization of the physical movement of goods while coming in and going out. This blog post will give a detailed overview of TMS and how it can help optimize the business process.

What Is a Transportation Management System? 

As a part of the supply chain management systems, a transportation management system is a tool that allows companies to manage logistics associated with the physical movement of goods by air, land, sea, or a combination of modes of transportation. This system uses the technology to allow businesses to plan, execute, and optimize the movement of goods and ensure that the shipment is appropriately documented and compliant. Also referred to as transportation management software, it provides visibility into day-to-day transportation operations and documentation and ensures timely delivery of goods. It also streamlines the shipping process and makes it easy for businesses to optimize and manage their air, land, and sea transportation operations. 

Types of Transportation in TMS

The transportation management system is a supply chain management component represented by software containing mainly freight transportation issues like stock movements and rating, selecting the best routes or carriers, handling payments and bills, etc. TMS usually focuses on the following types of transportation:

Single Mode - In single mode transportation, the transits are performed by only a single mode of transportation, such as roadways, railways, or airways. 

Multimodal - This transportation mode is performed by one carrier using more than two means of transport that may be under a legal obligation for contract compliance. 

Intermodal - This type of transportation in TMS requires more than one carrier and a contract. Vendors undoubtedly enjoy better control over the stock and carrier but also have more management responsibilities.

Key Features of a Transportation Management System  

A transportation management system is a software program companies use to manage logistics and transportation functions effectively. It organizes transportation data to allow companies to plan and forecast network needs, optimize routes, handle payment and settlement, automate processes, execute, and track shipments, and report on network KPIs. Today TMS is an indispensable tool in the complex transportation landscape that decreases transportation costs, enhances performance, and increases customer satisfaction. Some of the critical features of a transportation management system include:

Trace and Track - This feature of the TMS allows products to be traced and tracked as they move through the network. It provides a detailed view of each stage of the transportation process, making good transportation simpler to manage.

Contracts Management - This feature allows an organization to leverage the preferential terms and discussed lanes set for the businesses by combining the contracts in an e-database to offer practical decision support tools for the TMS.

Reporting and Analytics – A system with reporting and analytics allows businesses to analyze rates and profitability and quickly adjust to unforeseen circumstances. Organizations have real-time visibility into all aspects of the transportation process that help them make immediate and data-driven decisions. 

Freight Management – This transportation management system feature allows proper freight costing, rate determination, and order management, besides streamlining the quote-to-contract process. 

What is the Function of TMS?     

A transportation management system is a supply chain solution helping businesses and shippers plan, execute, and optimize their shipping processes. The primary function of the TMS is further divided into the planning, execution, and delivery of shipments and the optimization of supply chain processes like billing, carrier selection, price strategy, and more. 

  • The transportation management system allows shippers to choose the best mode of transportation, reliable carriers, lowest rates, and highest performing lanes. Shippers also get insight into shipments and let them proactively manage customer expectations.
  • A transportation management system also has exceptional functions that vary based on the TMS’s technology and objective. A highly advanced system automatically imports orders, consolidates them into loads, and tenders shipments to provide visibility, settle invoices, etc.
  • TMS also tracks shipment performance, from operational statistics to carrier scorecards, allowing shippers to optimize future shipments. Data analytics dashboard and pricing insights facilitate shipping professionals to lower transportation costs and improve operations by discovering poor-performing lanes and carriers and determining additional solutions for the business.    

Benefits of TMS       

Logistics and transportation management are inherently complex processes requiring massive paperwork, regulatory compliance, and auditing. Any company that ships goods and products will immensely benefit from the modern TMS platforms. This software also proves beneficial for companies in the following ways:

  • This software facilitates a highly responsive shipping process resulting in higher customer satisfaction.
  • Provides better supply chain visibility as the software can track and monitor orders and shipments in real time. 
  • With better visibility and accountability in the supply chain network, the software helps improve inventory management and forecasting.  
  • TMS automates freight payment and auditing processes and reduces administrative costs and invoicing errors.
  • TMS facilitates better fleet management, labor use, space use, and better coordination between the transportation and fulfillment functions resulting in reduced distribution and warehouse costs.
  • It allows tracking freight on the road, alerts for unforeseen delays, and lets businesses know when and why delays are happening.

What is the Future of TMS?        

The concept of on-time deliveries is outdated in the current scenario, as customers today want either same-day deliveries or even few-minutes deliveries. With real-time transportation system updates on the shipment process, global trade organizations are encouraging supply chains to innovate and keep pace by investing in a transportation management system. Today this system has become more robust and feature-rich to provide faster responses to consumers and in-depth information to businesses. In the future, TMS will be more intelligent and provide more accurate predictions and recommendations. Organizations can integrate their transportation management system with emerging technologies to improve visibility and customer service. Some innovative technologies with which the TMS are integrated include IoT fleet monitoring, digital assistants, blockchain, cold chain management, adaptive intelligence, and machine learning.

How Can Transportation Management Software Help Your Business Grow?

Transportation management software manages four major processes for transportation management, planning and decision making, transportation execution, transport follow-up, and measurement. Its functions include planning and optimizing terrestrial transport rounds, inbound and outbound transportation modes, and transportation provider selection management of motor carriers, rail, air, and maritime transport. Transport Management System software uses technology that allows companies to plan, execute, and optimize the mechanical shifting of both incoming and outgoing products. 

It ensures that the shipment is correct and with precise documentation. It is usually a part of a more comprehensive supply chain management system. Technology advancement has enhanced and improved supply chain awareness. This software allows transportation companies to manage and perform transport operations without any hassles, as it regulates the day-to-day activities associated with the shipment of their goods and products. The highly advanced software has made retrieval of information and real-time execution mainstream. It also provides additional flexibility to the business, as a company can receive real-time usage and freight capacity and help them determine the best truck routes and shipping options. 

FAQs

How does a transportation management system work?

A transportation management system is a comprehensive carrier database and allows businesses to plan, perform, and monitor shipments. Hence, this system should be integrated with different data sources, add carrier bases, and have an option to load necessary data. TMS work is connected with supply chain management systems like ERP and WMS that take part in order processing, and orders are automatically received from an ERP integrated with TMS. It is also integrated with the warehouse management system to manage yard management, labor scheduling, or cross-docking between warehouse and freight carriers.

Who uses a TMS?

The transportation management systems offer various undeniable advantages for multiple companies to cut operational costs, improve workflows, and perform vital activities. The logistics system is practically required everywhere; hence, TMS is required by carriers, distributors, retail, e-commerce companies, manufacturers, and businesses offering third-party, fourth-party logistical services.

Why it’s essential to have a transportation management system?

A Transport Management System allows an organization to streamline the shipping process efficiently. It enhances visibility into shipping operations and will enable them to compare rates, reduce costs, simplify processes, save time and provide better customer service. A transportation management system saves companies from wasting time on mundane and repetitive paperwork, speeds up the performance of necessary tasks, and allows companies to focus on other aspects of the business. TMS also helps businesses compare carrier rates and book shipments, as options are displayed on a single screen for easy and faster comparison. Integrating the ERP with TMS eliminates the chance of human error while re-keying orders.

What is a TMS’ role in supply chain management?

The transport management system is a subset of a more extensive supply chain management system focusing mainly on transportation operations. It is an operating platform for any logistics operation or supply chain. TMS streamlines the shipping process by allowing the organization to plan and coordinate the shipping, tracking, and delivery of freight. TMS assist logistic business with planning, executing, and optimizing moves.

What does transportation management technology do?        

Transportation management technology helps in planning, executing, and coordinating tracking, shipping, and delivering goods from one place to another. This system gives shippers the technology to make decisions based on quotes, transit time, and carriers. The centralized quoting location will eradicate unnecessary stress and time spent on booking.

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