What is a Transport Management System? Guide and options for fleet owners and brands.

October 18, 2021

As a business owner, you understand the importance of being on top of technology. Not being on top can make a difference in big revenue for your business. The thing is, technology is constantly changing, and it’s easy to fall behind on the next big thing. Some of us don’t even realize how big the next thing is until after it’s come and gone. Then you find yourself behind and trying to catch up. 

These days, playing catch-up can be costly. If you move goods from various points, you’ll want to know more about the newest technology for transporting goods, the transportation management system (TMS). TMS is now common in the supply chain industry, and companies of all sizes are researching to learn more about this new technology to see how it can save them money, streamline logistics operations and improve customer satisfaction. 

What is Transport Management System? 

A transportation management system is a logistical system that helps businesses plan, execute and optimize the movement of their goods. With TMS, a business can track anything that’s moving, at any time. 

Businesses that use TMS have a mission that requires them to be moving goods on a regular basis. These businesses include manufacturers, retail businesses, e-commerce companies, distributors, and companies that provide logistics services. For instance, third- and fourth-party logistics companies and logistics service providers. 

In the past, larger companies, spending $100 million or more a year on freight costs, have been the major players of TMS. But with the cloud-based solutions, TMS is now more affordable to smaller businesses. TMS is used by businesses in nearly every industry, from construction to life sciences. 

Thus, businesses can choose to buy a standalone system that can be integrated with their existing cloud-based system. They also have the option of purchasing enterprise resource planning (ERP) software and supply chain management (SCM) solutions. 

How it Works 

A TMS enables businesses to plan, execute and track the movement of their goods. In order for this to happen efficiently, it must have a strong integration with carrier systems and data sources or some way to download carrier information. It also has to facilitate entry of the customer orders that specify what is to be transported. That is where ERP comes into play, as orders usually automatically come from ERP or other management systems integrated with it. A TMS can be integrated with warehouse management (WMS) so it can better coordinate the tasks that occur at the interface of warehouses and freight shippers. Some of these tasks include labour scheduling, palletization of goods, yard management, load building, and cross-docking. 

The main systems are ERP, WMS, and TMS. Each one has an important role to play in processing orders. Because of how they’re integrated, they’re able to share certain data and documents that are crucial to the success and efficiency of the process. 

The ERP system handles the accounting and most of the invoicing, order management, and inventory management. The WMS helps users manage the fulfilment, shipping, and receiving tasks in the warehouse or distribution centre. That could be picking the goods from the shelves for shipment or putting goods received away. It tracks the inventory data from the barcode readers and radio frequency identification tags and updates the inventory management module in the ERP system. That helps to ensure it has the latest information. An integration link synchronizes the inventory data in the ERP system and the WMS. 

The ERP system outputs the order information the TMS needs to prepare and execute shipments. In addition to the customer name and address, it also includes detailed information about the products to ensure the right goods are being shipped. The TMS returns the shipment details that the ERP system needs for accounting and order management functions, like the tracking and carrier name and cost. Shipment information may also go to a customer relationship management (CRM) module for sales and customer service. This way customers can be updated on the status of their orders. 

Features 

Some of the features that come with TMS include routing and scheduling, order management, fleet management, customer management, and live driver tracking. 

Benefits 

TMS plays a major role in the supply chain. It affects everything from planning and procurement to logistics and lifecycle management. Every step of the way, TMS ensures efficient planning and execution of the movement, which results in satisfied customers. When customers are satisfied, it guarantees future business, which impacts business growth and the overall bottom line for the company. A logistical system that’s effective in allowing a business to manage every stage of it is important to the growth of any transportation business. 

With TMS in place, a business can better plan, execute, and optimize the physical movement of goods. That is all of benefit to the business. 

Planning 

With TMS, a business can select the optimal mode of shipment and the best carrier. Taking factors into consideration, such as cost, efficiency and distance, a business is able to effectively plan a route that will prove the best savings, allow the best time, and ultimately producing the route that’s in the best interest of the business and the customer. A strong TMS can provide visibility into every stage of the supply chain. That includes identifying potential delays. Delays cost money. With TMS, this will be limited because the business will be able to track where the movement is and any potential hold-ups to come. 

Execution 

During the execution, so many factors are impacted. Once transportation is set in motion, a business can communicate as needed with carriers and can track and document shipments. Some advanced features allow businesses to have real-time information and exchange among distributors, carriers, warehouses, and customers. 

Optimization 

TMS allows a business to have some of the most efficient processes in place when it comes to tracking and reporting. Overall, TMS provides: 

Challenges 

TMS is a beneficial system to have in place. Without it, the business can become very challenging. These are some of the challenges that come without TMS in place: keeping quotes organized, selecting the best carrier, tracking shipments, gathering insights. 

Managing Quotes 

If you’re working with different shipments, being on the phone or jumping from one website to another to get rates can create a challenge. That is also time-consuming and can leave a business lacking in other aspects of it. 

Carrier Selection 

Not all goods can be handled the same. Some are time-sensitive, have special delivery services, or need to be handled with care. So, precision and care need to be given to the best carrier, and sometimes multiple carriers need to be selected. Some carriers may be better for long hauls, and others might provide other services that you need. 

Tracking Shipments 

You may not always use the same carrier for all of your shipments, which means multiple shipments could be in transit at one time with various carriers. Without a TMS, it would be much more complicated to keep up with all of the carriers, and shipment numbers may need to be manually entered onto forms on different carrier sites. 

Gathering Insights 

Without TMS, it would be difficult to have any real insight on what’s best for the business, as far as costs. TMS technology makes it much easier to know how to plan for the future for the best outcomes for the business and customers. 

How To Choose One 

There are many types of TMSs to choose from. Some cloud-based software as a service (SaaS) solutions is designed for mid-size businesses. It can be used as part of a broader system or as a stand-alone. Most systems are easy to implement, low maintenance, and can be accessed remotely. Some of the most popular systems for mid-sized businesses are: 

The more complex a business becomes (number of loads per week, carriers, number of modes, staff, exports), the more that business will see a need to upgrade the type of TMS it uses. Larger corporations usually use ERP systems that include a TMS module like SAP or Oracle. 

Conclusion 

Transport Management Systems are proven to be efficient technology that is mostly useful to businesses in the transport and shipping business. The larger the business, the more complex it is, and the more beneficial a TMS would be to the bottom line. 

TMS is continually innovating, with future expectations being robust with much quicker delivery times. Digital assistants, blockchain and adaptive intelligence, and machine learning are among some of the most innovative features available with the technology.