The benefits of transportation management systems (TMS) go beyond the cost savings associated with moving freight. Still, many organizations are under the false impression that transportation management software is only reserved for large enterprises. While this notion may have been true in the past when TMS implementation was limited by the monetary and time expense required, today’s technological innovation has made it possible for small and mid-sized companies to become TMS users as well.
Importantly, many smaller businesses still rely on manual approaches to their freight management. Some still use their in-house expertise by working with spreadsheets, phone calls, faxes, and email. Unfortunately, these manual processes are vulnerable to human error, miscommunication, and time wastage.
Businesses that don’t use TMS systems are missing out on gaining a competitive advantage by reaching new markets and customers, improving their customer service, lowering freight costs, and other distinct advantages.
What Is a Transportation Management System (TMS)?
A TMS platform represents a subset of a company’s supply chain management system. It deals with all transportation operations and sits somewhere between enterprise resource planning (ERP) and warehouse management systems (WMS). It looks at both inbound logistics (procurement) and outbound freight (shipping), offering TMS users optimized route planning suggestions.
In other words, a TMS solution will help third party logistics carriers and shippers with the planning and execution of moving freight more efficiently and reliably, saving time and money in the process. TMS systems offer solutions for all modes of transportation, including over-the-road, intermodal transportation, as well as ocean and air freight.
They cover internal and external shipments to and from North America using either in-house transportation and logistics resources or those from a third-party logistics company (3PL). The freight managed can range in size from small packages to bulk commodities.
Put simply, TMS systems offer numerous benefits to the organizations that use them; probably more so than any other supply chain application currently available. The main reason why companies are implementing TMS into their processes is to reduce freight spend. These freight cost savings are achieved based on process enforcement, optimization, reporting, and analytics. When compared to traditional forms of managed transportation, TMS software will perform better, resulting in improved customer experience, efficiency, and more informed business decisions.
The Functionality and Benefits of TMS
The benefits of TMS can help all organizations, in different industries and of all sizes. Below are some major functions and uses that will benefit most TMS users.
Freight Organization and Optimization
As we mentioned, TMS software works with all types of different freight. These include truckload, LTL, expedited shipping, land, air, ocean freight, intermodal transportation, and others. Keeping these various types of shipments organized without a TMS would require a lot of time and effort from your team. Details can slip through the cracks, sometimes leading to serious and costly consequences.
TMS users can keep all of their data organized and easily accessible. This will help them avoid making mistakes or wasting time. In addition, TMS systems can help companies consolidate their orders so as to optimize route planning and scheduling.
Yard Management and Dock Scheduling
Transportation management software can also help optimize your dock configuration, minimizing congestion and additional charges. This software provides visibility into all available shipping vessels such as containers or trailers. In addition, route information and scorecards can be updated in real-time into your TMS. As a result, your warehouse efficiency will also stand to gain.
Carrier Rate Management and Payments
Carrier rates are yet another functionality that’s fundamental to realizing the benefits of a TMS. They allow you to store all of your contract carrier pricing information and enable a cost-based optimization option. It also gives visibility into carrier payment processing, providing users with customized payment options. Shippers can approve or reject any accessorials in real-time without having to wait for the invoice. Payments can also be automated, streamlining the entire invoicing and billing process.
Freight Bidding and Tendering
Carriers can use a TMS to virtually bid on a shipment-by-shipment basis, making the whole process simpler and more efficient. The system also allows companies to automate how they distribute freight to their carriers. Freight tendering follows a set of logical rules that include several variables like cost, lane percent allocation, or award rank. This automated freight tendering system will simplify communications with all carrier partners.
Tracking and Tracing Shipments
Another useful feature of a TMS solution is the possibility to track shipments through their entire journey. This is useful in all situations, but especially so when companies use multiple carriers to transport large amounts of goods. Manually keeping an eye on everything can be quite challenging and time-consuming. A TMS will allow shippers to track their freight in real-time and receive alerts every time a situation needs their attention. So, every time there’s an imminent delay, the shipper is made aware and can plan accordingly.
Reporting and Analytics
It always takes plenty of business intelligence for carriers and shippers to receive and provide optimal service. Gleaning, tracking, and analyzing this information by hand can be incredibly time-consuming and prone to error. When digitally automated with a TMS software, however, these analytics and reports will offer shippers better insights into their logistic operations and spend.
The added supply chain visibility can also indicate which carriers have more customer complaints than others. This information can be used to see where issues appear in the supply chain and address them as soon as possible, offering more opportunities for logistics teams to optimize their processes. It will also help improve customer service.
A TMS solution will save businesses time by supplying the digital tools that simplify the entire freight management process.A TMS will also help reduce costs by increasing efficiency and supply chain visibility, improving carrier compliance, and streamlining bidding and payments. In short, implementing a TMS into your processes will work to reduce overall spend, increase profitability, and boost customer service.