What Is a Transportation Management System (TMS) and how does it work?

With Transportation Management System (TMS) becoming more complex and multi-layered in this fast-changing business scenario, the need for automating the basic transportation process is imperative for accurate deliveries and logistics management. A Transportation Management System can help transportation and logistics companies and business owners build a logistics strategy that will reduce delivery timelines, improve warehouse efficiency, and help build stronger supply chains.

What is a Transportation Management System?

Transportation Management System is a platform that helps in the planning and execution of physical movement of goods. It comprises of monitoring, organising, managing, handling, and other aspects in the transportation of products from order placement to final delivery.

Often used by logistics service providers, a TMS not just provides visibility into day-to-day transportation operations, and documentation but also helps in tracking shipments, cutting unnecessary costs, customer need analysis, and procuring real-time information about the entire shipping process. TMS is usually a part of the larger Supply Chain Management (SCM) system.

Some of the better known TMS examples in India are Cogxim, Tookan, Logi-Sys, Sahiwala, and SAP TMS. There are several domestic logistics services offering TMS services at present.

Who uses a TMS?

While the primary users of the TMS software are shippers and carriers, there are other stakeholders too. Manufacturers, distributors, wholesalers, retailers, third-party logistics providers, and e-Commence organisations also use this software extensively.

There is a need for logistics management system in every industry from construction to manufacturing and the list is growing. While bigger companies that incurs huge expenditure on freight are the primary users of TMS, the availability of cloud-based logistics solutions in the recent years have helped smaller businesses too to take advantage of its benefits.

The benefits of a TMS

A Transportation Management System has a lot to offer in terms of streamlining your transportation related issues and planning for the evolving needs of your business.

Why get a Transportation Management System for your business?

Some of the benefits of a Transportation Management System are:

• Reduce expenses: A transportation management system will help you in reducing expenditure associated with cargo services and transit. You would also be able to select the best options within your budget.
• Save on time: A TMS will enable you with automated operations, accurate predictions, and real-time monitoring in a planned way. This will not just save you time but also help in tracking all processes in a single dashboard and navigate between applications.
• Ease of use: Most TMS solutions are easy to adopt and use and comes with a simple interface. The software collates data from different sources and makes it accessible on a centralised dashboard.
• Make smarter decisions: You will be able to make faster and smarter decisions with the help of the TMS software due to the availability of accurate and consolidated data. You can access real-time data from various resources to make business decisions better.
• Create customer delight: A TMS helps in better planning and timely delivery of goods at competitive costs. You will no longer be required to struggle with logistics delays and fulfil faster deliveries with real-time tracking. Factors like door-to-door logistics services, logistics pickup and delivery, low-cost logistics services will help create customer satisfaction and help you grow your business.

What are the main TMS offerings?

Businesses both big and small can avail TMS offerings. You can either invest in a standalone transportation management system that can be integrated into your existing cloud or go for a on-premises enterprise resource planning (ERP) software and SCM solutions. There are other less feature-rich TMSs that are available as modules within ERP too.

How does TMS help businesses?

Any business which has adopted a Transportation Management System can use the tool in planning, executing, and optimising processes for the physical movement of goods.

• Planning

In terms of planning, a TMS helps businesses decide on the best mode of shipping goods in terms of cost, efficiency, and timelines. The major advantage you can have by investing in a strong TMS is in the visibility it provides at every stage of the supply chain process. Coupled with a global trade management functionality, this software can even provide accurate information on trade and tariff and even potential delays that helps in the planning process.

• Execution:

While the execution in transformation management systems differs as per providers, it generally involves communication with carriers, documentation and tracking of goods as well as billing of frights.

• Optimisation

Among the optimisation functionality that TMS offers, the primary is the ability to measure and track performances with dashboard and analytics.

What are the key features of transport management system?

Though every TMS system is programmed to improve transportation of physical goods, there are various additional functions available for users to choose from. Some common features that are good to have in your chosen TMS to handle day-to-day transportation operations efficiently are:

• Transportation Control Tower: A connected and personalised dashboard that displays key business metrics in a single place. It enables you to understand and resolve critical issues in real time. The control tower provides advanced shipping notification and delivery data for better visibility into inbound and outbound logistics.
• Optimisation Engine: To help you to plan and arrange transportation workloads. Most TMSs have an in-built optimisation engine enabled with different capabilities.
• Freight Audit and Billing: This function on a TMS helps examines and verifies bills to limit duplication. This facilitates error-free calculations and reduces billing reconciliation time.
• Contract Management: This assists in managing contracts with carriers and takes away the burden of manual contract management. It also enables you to store and locate contracts, terms, or other essential information in an e-database.
• Reports and Analytics: A TMS should have the functionality to generate reports in a lucid and presentable format usually through visualised forms like charts, graphs, dashboards, maps, etc.

How does the Transportation Management System work?

Transportation Management System is a component of the supply chain management system and works in tandem with Enterprise Resource Planning (ERP) and Warehouse Management System (WMS) to cover the entire logistics process.

While an ERP handles accounting and manages orders, WMS manage end-to-end warehousing processes comprising of labour scheduling, inventory management, etc. TMS handles freight management and optimises routes and improves delivery tracking progress. In this way, data can be consolidated in a single platform.

To sum it up

If you want to survive and scale your business in the current disruptive market scenario, digitalisation in the key. A Transportation Management System will not just help you digitise your transportation-related workflow but also improve processes, decrease expenditures, and ensure faster and optimised delivery.