18/02/2022 | Innovation

What Is a Transportation Management System (TMS)?

Transportation Management Systems (TMS) are used by businesses across many sectors to streamline their transportation and distribution operations. This article aims to explain what Transportation Management Systems are and how they work.

Also known as Transportation Management Software or Solutions, TMS systems are vital for manufacturers, distributors, retailers, eCommerce companies and logistics companies. In the current context of same-day shipping and real-time tracking, consumers expect to receive what they want, when they want it. This is putting enormous pressure on businesses across the board, and it is felt most acutely in the supply chain. The delivery of goods is one of the most important links in the supply chain, and an increasing number of companies are relying on transport management systems to help them manage it.

Types of TMS

Transportation Management Systems are technology-based and different types are available depending on the size of the business, the geographical location, the type of transportation needed and other requirements. TMS can be standalone software that integrates with existing software, on-premises, or cloud-based, and some also offer additional integrated supply chain packages. Some well-known TMS companies include BluJay, SAP, 3Gtms and Blueyonder.

What TMS systems are used for

Transportation Management Systems are used to plan, execute, and optimize the movement of incoming and outgoing goods. An efficient TMS can help a company select the best shipping options and carrier, based on cost, efficiency and distance, and can even help to improve routes that include multiple stages. They can also include a system capable of allocating loads to the right carriers, documenting and tracking shipments, and assisting with invoicing and payment of transport costs, as well as providing tracking and tracing systems, enabling the exchange of real-time information between carriers, distributors, warehouses and clients. Lastly, these systems can provide reports and analytics which businesses can use to improve their operations, helping them to grow and achieve higher customer satisfaction.

The role of TMS in business

TMS systems play a key role in supply chain management. They affect every part of the supply chain process, including procurement, distribution, the lifecycle of goods and transportation. There are many benefits to having a Transportation Management System, including:

§  Simplification of supply chain management.

§  Time-saving for both internal and external operations.

§  Improved security of shipments and real-time tracking.

§  Automation of certain business operations.

§  Reduced costs for both the business and the customers.

§  Higher customer satisfaction due to less delays and more real-time updates for shipments.

How to decide which TMS system is right for my business

It is very important to choose the right TMS for a business, because changing from one system to another can be costly and time-consuming. There is not a one-size-fits-all system. Different TMS offer different functionalities and the selection process must be well managed. The best way to decide on which TMS system is best for your business is to create a requirements document that outlines all the needs and characteristics. It is a good idea to encourage the participation of all those involved in transportation and related activities in order to make the document as comprehensive as possible. There are several articles and templates available online to help with this process.

The general functionality of the business will have an impact on which TMS system will be a good fit. For example, the national and international capabilities of a TMS are an important aspect to consider, including language and currency. Scalability, flexibility and whether the system supports the document formats used by employees are also significant factors.

The transportation types covered and the strategic planning tools the TMS offers also need to be taken into consideration, as well as accountancy and analytics tools. The potential for growth is also an important factor to consider, as some TMS systems are specifically designed for smaller operations.

The right TMS can help a business grow and prosper

An effective Transportation Management System can have an enormous impact on a business, increasing customer satisfaction, improving cost effectiveness and helping the business to grow. As technology develops further, and consumers’ expectations get higher, TMS systems are providing more and more efficient solutions and are likely to become even more essential for businesses in the future.