A transportation management system is an essential part of any supply chain management system. Traditionally, these systems were complex, costly, and time-consuming to implement. That meant large enterprises were the primary users. However, with the advancement of new technologies, integration capabilities, and global competition TMS became much more affordable in 2019. So, if you haven’t looked at TMS solutions in a while, now is the time to do so.
What is a TMS?
A transportation management system (TMS) helps companies move cargo from source to destination efficiently, reliably, and cost-effectively. TMS software acts as a virtual control tower, providing visibility into operational components. Better visibility means knowing what’s moving, where and what’s coming back. This clarity allows for proper forecasting of freight trends. Ultimately, it’s a management tool to foster better decisions.
Today, rising freight rates, driver shortages, tight truck capacity, and challenging customer demands constantly challenge the logistics manager. Shippers are using more technology to control these transportation-centric problems. TMS is increasingly becoming the default approach to solve a myriad of delivery tasks. Phones, faxes, and spreadsheets are inadequate tools for managing current supply chain challenges.
As TMS software use has grown, the global footprint has increased exponentially. Where this was once a software market that originated in the U.S., it spread to all global markets. As a result of these growing capabilities, TMS is especially gaining ground in developing countries. The forecast for global TMS growth continues to expand and encompass more markets.
The capacity crunch of 2018 demonstrated the effects of spiking demands yet limited shipping options. So, adoption of TMS solutions continues to grow, also due to the overall global supply chain demands. Marketwatch has reported that from 2019 through 2025, the market is expected to swell to $4.88 billion, reflecting an annual growth rate of 15.1%. Those that forgo embracing the TMS-ready future will face uncertainty.
Before selecting a TMS, understand the value of this system and how it can be beneficial for your company. There is no such thing as a standard TMS. Expect a vast selection of vendors, features, and enterprise integration levels. Take the time to learn the key pain points the organization struggles with. Match these internal opportunities to the features vendors advertise. Read on to see some of the key benefits you may consider as a system requirement.
Due to their complexity, traditional TMS took as much as a year or two to install. For many companies, implementation timeframe was the primary barrier for considering a TMS. The ROI took too long to realize. The newest TMS systems use modernized design which doesn’t require special devices. Hence, implementation efforts decreased. Some implementations completed in a single quarter.
This doesn´t mean fewer features. TMS developers are also expanding integration capabilities that go beyond ERP. Some are incorporating voice, email, and text data. JSON and other application programming interfaces (APIs) make TMS more flexible and adaptive to the way business is done today.
Cloud and SaaS
Current TMS solutions are available not only on established platforms but also on the Cloud and via subscription-based services (software as a service – SaaS). TMS was one of the first application of the supply chain to move to the Cloud. Cloud and SaaS offerings make Transporation Management software more accessible to a broader population of companies. As a result, research firms report TMS usage within small- to mid-sized firms could see more than 20 percent growth in the next six years.
This feature aids cargo planning to ensure an optimal delivery pattern. First, shipment consolidation creates groups of items to be transported together by location, container, or weight for maximizing load efficiency. Many systems improve planning by considering constraints, business rules, and carrier capacity. These are all used in combination to reduce transportation costs and improve resource management.
Uber-like delivery applications enable shippers to “shop” for transportation via their smartphones, and then track the path of that freight via a mobile device. These applications are particularly useful for handling the “easy” cargo. Auction style selling of last-mile delivery is another modern feature you may want. Many start-up players have jumped into this market space.
Wherever there’s more opportunity for profit, there’s also an opportunity for failure. That’s why it’s critical TMS providers supply a centralized method of dealing with disputes. Dispute management covers claims related to cargo discrepancies, such as damages and goods lost in transit.
A process to improve dispute management is by integrating with financial data. This allows shipping managers to instantly audit previous rates and adjusts the corresponding billing records. Plus, some systems offer dispute analytics in the form of reports. These reports provide a quick means of sharing the data to understand trends.
Outbound logistics gives management complex challenges. However, reviewing and understanding performance levels should be easy. Reports and KPI dashboards and simple tools to help interpret collected data. While TMS software still provides classic reporting elements like charts, it is often including more specialized maps to visualize shipping patterns. Most performance tracking systems report metrics like on-time deliveries, transit, and loading times. With the help of performance tracking, management quickly discovers organizational strengths and weaknesses.
TMS software allows users to monitor all stages of transportation, providing better visibility into the movement of goods. Managers set deadlines, see the historical performance and receive notifications for events or delays. This helps providers to get ahead of issues, enabling resolution planning before the consequences become compounded.
Accurate billing is key for supporting healthy relationships with your carriers. A TMS feature that helps collect the right payment and the right time is always helpful. TMS software can be a great way to support billing processes. Some systems calculate the transportation costs for both the party ordering the goods and the supplier. Custom solutions can automatically calculate carrier rates using rate databases.
This feature ties mainly into performance tracking, with many systems using the flow of goods as a metric of performance. If your product has stopped flowing somewhere, it’s important to learn why how you can get it moving again as quickly as possible.
In order to get detailed visibility into a supply chain, TMS systems track items at the SKU numbers and other key properties. When a macro view is warranted, search for features that use beacon technology for end-to-end tracking and for getting data on en-route cargo. Digital delivery confirmation provides a strong record for quality control purposes. Some solutions can help track returns as well.
With logistics becoming more and more globalized, it’s important to maintain local protocols wherever possible. Users choose the units of measurement, currencies, and language. These settings get used for labels and present on documentation.
Driver Dispatch properly
Managing your fleet requires a system that can send secure communications to drivers, track their location, and assist with labor productivity. Best in class solutions allow dispatchers and drivers to communicate directly via the mobile app. Additionally, TMS optimizes delivery planning by choosing the best driver, route, and mode of transportation based on cost, skill, availability, and seniority. Dispatchers also track drivers to ensure correct shipment routes get used.
Mobility is often considered a “nice-to-have” in Enterprise systems. It’s a necessity for Transporation Management, which signifies everything is always on the go. Some vendors offer designated native mobile apps, with others relying on a mobile website. Some systems get accessed from any device with internet connectivity. Others are specific to an OS. Most commonly, TMS mobile apps have been optimized to run on iOS or Android.
Those running as native apps usually have the most robust set of features. While the design isn’t a part of TMS functional requirements, it does affect the adoption rates and thus, the overall ROI. If you expect some push back during the implementation, a great user-experience is something to include on your TMS checklist.
Becoming familiar with features transportation management solutions provide the first step. Next, take time to make a list of essential requirements for software selection. Next, start comparing systems to find a solution best matching the organization’s needs.
A correctly implemented transportation management system has enormous upside and little downside.