Transportation Management System: definition & benefits?
Today, transportation companies need to integrate ultra-efficient and innovative supply chains to challenge other competitive enterprises within their marketplace. Transportation management system thus represents the most important logistics management tool that will enable them to make a major contribution to exploit cost-cutting opportunities.
In this article, we provide you with an explanation of what Transportation Management System is, with a summary of the various agents benefiting from it and of its many benefits.
1. What is a Transportation Management System (TMS)?
A Transportation Management System (TMS) is part of a supply chain management (SCM), which is centred on transportation logistics. It enables efficient interactions between the order management system (OMS) and the distribution centre (DC) or the warehouse.
A proper Transportation Management System serves as the logistics management hub at the heart of a collaborative network of shippers, carriers and customers. It helps various types of companies efficiently move freight from origin to destination. It encompasses solutions to move freight in various modes while including intermodal movements.
By using a Transportation Management System, logistics companies will be able to reduce freight spend thanks to process enforcement, analytics as well as optimization. This system consists of four main operations:
- Planning: companies need to define the best transportation strategies basing themselves on specific parameters (e.g. minimum stops possible in order to guarantee quality, shorter lead-time, etc.).
- Executing transportation: Transportation Management System will enable you to execute your transportation plan thanks to several applications (e.g. carrier sending, electronic data interchange, etc.).
- Providing a transportation follow-up: the system also provides companies with a precise follow-up of all their administrative or physical operations regarding transportation (e.g. event-by-event traceability, customs clearance, etc.).
- Measuring your performance: this very operation can be undergone by making use of a strategic key performance indicator (KPI) that will report functionality for transportation.
2. Which agents will greatly benefit from a Transportation Management System?
Three major agents will get benefits from the implementation of a TMS:
- Planners: they will benefit from immediate real time information and will therefore be able to provide intelligence to both drivers and various employees regarding effective route planning, load optimisation, electronic Proof of Collection (ePOC), etc.;
- Drivers or shippers: they will improve their load efficiency and delivery by loading trucks according to a specific delivery order within their omni-channel environment. The TMS will enable them to match carriers and therefore optimize modes of transportation thanks to diverse cloud-based applications. Moreover, if they do not carry a full load, they can receive information to make additional collections;
- Customers: the implementation of a TMS will provide them with visibility by reporting real time status of delivery or improved data accuracy.
3. What are the main benefits of implementing a Transportation Management System?
Implementing a Transportation Management System will lead to four main benefits for transportation companies:
- Increasing the quality of your customer service: by making use of reporting and analytics, you will receive valuable information enabling you to increase your customers’ happiness, as you will be able to make sure they actually receive their orders;
- Enhancing your warehouse efficiency: using a Transportation Management System will help you decrease time spent on managing freight enabling you to focus on other projects along which will provide you with a good return on investment;
- Enlarging your delivery solutions: a TMS will also improve the means you ship orders, as you will be able to adequately respond to a potential driver shortage along with providing a greater flexibility to make changes in delivery plans;
- Managing your inventory: having knowledge of the various sent shipments will enable you to better plan your inventory. As a result, you will act proactively and not reactively.
This article taught that a Transportation Management System consists in a logistics management hub implemented by logistics companies to efficiently move freight.
As a reminder:
- TMS will help you plan, execute transportation, provide follows-up and measure your performance;
- It will mainly be of benefit for planners, shippers and customers;
- As a logistics company, you will thus be able to increase the quality of your customer service, enhance your warehouse efficiency, enlarge your delivery solutions and manage your inventory.