As a consumer, it can feel like magic when you place an order online and have it show up a day later right at your doorstep. Business owners, however, know that there’s no magic involved at all. It’s a carefully choreographed dance along the supply chain that involves many moving parts. Getting a package from point A to point B is much more difficult than simply tossing it onto a truck. There’s planning, route selection, load consolidation, carrier contracts, package tracking, invoices, and so much more to think about.
How is a company to manage so many things? With TMS Software, of course!
What is TMS software?
TMS stands for Transportation Management System. It’s a subset of the larger supply chain and just part of a company’s software solution. The purpose of a TMS is to make shipping and transportation easier for businesses to manage. These days, with companies like Amazon upping the ante with free two-day shipping, it’s more important than ever for businesses to stay at the top of their transportation game.
Not only does having a TMS help keep companies competitive but it’s also a great way to cut down on costs. A good TMS can help your business with planning, decision making, execution, and data analysis. It can also automate a lot of daily manual tasks.
Think about the journey that a shipment takes. First, a carrier must be chosen. A good TMS will analyze your contracts with different carriers to help you choose the one with the best options for the lowest price. Next, the transportation will be scheduled in such a way that the cargo can be delivered on time while optimizing for full truckloads and efficient routes. The shipment will be tracked along the way so that you and your customers know when it will be delivered. Once the package has successfully arrived at its final location, the carrier invoice needs to be paid, which a TMS can handle automatically.
On top of all of that a TMS will collect and analyze data, gathering it into easy-to-understand reports that can be used to further improve supply chain processes. The TMS will remind the transportation management team when carrier contracts are due for renewal and provide benchmark data for them to use when re-negotiating.
Who uses transportation management software?
TMS Software is used by a wide variety of companies. Users might include:
- Retailers and ecommerce businesses
- Third-party logistics service providers (LSPs)
- Shippers and freight forwarders
- Fleet owners
What are the benefits of using TMS software?
It increases efficiency. TMS solves the problem of wasting time during trucking and transport on ineffective routes or filling vessels with less-than-capacity loads. These are the exact things that will reduce your margins. Modern optimization methods (also a hot topic in passenger transport) help to find the fastest route in the lowest possible time and the best ways to maximize space on your transportation vessel, resulting in time and cost savings.
It provides visibility. Tracking packages in transit is crucial for shipping these days. Customers want to know when to expect their goods and be alerted of any problems that might occur on the journey. When customers have visibility into the dispatching and shipping process, it increases their satisfaction.
It mitigates risk. Through a powerful combination of big data analysis and automation, a great transport management solution can help you identify weak points in your supply chain management and remove the risk of human error. Humans just aren’t capable of collecting and interpreting large amounts of data like computers are. With technology, it’s easy to uncover patterns and formulate ideas for improvement. When automation is introduced, it helps to standardize practices and removes the chance for accidental oversights, especially for important work like invoicing.
What are the must-have features to look for in a TMS?
Optimization engine. Don’t purchase TMS software without strong optimization capabilities. The optimization engine weighs in on a number of areas in the shipping process:
- Freight rates estimate: A TMS can help determine delivery costs based on shipping mode, weight, and distance to travel.
- Carrier selection: Selecting a carrier can be done with intelligence. Your TMS should be able to gather data from all of your different freight broker contracts and then determine which one is the best choice based on parameters that you’ve set—like delivery speed and maximum price.
- Order consolidation: Sending the most product on the least amount of vessels. Your TMS can solve complicated logistic problems (similar to the knapsack problem) so your shipments are consolidated as much as possible.
- Route optimization: The TMS can factor in data like traffic, road weight limitations, speeds, roadmaps, the cost of fuel, and multiple drop-off points to determine the best route to take. Remember, more efficient routes mean less money spent on gas, less wear on the vessels used, and less exhaustion for the drivers.
Real-time tracking. Modern TMS Software can help track shipments between the distributor, carrier, and customer while making sure every party involved knows what to expect and when. Any problems in transit are automatically sent as alerts.
Carrier contracts management. Most companies have multiple carriers with whom they partner for shipping. No two contracts are alike and they often expire at different times. A TMS will not only be able to remind you when a contract is up for renewal, but it will also be able to provide benchmark data that you can use while renegotiating the contract.
Integrations. Remember how TMS Software is just a subset of the supply chain? Most companies have an Enterprise Resource Planning system (ERP), Order Management System (OMS), and/or Warehouse Management System (WMS) that they rely on. If the TMS cannot integrate with these systems, it creates data silos. Problems and inefficiencies are inevitable when data is siloed, but systems are strengthened when visibility exists end-to-end across various functions of the supply chain.
Automated accounting. A good intermodal TMS will give you the ability to automate a lot of the business side of supply chain work. You can set up automated payments to your carriers, use tools made for freight audits, and get help figuring out transportation rates per carrier.
Reporting and data analysis. The Internet of Things (IoT), defined as the connection of many devices constantly transferring data over a network, has made a huge impact on supply chain technology. The Material Handling Institute (MHI) talked in their recent report about how the high volumes of data in the supply chain “[create] predictive actionable decisions that better serve the customer.” With more information than ever available, it’s important to use a tool that can comb through it and pull out useful information to help optimize and streamline your business.
International logistics. If your business deals with customers overseas, international logistics is a necessary feature for your TMS Software. It can help you choose long-distance carriers (such as ocean or air), schedule multi-leg transit, and even provide multi-language interfaces with support for foreign currencies. The TMS also keeps track of laws around foreign trade, automatically generating necessary paperwork and stopping you from accidentally making illegal transactions.
How do I get started?
Spend some time thinking about what features are the most important for your business’s shipping needs. Once you’ve determined that, shop around. Compare the different TMS software options, keeping in mind the list of must-have features from this guide, then make an educated decision.