What Is a Transportation Management System? Benefits of TMS
by Marilyn Bunderson
Imagine trying to navigate a bustling city without a map or GPS. You’d soon be lost in a maze of streets and buildings. When—or if—you did arrive at your destination, after taking much longer than necessary, it would be at the cost of efficiency and likely, a bit of frustration.
When it comes to logistics and supply chain, trying to navigate its complexity without a transportation management system (TMS) will lead to the same results. Your products may get to their destination eventually, but not without much more hassle and wasted time than it should. But what is a TMS, and why do businesses need one?
Understanding transportation management systems
What is a TMS?
A transportation management system is software that helps companies move their goods from one place to another. It takes care of the planning and execution of transportation, making the process as efficient as possible from shipment to delivery. To break it down further, it handles carrier selection, route optimization, freight auditing, shipment tracking, and more. With all these separate tasks consolidated, businesses gain greater visibility and control of their transportation processes.
Logistics and supply chain management
With logistics, the goal is to get the right product to the right places at the right times. It’s kind of a lot, covering warehousing to inventory management and even transportation (that’s where the TMS comes in). A transportation management system solution enhances supply chain management, providing the tools to improve transport operations and ensuring the goods move from one point to another smoothly, all while minimizing the inherent costs and delays.
Why businesses need transportation management systems
Before widespread access to affordable transportation management systems, these same processes and functions were done manually—can you imagine? It would take multiple spreadsheets, constant data collection, and a whole team of people. How well the job got done depended on the level of expertise and how well they had set up the process. And even under the best of circumstances, inefficiencies caused delays and higher costs. On the other hand, the introduction of TMSs transformed the process. Read on to learn how.
5 key features of a transportation management system
- Freight management. A transportation management system provides a centralized platform that manages and tracks all freight activities so it’s easier to keep track of costs and optimize performance. It helps orchestrate shipments so they move from point A to point B more smoothly.
- Carrier selection (and rate comparison). An important part of freight management is selecting which carrier is best suited to complete the delivery. The transport management system has tools that compare carriers based on service levels, rates, and performance so businesses can make informed decisions.
- Route optimization. Remember how we talked about navigating a city without a map or a GPS? A TMS optimizes routes so goods can be transported efficiently. It takes traffic, weather, and delivery windows into account, which reduces costs and improves delivery times.
- Shipment tracking. Real-time tracking benefits both businesses and customers. TMSs can provide updates on the status of shipments so companies can keep customers informed and manage expectations.
- Reporting and analytics. Seeing performance metrics provided by a transportation management system allows businesses to identify trends, optimize their operations, and make data-driven improvements.
Benefits of implementing a transportation management system
Implementing a transportation management system can yield many benefits:
Cost reduction
A TMS facilitates efficient planning and execution, helping businesses minimize transportation costs. As mentioned above, it can take care of carrier selection, find the best routes, and even help with freight auditing, which translates into significant savings for your business.
Improved efficiency
Automation is the name of the game with a TMS. Manual errors are reduced and operations enhanced when businesses implement a TMS, freeing up company resources for more strategic tasks.
Enhanced customer experience
Service delivery is paramount for customer satisfaction, and businesses can meet customer expectations and foster loyalty with a transportation management system in place thanks to on-time deliveries and accurate shipments.
Scalability
As transportation needs grow, a transportation management system can scale with the business. Whether expanding into new markets or increasing shipment volumes, a TMS can adapt to changing requirements without missing a beat.
Choosing the right transportation management system
If you’re in the market for a TMS, you should consider several factors:
- Integration capabilities. Look for a system that can easily integrate with your existing warehouse management system (WMS), ERP, and other systems.
- User friendliness. The TMS should be easy for your team to use without the need for extensive training.
- Scalability. It is essential that the TMS can grow with your business and adapt to your future needs. If you’re going to the trouble of implementing a new system, make sure it’s there to last.
Compare transportation management system providers
Take the time to compare a variety of TMS providers; each will offer unique features and advantages, and you will need to determine which align more closely with your goals. It’s worth the effort to make sure you end up with a robust TMS that fits your specific needs and will provide ongoing support and updates that will keep your operations running smoothly.
Consider consulting with experts
Choosing the right software for your business, whether it’s a TMS, WMS, OMS, ERP, or other software system, can be daunting. If you make a bad choice, it could mean thousands of dollars and thousands of hours down the drain. Consider consulting with a team of experts who can come in and assess your situation, help you find the right software solution, and even assist with implementation.
Read how Duluth Trading Company made the shift to full omnichannel distribution with the help of Summit Advisory Team.
Simplifying transportation management
With the right TMS in place, managing your transportation needs is easy. Centralized logistics and automated processes will streamline your efforts, save time, and allow you to focus on growing your operations.
Frequently asked questions (FAQs)
What are the primary functions of a TMS?
A transportation management system primarily facilitates freight management, carrier selection, rate comparisons, freight auditing, route optimization, shipment tracking, and reporting and analytics.
How does a TMS reduce transportation costs?
By optimizing routes, selecting the most cost-effective carriers, and automating freight auditing, a TMS helps minimize unnecessary expenses and improve overall efficiency.
What should I look for in a TMS provider?
Consider factors such as scalability, integration capabilities, user-friendliness, and the unique features offered by each provider to find the best fit for your business.
One final thing to keep in mind when choosing a transportation management system, make sure it’s a good fit with your shipping software!
Reach out to our team to learn more about our enterprise shipping solutions.