What is a Transportation Management System (TMS)?

When you efficiently transport your goods, it equals a better bottom line. Optimizing your shipping operations makes you more competitive. Easy to say, but not so easy to do. Or is it? Implementing a Transportation Management System (TMS) can help with the complexities of freight logistics and simplify the way companies handle their shipping needs.

With that in mind, let’s get to the core of what a Transportation Management System is all about, taking a look at its functions, cost-saving potential, and time-saving capabilities. By the end, with a clearer understanding of the features and benefits of a TMS, you’ll likely recognize the value of building such a tool into your transportation strategies.

What is a Transportation Management System?

A Transportation Management System (TMS) is a software solution designed to streamline and optimize the transportation process, from planning to execution. Its primary purpose is to help shippers manage their logistics operations more effectively, simplify freight management processes, and enhance overall supply chain efficiency.

To expand on that a bit, transportation management software can help you coordinate the movement of goods across various carriers, routes, and modes of transportation. Whether you’re dealing with full truckload (FTL) shipments or less-than-truckload (LTL) freight, a TMS has tools to help you select the most suitable options based on criteria such as cost, transit time, and service levels. In essence, it’s a centralized hub for your transportation management.

What You Need to Know About a Transportation Management Solution

There are several important aspects of a TMS. Understanding them can help you capitalize on their advantages, respond to market dynamics efficiently, and remain competitive.

Software Versatility

There is no one-size-fits-all. Transportation management systems vary in complexity and capabilities. Some platforms may only provide you with basic freight tracking features, while others are comprehensive systems able to integrate with enterprise resource planning (ERP) software and other supply chain tools. Shippers need to evaluate their unique requirements and select a TMS that offers the necessary functionality for their operations.

Data-Driven Decision-Making

One of the biggest benefits of a TMS is its ability to collect and analyze data. Shippers can use insights into patterns, costs, and carrier performance to help make better-informed decisions on how to optimize their logistics strategies. And having historical data makes it easier to benchmark performance and identify areas for improvement. The most cutting-edge TMS platforms offer actionable insights with the help of artificial intelligence. ShipperGuide TMS, for example, can come with FreightIntel AI embedded so users can get optimization recommendations to improve performance and save on freight spend.

Cost Management

A transportation management solution gives shippers better control of their freight expenses. A TMS will make it easier to compare multiple carriers and services, negotiate competitive pricing, and identify the most cost-effective solutions for their shipments. Another advantage is their ability to manage and mitigate unexpected costs, such as those caused by delays or damages. The best solutions help shippers handle the cumbersome RFP process, making it fast and easy to request bids from carriers.

Scalability

As your business grows, there’s a good chance your shipping needs become more complex. A flexible TMS can scale with you and accommodate increasing volumes and changing requirements. This adaptability means you’re able to meet customer demands without overwhelming your logistics processes.

Enhanced Customer Service

Customers are more demanding than ever before, and a big advantage of a TMS is that it can significantly improve service levels. With real-time tracking information and notifications about shipment status, you can keep your customers informed and address potential issues before they escalate. This level of transparency can help build stronger relationships and promote customer loyalty.

Integration Capabilities

Depending on the transportation management solution you chose, some can integrate with a variety of other logistics software, including warehouse management systems (WMS), ERP software, and accounting tools. This seamless integration will help streamline operations across your supply chain.

Regulatory Compliance

The logistics industry is heavily regulated with endless compliance rules—rules that often change. Failure to remain compliant could be costly on a number of levels. However, a robust TMS can ensure you continue to adhere to your legal requirements by automating the documentation process, ensuring that your shipments comply with all regulations, and maintaining accurate records.

What are the Core Functions of a Transportation Management System?

A TMS encompasses several core functions to help you level up your logistics management. Understanding their capabilities can help companies that are involved involved in the movement of goods utilize the full potential of the software.

• Procure: This function involves finding and securing the best possible rates and carriers for your shipments. A TMS can help you compare quotes from different carriers, negotiate rates, and book shipments electronically.
• Plan: In the planning stage, a TMS helps you optimize your shipment routing and consolidation. You can factor in things like delivery times, costs, and carrier availability to create efficient shipping plans.
• Execute: Once your shipments are planned, the execution function ensures they are carried out smoothly. A TMS can track shipments in real-time, provide electronic documents, and manage communication with carriers.
• Settle: The settlement function streamlines the process of paying carriers and managing freight invoices. A TMS can automate invoice processing, identify discrepancies, and ensure timely payments.
• Analyze: Finally, the analysis function provides valuable insights into your transportation data. A TMS can help you track key metrics like shipping costs, carrier performance, and on-time delivery rates. By analyzing this data, you can identify areas for improvement and make data-driven decisions to optimize your transportation operations.

How Does a TMS Help Shippers Save Money?

Looking to cut back on costs? Then, think of a TMS as a power tool, saving you money and time.

• Negotiate Better Rates: By analyzing historical data and identifying trends, a TMS can help you leverage your shipping volume and negotiate better rates with carriers
• Optimize Routes: A TMS can help you find the most efficient routes for your shipments, minimizing transportation costs and reducing fuel consumption
• Consolidate Shipments: By consolidating shipments, you can reduce the number of trucks required, lower transportation costs, and improve efficiency
• Improve Carrier Selection: A transportation management solution can help you select the best carriers for your specific needs, ensuring you're always getting the most competitive rates and reliable service
• Reduce Errors and Delays: Implementing a TMS can help you avoid costly errors and delays by automating processes and providing real-time visibility into your shipments
• Improve Inventory Management: By optimizing your transportation processes, a TMS can help you reduce inventory costs and avoid stockouts

How Does a TMS Help Shippers Save Time?

Remember, a powerful TMS can save you money and time! Here’s how:

• Automation: Automating manual tasks such as creating shipping documents, tracking shipments, and managing invoices frees up time for employees to focus on more important tasks
• Improved Visibility: Real-time visibility into your shipments allows you to quickly identify and address issues, reducing the time spent on troubleshooting and problem-solving
• Simplified Communication: When communication between shippers, carriers, and other stakeholders is streamlined, it reduces the time spent on back-and-forth communication and ensures everyone is on the same page
• Optimized Processes: Optimizing your transportation processes reduces the time it takes to plan, execute, and settle shipments
• Data-Driven Decision Making: Having data-driven insights can help you make informed decisions quickly, reducing the time spent on guesswork and trial-and-error

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