A transportation management system (TMS) is a software tool that enables businesses to manage how they move their products from one place to another. It helps them plan, track, and optimize the transportation process. Typically, a TMS is one piece of a bigger system used in supply chain management or enterprise resource planning.
This blog post will reveal how a TMS solution works, why your organization needs it, and what to consider when looking for the right TMS transportation management system.
How Does a TMS System Work?
A TMS connects to the systems of different shipping carriers and pulls out essential details such as services, rates, and delivery times. It then stores this information in a central place where you can easily compare shipping companies.
In addition, the transportation management software uses advanced algorithms to calculate the most efficient shipping routes. The tool considers factors like distance to determine the fastest and most cost-effective way to move goods from one point to another.
Once the shipment is in transit, the TMS tracks its location in real time. As a result, businesses can see exactly where their products are and stay on top of delivery schedules.
What Is the Difference Between TMS and WMS?
A warehouse management system (WMS) and TMS are distinct business technologies.
Organizations use a TMS to enhance carrier selection, optimize routes, and track the transportation process. Meanwhile, companies use a WMS to manage storage facility operations, from the moment materials and goods enter a warehouse to when they leave.
Both TMS and WMS are designed to integrate with supply chain software. That way, businesses can easily manage transportation logistics and warehouse activities from a single platform.
Importance of TMS in Supply Chain Management
A transport management system is significant in keeping supply chains running smoothly. For instance, it allows businesses to track shipments while in transit. This real-time visibility helps them manage expectations and reduce supply chain disruptions.
Other benefits of this technology include:
- Reduces transportation costs: The software makes it easy for businesses to choose the most cost-effective options by comparing rates of different carriers and determining the fastest routes.
- Boosts efficiency: A TMS automates tasks like carrier selection, route optimization, and shipment tracking, which are time-consuming and error-prone when done manually. This increases operational efficiency.
- Streamlines collaboration: A TMS solution provides a central place for a business to coordinate with all its carriers, suppliers, and other stakeholders. This enhances transportation operations and reduces miscommunication.
- Improves delivery and customer service: A TMS can determine the most efficient transportation routes, ensuring products reach their destination on time. Real-time updates of shipment location allow businesses to identify and address issues that may cause delays, enabling them to meet customer expectations of on-time deliveries.
Who Uses a TMS?
Businesses that regularly ship products to customers or receive materials from suppliers use transportation management systems. They include:
- Distributors
- Retailers
- Companies in the manufacturing industry
- Logistic service providers
- E-commerce stores
Key Features of Transportation Management Systems
What main features should you look for in a transportation management system?
Load Planning and Optimization
Load planning and optimization involves determining the best way to ship cargo and maximize logistic efficiency.
Robust TSM software helps you evaluate the most affordable modes of transportation, compare carriers to determine the least expensive ones, and identify the fastest shipping routes.
Additionally, you want a TMS that can categorize cargo based on type, destination, fragility, weight, delivery time frame, size, or any other relevant criteria. That way, you can easily combine shipments with similar characteristics and transport them together to minimize costs.
Automated Load Execution
Load execution is putting a shipping plan into action. Instead of doing it manually, look for a TMS that can automate tasks like:
- Load matching: The process of connecting shippers with carriers who have enough capacity (truck size, container space, etc.) to transport a certain quantity of goods.
- Communication: With a TMS that automates load execution, businesses don’t need constant back-and-forth exchange of hard copy documents, phone calls, and emails to keep everyone on the same page. The software provides a digital, central platform to easily and quickly share real-time information with suppliers, distributors, customers, and other stakeholders.
- Documentation and record keeping: The software can automatically create and send freight bills. It can also provide information about import and export documentation requirements, ensuring shipments comply with relevant regulations.
Freight Tracking Capabilities
With real-time monitoring, a TMS gives you a clear view of where your shipments are at any moment. This visibility lets you keep everyone in the loop — from carriers and suppliers to distributors and customers. It also makes it easy to adjust plans if something unexpected happens in the shipping process.
Businesses can leverage this feature to better manage shipping costs, forecast transportation needs, and make supply chain decisions based on up-to-date information.
How to Choose a Transportation Management System
With multiple transport management systems out there, picking the most suitable for your organization can be overwhelming. Here’s what you can do to narrow down your options and choose software that meets your business needs:
- Look for basic TMS features: These capabilities include freight tracking, automated load execution, and transportation planning capabilities.
- Ensure it’s easy to use: You want TMS software your team can start using instantly without needing a manual.
- Consider integration: Choose a system that interconnects seamlessly with supply chain technologies your team is already using to streamline data flow and avoid disruptions.
- Evaluate your choices: List three to five options and compare them based on features, pricing, pros, and cons.
- Try out your options: Most software providers offer free demos or trials. Use the trials to test the tools you’re evaluating to understand how they work. You can then use your first-hand experience together with the above factors to make a buying decision.
Gain Transportation Visibility With Surgere
Surgere lets you monitor your goods, whether inside the warehouse being prepared for shipping or while in transit.
It leverages Radio Frequency Identification (RFID) tags so you can instantly locate the inventory you want to ship instead of manually searching the storage facility. This can help optimize transportation planning.
When moving cargo from one point to another, Surgere enables you to track its real-time location through GPS. Request a demo today or learn more about our transportation visibility software.
