Transportation management software
What is transportation management software?
Transportation management software (TMS) plays a key role for shippers in the era of digital logistics. But what is a TMS? What features does it offer? And how can businesses benefit?
Transportation management software (TMS) – sometimes also called a transport management system or transport management software – is a software solution for managing logistics processes. It helps optimize the physical movement of goods. A TMS covers transport planning and optimization, transport execution, supply chain visibility and control tower monitoring, freight cost management (including freight purchasing), and internal accounting and reporting.
A TMS is often a key component of the supply chain management system environment, where it typically works in tandem with an enterprise resource planning (ERP) and warehouse management system (WMS).
Using a powerful, robust TMS solution allows businesses to plan and execute their transports more efficiently, cut administrative overhead, reduce errors, and ultimately drive down shipping lead times and cost for greater customer satisfaction.
Key features of a TMS
Transportation management software supports transportation management through five key processes centered around planning, execution, and optimization:
Planning, decision-making, and optimization
A TMS helps optimize transport planning by applying pre-defined parameters based on user preferences, prioritizing factors such as transport cost, lead time, number of stops, or environmental impact. The next step is then to execute the planning.
Transport execution
A TMS supports the complete execution of the transport planning. It controls and optimizes the operational processes in transport management in collaboration with carriers and parcel services, seamlessly fusing execution with planning, optimization, and visibility to lay the foundation for end-to-end automation and a continuous improvement process.
Supply chain visibility and control tower
TMS solutions offer visibility across physical and administrative operations associated with transports and shipments. This includes tracking transport events. A TMS can also manage receiving, customs clearance, invoicing, and booking documents and issue transport alerts in the event of delays or unexpected incidents.
Freight cost management
Transportation management software helps manage and optimize all end-to-end freight cost management processes – from calls for bids and purchasing to managing carrier rates with transport partners to invoice auditing and billing.
Measurement
A TMS incorporates various reporting and analytics tools to generate and analyze key performance indicators (KPIs) for transport and logistics. Some typical KPIs:
- Percentage of on-time pickup and delivery services
- Cost per unit of measure: kilometer, kilogram, container, pallet, etc.
- Productivity in monetary terms: cost per unit, weight, shipping unit, etc.
- Productivity in operational terms: shipping units per order, weight per load, etc.
Typical TMS features
- Planning and optimization of multimodal transport chains
- Selection of inbound and outbound transport methods and providers
- Assignment to transport companies (road, rail, air, sea)
- Real-time supply chain visibility
- Service quality monitoring using KPIs
- Order consolidation and route optimization
- Transport cost and planning simulation
- Freight cost management
- Cost oversight, KPI reporting, statistical analyses
- Freight billing
Who needs a TMS?
Businesses benefiting from TMS technology are found primarily in the automotive and other manufacturing industries, retail and wholesale, e-commerce, and logistics services. Transportation management software can support such businesses with distribution, inbound, intercompany, and reverse/return logistics.
Each segment has its own unique needs, but what all these businesses have in common is that they ship or manage large volumes of goods or high-value goods, or they’re involved in complex transport or supply chain networks. They also often have complex processes with a wide range of transport modes, routes, and transport partners.
TMS in the cloud: What are the benefits?
For a long time, transportation management software was a major expense, feasible only for large enterprises. But today’s licensing models – like cloud-based solutions – have made TMS technology affordable to more and more smaller companies as well.
Analysts watching this trend predict that the market for cloud-based TMS solutions will experience strong growth in the coming years. So what benefits does the cloud bring to TMS tools? Four main points stand out:
- Scalability: The cloud infrastructure allows businesses to adapt the software to their transport needs.
- Real-time updates: A cloud TMS is updated in real time, so users gain quick and easy access to all the latest features and improvements.
- Flexibility: A cloud TMS makes businesses more flexible overall without the need for major investments in IT infrastructure.
- Collaboration: A cloud TMS makes it easier to work together and enables global access to key logistics data.
In a nutshell
Transportation management software (TMS) can generally help businesses optimize transport and supply chain processes, cut costs, and boost productivity. That’s why it’s so important to choose the right TMS and provider. Getting this right ensures that you get the best possible solution for your unique needs.
Your first step to flexible, efficient transportation management is simple
Arrange a no-obligation appointment with our AEB experts for transport management software and systems
