What is a Transport Management System? Explained

Luis Lopez

A transportation management system commonly abbreviated “TMS” in supply chain management ensures an effective shipping process. TMS transport management system allows full automation of the shipment hence reducing time wastage. 

It’s amazing we now understand what a TMS system is. TMS systems allow for timely freight delivery and trade compliance documentation and information. In fact, with the TMS system the shipment process is streamlined.

What does the transport management system do?

As a matter of fact, the future of supply chain management is technology. There has been enormous growth in the disruptive technology sector which has directly affected the supply chain and transportation management. The transport management software is crucial in supply chains and affects different areas from planning – procurement – logistics and supply lifecycle management.

The effective use of the transport software management software increases the supply chain visibility. This in return ensures high customer satisfaction and retention. That, again, brings in increased business growth and sales. The global trade compliance and policies are clearly outlined for any shipper. 

In this sense, always ensure you go for the right TMS by reviewing the previous shippers experience with the company.

Capabilities of a transport management system

Let us outline the capabilities of a transport management system in effective supply chain visibility. 

• Procurement Management
• Carrier Management
• Freight Execution
• Load and Route Optimization
• Supply chain communication
• Analytics, Reporting, and Visibility
• Invoicing capabilities
• Supply chain and logistics data repository. 
• Freight audit and pay 

In explaining the capabilities of a transport management system, let’s delve into specific capabilities as per the different supply management stages.

Manufacturing: Products in manufacturing schedule visibility. 

Freight: Help plan, optimize, and execute outbound and inbound product movement. Also analyze freight cost and performance of freight providers. 

Distribution: Products required to fill order visibility.

Procurement: Helps with performance reporting and vendor management.

Finance: freight audit, invoice, and pay. Also helps with calculation of accruals and cost performance analysis. 

Sales: Order tracking and performance reporting. 

Customer service: Direct order and shipment info access, manage, schedule, and report shipments to customers, track and report order shipment progress to customers. 

Who uses transport management systems

Transport Management systems have been widely adopted for shipment tracking by different companies globally. Here is a list of businesses who use transport management systems: 

• E-commerce companies such as Amazon, Alibaba, eBay, and more. 
• Manufacturers.
• Wholesale and retail businesses. 
• Distributors. 
• Third-party logistics (3PL) companies, fourth-party logistics (4PL) companies

Benefits of a transport management system

The increased use of technology has taken the supply chain management industry by a storm. The benefits of a transport management system in the order management and fulfillment can’t be downplayed. 

Here are some of the benefits of the TMS transport management system.  

Technology use – With an effective transport management system (TMS) shippers reduce unwanted time wastage and stress. It makes it easy for shipping companies to make routing decisions depending on the carrier mix, transit time, and quotes. 

Simplify the supply chain process – It is never simple to assign and track shipments, but with TMS selection of the most appropriate carrier for a specific location is simplified as you can review past shipment performance. A smooth running shipping process feels secure and in turn keeps the customer happy. 

Simplified tracking – With an effective transport management system real-time tracking of products ensures goods on transit are delivered without any unforeseen delays. Human error but with the TMS software human errors will be a claim of the past. 

Improved customer services relationship – Due to the realtor tracking the customers feel confident that their products will be delivered in good time. This in turn increases customer satisfaction and retention. 

Business insights and reporting capabilities – The TMS transport management system enables in-depth insight and reporting of the supply chain management activities real-time. In fact, with a TMS system load capacity or number of products for routing in a specific location shouldn’t baffle you. 

Increased security and visibility – Interestingly, TMS allows for real-time tracking and in case of any challenge with the delivery the customer is notified instantly. 

Face paced business scalability – The software 3pl system allows for personnel to focus on the most important aspects of business growth as transportation and routing is taken care of by the software. A company will focus on meeting the exceeding customer demands. 
Enhanced trading policies compliance – with the TMS system you eliminate the trade policies breach which can lead to fines and penalties.

Transport Management System (TMS) Challenges

In fact, like any other industry the TMS has challenges as well. Here are some of the challenges: 

Organizing orders or quotes – the process of organizing quotes for different carriers can be time consuming, you will have to call every carrier asking for freight rates and the routing process. This is cumbersome in the first stage. Time used for this activity could be used to conduct other business processes. 

Making a carrier selection – there is a large number of companies offering freight services. The decision on which is the best carrier for delivery depends on the type of goods being transported. Some products can be temperature sensitive while others require absolute care to avoid being damaged before getting to the customer.

Shipment tracking – As much as this is the most significant feature of the TMS system, its implementation is sometimes overwhelming. This is because a company can be using different carriers for shipment. In some scenarios the shipment involves different carriers in shipment abroad and in case of tracking issues this has to be done manually which is super tiresome. Imagine, where you are tasked with manual tracking of a container? It should be mind-blowing. 

Information gathering and insights – The idea of the TMS is to ensure you get information on the performance of different carriers before onboarding them to offer delivery services to you. If the TMS isn’t available the whole transport and shipping process becomes expensive and time-consuming. 

Conclusion

To wrap up, the transport management system (TMS) in supply chain management is one of the significant processes in shipping management. The future of TMS is certain and precisely, moving the technological way. Over the years with the increased adoption of online retail on-time products delivery ensures customers satisfaction. Customers are enticed by almost same-day-delivery. 

However, it is worth noting with the implementation of modern technologies such as machine learning the TMS system continues to learn and make accurate shipping predictions. Companies can easily integrate the TMS with emerging technologies such IoT fleet monitoring, cold chain management, Blockchain, and more.

The advantages of the TMS transport management system outway the disadvantages. In fact, a company using TMS for shipping reduces stress and time wastage immensely. 

To be precise, the conclusion of the transport management system as a viable shipping process is vivid. In today’s, technological world if you aren’t implementing transport management systems in your shipping automation you are planning for business growth stagnation and subsequent failure. 

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