Now more than ever, automation in the logistics sector is necessary to keep a business afloat. While some companies are still drawing up offers manually and communicate with providers via emails, others take advantage of automated order management, decision-making, booking, and scheduling. Clearly, the first ones are losing ground to the competition, while the latter ones continue to cut delivery time and respond to customer needs faster than others.

Leveraging a transport management system is no longer a competitive advantage, it’s the only way to pull ahead. TMS helps companies automate all the day-to-day operations and allows to adopt innovative solutions like IoT-based real-time tracking and automated route optimization. This enables delivering goods faster, cutting operational costs, and providing better customer service.

In this post, we’ll give you a walkthrough of a TMS, its functionality, factors to consider when choosing it, and the benefits it brings to businesses.

What is Transport Management Software

A transportation management software (TMS) is a platform that helps companies streamline the shipping process automating all the logistics and shipping activities including route optimization, planning, network design, load building, monitoring, reporting, billing, order management, procurement, and freight audit. The goals of using a TMS are to enhance shipment efficiency, reduce transport expenses, gain real-time visibility of logistics processes and improve customer service.

The TMS can automatically examine transportation scenarios, suggest optimal routes, manage load, choose the best providers, track movements in real-time, perform billing and payments, conduct analytics. Automation in this area reduces human error and allows building complex global trade network reliably and cost-effectively.

TMS optimizes daily operations for shippers, logistics service providers, carriers, warehouses, manufacturers, e-commerce companies and any other organizations that move freight on a regular basis.

Types of Transport Management Systems

A pool of features

Transport management systems can be divided into three groups depending on the features they offer:

TMS suites that combine a broad set of features under one roof and can be customized for the company needs. They’re best suited for enterprises, as they offer an end-to-end solution for freight management. For small businesses, they may be unnecessary and too expensive.

Point solutions are small systems with only a few features that support specific transportation activities depending on the business needs. For instance, it could be order management and inventory control for an e-commerce company – only required features without redundant functionality.

Extended TMS includes additional advanced features that are not incorporated in traditional transport management systems. It could be contract management or accounting.

Software architecture

A transport management system also can be divided into cloud-based and on-premise. Cloud-based solutions are hosted on the vendor’s servers and can be accessed via a browser on a subscription basis. On-premise ones are installed software, hosted and maintained on your own servers.

Both types have their pros and cons. On-premise doesn’t require monthly payments, offers a high level of control and customization but can’t be accessed from mobile devices, needs updates and maintenance and isn’t flexible and easy-to-use.

Cloud, in turn, is more scalable and easy-to-use, always up-to-date with the latest innovation as responsibility for updates and maintenance lies on a vendor, can be accessed through a browser any time, from anywhere and from any device. At the same time, it requires monthly payments and can’t be accessed without an internet connection.

While one-time investment and a high level of control sound attractive, businesses tend to use cloud-based solutions because of their flexibility, pay-per-use model and innovative solutions. The choice should be based only on your own business needs and priorities.

Build TMS Software vs. Buy Solutions

One more aspect to consider is build vs. buy. There are hundreds of ready-made TMS solutions to choose from. All you need to do is buy a subscription, set it up, train your team and start using the software. So why would someone want to go a longer and more complex way?

Regardless of the type of software, business and industry, there’s a simple rule to solve this build or buy dilemma. If a specific problem you’re trying to solve with this software is closely related to your core business offering, then the best way to go is building a custom software solution. Most likely, you’d like to have full control over the software that differentiates your business and helps it function and make a profit. All other regular business needs can be solved with off-the-shelf software.

For instance, if you’re logistics server provider, managed transportation services are your core value proposition. In case you have enough resources, building a fully-customized application for transport management would be the right choice for you. This will mean that your business won’t be dependent on a third-party vendor, your data will be 100% secure as it’s stored in your own data centres, and software that powers your business will perfectly meet your needs. The software that solves regular commodity issues like HRM or email client doesn’t require custom development.

In case the transportation isn’t your core business function, most likely, an off-the-shelf solution will be enough to satisfy your needs.

Key features and benefits of TMS

TMS can include a large pool of various features, here are the most common ones:

• Carrier management helps managers evaluate and choose between service providers. It can be chosen by the defined criteria like geo coverage, type of service, price, and so on.
• Route planning, scheduling and optimization features help combine locations based on distance, type of transportation, and any other custom criteria.
• Shipment planning allows scheduling shipments depending on lots of factors such as inventory availability, type of transportation, and time frames.
• Track and trace feature offers GPS tracking or IoT-based tracking features that help dispatchers and customers monitor cargo delivery process 24/7 via mobile phones, web apps and tablets.
• Fleet management helps manage, monitor, optimize and maintain vehicles used for transportation.
• Calculations features help automate calculations of optimal cargo loss, inventory, fuel consumption, an optimal number of stops.
• Order management gives complete control and a unified view of all orders and their statuses.
• Billing features help automatically create and send invoices, add attachments and notes, and customize invoices for each user.

Profit for your business

Cost savings. ARC Advisory Group research indicates that TMS application brings companies up to 8% of savings, which can be attributed to automated decision making, load consolidation, route optimization, time-saving, reduction in carrier overcharges, and automated freight audit.

Real-time monitoring. A TMS gives businesses and customers full control over the delivery process. You’ll always know where the freight is at this moment and be informed about any unforeseen delays and deviations, when they occur and why.

Better decision making. TMS automatically analyzes and evaluates lots of factors to help you choose the most optimal provider, route, schedule, type of transportation, carrier, etc. This leads to faster and cheaper delivery.

Business intelligence. A transportation system will give you in-depth insights into each and every metric of your business. All information is stored in one place and is available for custom reporting and analysis. Analyzing previous experience, you can constantly improve your company’s processes and reach your highest level of performance.

No paperwork and less manual data entry. TMS significantly decreases manual work by automating every aspect of the transportation process, from planning and calculations all the way to execution, tracking and reporting.

Improved customer service. Customers can access the shipment and freight information whenever they need and from any device to know exactly where their shipment is. Clear processes make your business more reliable and trusted.

Supply chain efficiency. Automation, proper planning and analysis help reduce inefficiencies in your business and noticeably improve your entire supply chain.

Over to you

If you’re not sure if TMS is the right choice for you, don’t know what type to choose or want to get a ballpark estimation of TMS development for your business, our engineers have enough experience developing transport management systems and are ready to answer all the questions you may have. Feel free to get in touch!