Transportation Management System

What is a transportation management system?

A transportation management system (TMS) is a centralized tool companies use to more effectively handle their transportation and distribution logistics.

The TMS can be used to take care of various vendor and partner relationships in the transportation process, such as shippers, freight brokers, or supply chain managers. 

Most TMS software now integrates with other supply chain and warehouse management tools to give businesses greater visibility and insights into aspects like inventory tracking and predictive analytics.

Basic elements of transportation management systems

Within any TMS software, businesses should have the ability to manage various features of physical goods connected to the company and their movement.

• Real-time freight tracking. Business owners need to be able to know where assets are at any given moment. Tracking freight from one vendor to another through the TMS keeps all stock and raw materials accounted for. This also plays an important role in staying on budget and minimizing losses through the distribution process.
• Route and load optimization. Every good TMS should offer the means to find the most ideal route to transport materials. Route optimization keeps materials moving in a timely way between different parts of the transportation process, assuring customers have an optimal experience when receiving their orders. Load optimization helps pack transportation vehicles more effectively to maximize the space available and keep costs to a minimum. 

• Contact management. The transportation process usually involves several vendors at the same time. A proper TMS needs to centralize their contact details. Key information and agreements between vendors,  like copies of contracts or proposals being considered, can also be uploaded.

Benefits of transportation management systems

Managing a large amount of inventory or raw materials quickly becomes complicated, particularly if these goods have to move to different locations. A TMS overcomes many of these challenges by:

• Providing real-time visibility. ATMS provides trackable data for business owners so they can better understand where materials and products are. This is especially important when materials travel by air or sea.
• Saving businesses money. The administrative costs associated with transporting goods are significant. An effective TMS should be able to replace many administrative processes with automated updates for more efficiency and less potential for human errors.
• Improving customer satisfaction. On-time or early delivery enhances the customer’s view of the business significantly. It’s also important for companies to be able to address any reasons for an order’s delay. Through tracking in the TMS, customer service representatives can provide more accurate details about what could be causing problems with an order.

Best practices for transportation management systems

When implementing a new TMS, these best practices should be considered ahead of time.

• Assess current goals and limitations. Every business needs a TMS for different reasons. Before deciding on which software to use, it’s important to reflect on which aspects of the TMS are most critical for both current and future business operations. Factor in growth and scalability before deciding, as this prevents fewer obstacles in the future.
• Understand existing team strengths and weaknesses. Embracing a new system challenges most people. Knowing what the team is doing well and how a TMS could support them better makes communication and training more straightforward.
• Create a detailed implementation plan. Every new system hits bumps in the road. Before rolling out a TMS, it’s best to review how the software will fit into current operations. A slower implementation may be necessary for team members or operational logistics to catch up.
• Test key aspects of the TMS. Errors in a TMS cause slowdowns in transportation and distribution. Before setting up the TMS throughout the whole business, test smaller areas to confirm processes work as expected and to correct any mistakes with minimal disruption.

Transportation management systems (TMS) vs. warehouse management systems (WMS)

The key function of a TMS is to help businesses manage the movement of freight, including raw materials and finished products. The logistics behind a TMS are focused solely on the movement of physical goods as part of the overall supply chain.

With regard to a WMS, other parts of the production process, like inventory, are considered. Warehouse management may also include organizing the physical space and taking care of order fulfillment. 

A WMS only deals with physical goods while they’re on-site in the warehouse, while a TMS can track and manage freight between facilities as the goods move from vendors to customers.

Choose the best freight transportation options for your raw materials and finished goods with dedicated freight management software.