How a Transportation Management System Can Improve Your Supply Chain

As a business grows, its supply chain operations can get geometrically more complex. If you’re only shipping a few loads a week, though, you might not need a transportation management system (TMS). However, if you move a significant number of loads via several different modes from several different origin points, a TMS could be a vital tool to help you plan, execute, and analyze all of your supply chain activities.

Transportation Management System (TMS): A software platform that helps businesses optimize their supply chain activities, specifically around the movement of goods. Both shippers as well as 3PLs may leverage these systems to streamline operations.

If you’re considering a transportation management system for your business, we’ll walk you through the major benefits. You’ll see how other operations leverage the features of common transportation management systems, so you can understand whether a TMS might be right for your business. Although cloud-based TMS software has made the price point more affordable for smaller businesses, a TMS still represents a significant investment. It’s important to understand the full benefits before taking the plunge.

Who Uses Transportation Management Systems?

Businesses in a wide variety of industries use transportation management systems. By and large, though, companies who invest in this software are those moving goods on a regular basis. That includes manufacturers, retailers, and suppliers. Third-party logistics companies (3PLs) who move freight on behalf of their customers also leverage TMS software.

When implemented in larger companies, transportation management systems are sometimes integrated into larger enterprise resource management (ERM) systems or supply chain management systems. TMS software can also integrate with warehouse management systems (WMS).

Warehouse Management System (WMS): Software that helps businesses track and organize inventory, optimize warehouse operations, and manage fulfillment. Although there can be some crossover, in general, a WMS helps a business with the flow of goods on site and a TMS helps businesses with the flow of their goods off-site.

What Benefits Does a TMS Offer?

Businesses that ship a number of goods via different modes and carriers have a lot of options available to them, a lot of data to organize and evaluate, and a lot of decisions to make. A TMS can streamline a number of these activities into a single system, simplify information on easy-to-parse dashboards, and synthesize complex data sets into actionable numbers.

As you dive deeper into the benefits of a TMS, you might find it easiest to think in terms of three different areas of supply chain management: planning, execution, and analysis.

Supply Chain Planning

By aggregating data from a number of different sources, a transportation management system can offer greater visibility into all aspects of an organization’s supply chain.

This visibility allows a supply chain manager to create a more effective plan to keep operations running smoothly and efficiently. For example, a TMS can quickly deliver information that assists with:

Route optimization
Mode recommendations, based on price and delivery targets
Carrier selection and quote management
Predicting transit times and anticipating delays, especially for international or multi-modal shipments

A supply chain manager can then use this information to create a solid plan for optimizing their supply chain. That might mean using the data within a TMS to uncover new ways to save money on freight, increase delivery efficiency, improve on-time delivery to increase customer satisfaction, or impact any other milestones that matter to the organization.

While much of this data is often available to organizations without a TMS, it would take considerable time to organize, synthesize, and analyze. A TMS can handle the collection and analysis, giving supply chain managers the data they need to put the right plans in place to optimize operations.

Supply Chain Execution

Once the planning phase is done, transportation management systems can also help optimize the next phase of goods movement: the execution—i.e., getting freight where it needs to go on the right timeline.

A TMS can assist with:

Booking freight with carriers and even digitally tendering loads
Managing, organizing, and sharing freight documentation
Tracking shipments, for the purposes of both real-time updates and carrier performance evaluation
Freight settlement, including invoicing and payments
Electronic filings for customs declarations, security filings, export documentation, and more

If your business works with several different carriers, a TMS maybe able to integrate with their systems and automatically pull all their relevant data into your TMS. Instead of having to go to a number of different portals to get tracking information or download invoices, your TMS can collect it all in one, convenient location.

In addition to saving you significant time, it also means you have all the information you need for this next phase of supply chain optimization.

Supply Chain Analysis

For supply chain managers looking to streamline operations and uncover opportunities for new efficiencies, a transportation management system can offer a significant boost in the area of analysis.

After collecting data all along the supply chain, a TMS can then deliver it in the form of easy-to-analyze reports and dashboards. After all, more data isn’t always a good thing. Supply chain managers can easily drown in data and fail to gain insights. The analysis tools within a TMS can turn a mountain of data into actionable numbers that produce bottom-line benefits.

Additionally, TMS software can also offer performance insights in specific areas. For example, maybe your operation has received several complaints about late deliveries. Rather than combing through a year’s worth of tracking information by hand, a TMS could quickly prepare a report, detailing things like:

Percentage of on-time/late shipments so you can see quickly if this is a company-wide problem or simply a customer-specific issue
Statistics by carrier, to discover whether these late shipments can be tracked to a particular provider

In other words, a TMS provides analysis tools that allow supply chain managers to leverage all available data toward more effective supply chain optimization. All of this creates even more opportunities for cost savings, greater efficiencies, and improved customer satisfaction, plus other priorities that matter to your organization.

Is a Transportation Management System Right for You?

As with many pieces of software, a transportation management system represents a significant investment. However, the benefits can also be significant, especially for operations that move a large number of goods. The increased visibility, expanded capability for analytics, and the efficiency of managing everything from a single system can be a springboard for significant savings in both time and money. By weighing the cost against the potential benefits, you’ll get a sense of whether a TMS will offer you the returns that make the investment worthwhile.

Looking for more ways to manage your freight more effectively? Our experts would be happy to help you analyze your transportation usage and budget to uncover new efficiencies. Reach out for a complimentary consultation to get started.

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