Transportation Management System

In essence, transportation management systems are used to move products from point A to point B as efficiently and cost-effectively as possible. To succeed in this, a robust solution spans more than just the logistical component of supply chain management, providing end-to-end visibility across the entire multi-party network (beyond just logistics providers), as well as multi-modal and container, pallet, and parcel support.

For consistent on-time in-full (OTIF) delivery, a solution should provide support for exceptions management using real-time visibility over track and trace with real-time alerts and in-app corrective actions capabilities.

Transport planning is today a key function of transportation management systems. To take advantage of every opportunity for optimization, your TMS should automate key fulfillment concerns, such as rating, routing, and carrier selection while balancing each individual order’s service requirements and costs.

Financial and analytic functions are also vital to cost control and continuous improvement. Robust transportation management software will offer rate and invoice management and allow you to set and track performance KPIs.

A TMS manages the entire lifecycle of a load, including: Load planning (mode conversion, carrier management, route optimization) Load execution (tendering, booking) Payment (settlement, auditing, billing), Freight tracking (status updates), Reporting (Analytics, KPI tracking).

The benefits of a transportation management system will vary depending on your business needs and challenges, but broadly speaking, organizations invest in the solution to drive operational efficiency and agility, as well as improve visibility and network coordination for more strategic decision-making, optimized cost management, and an improved customer experience.

It's not uncommon for a mid-size company to see a 5% OTIF improvement, which could generate as much as $30 million additional revenue.

With a comprehensive and holistic transportation management solution, benefits can also include reduced inventory and improved sustainability (for instance, by reducing empty miles, monitoring GHG emissions, and optimizing reverse logistics).

The best transportation management system for you will depend on your level of supply chain complexity, and overall challenges and goals. An ERP or a standalone transportation management system may be sufficient for simpler supply chains (regional, small, static network, few systems, few sales channels and order types).

However, if you need to exchange order data across a network of partners – such as multiple suppliers, warehouses, carriers, and forwarders, you'll need a more dynamic system with flexible, configurable business rules to accommodate rapidly evolving networks, as well as transportation and fulfillment models.

You may also want access to a large carrier network, shop competitive rates, enable smart planning with warehouse operations, and get multi-modal and container, pallet, and parcel support. The best transportation management solution for complex, often global organizations will be a holistic, multi-modal TMS.

A transportation management system (TMS) is a logistics platform created to support the physical transportation and shipment tracking of products between stakeholders. Over the years, this basic concept has evolved to include a complex ecosystem of vendors, carriers, suppliers, warehouses, retailers, and other parties, all with their own set of operations and constraints.

That's why today's shippers and logistics service providers need to be able to orchestrate the entire supply chain, logistics flows, and all the transportation steps in a multi-party business network. Simply optimizing one's own fleet or their own sites is not enough; businesses need to connect to the others in the network and ensure they can manage, control, and optimize each order flow from an end-to-end perspective. That requires going way beyond traditional ERP systems, warehouse systems, local carrier or fleet management systems, and even legacy transportation management systems capabilities.

The legacy TMS has limited functionality and restricts capabilities to batching orders with limited order-level reporting and speed. Next generation systems, or a TMS as part of a multi party orchestration platform, unifies the greater partner and systems landscape to enable versatility and better responsiveness. You can think of it as a "TMS+" that collaborates with ERPs, WMSs, and other systems and carriers to manage flows from an end-to-end perspective - whether that’s an outbound flow related to sales orders, inbound flows and purchase orders taken from suppliers, or return order flows.

Such holistic, network-wide visibility and control creates opportunities to optimize processes across business units that would otherwise be overlooked. By collaboratively working toward shared goals, such as, for example, utilizing full truckloads and improving time performance, stakeholders can mutually benefit and improve operations.

Here are a few additional examples to demonstrate specific applications for TMS optimization:

• After-sales flow management for reverse logistics
• Real-time rate quotes from carriers via API
• Parcel shipping (instead of batches), allowing greater flexibility and speed
• Integrated dock planning and appointment scheduling
• Multi-modal transportation and seamless integrations with carrier portals and your warehouse management system (WMS) or multiple systems

Transportation management systems (TMS) have historically been stand-alone units that work alongside order management systems (OMS). The OMS groups orders then transfer them to the TMS in batches to process and execute shipments. This approach has become too limiting and restrictive to effectively operate in the modern supply chain.

Combined order management and transportation management natively built on one platform (otherwise known as an "order-centric TMS") provides incredible benefits, such as order-level reporting and faster speed. 'Natively built' means that order, logistics, and transport management capabilities are built from the ground up to work together, rather than through separate systems obtained through mergers and acquisitions. As such, users enjoy:

• Enhanced transparency and control over the shipping process
• Native support for multi-modal, multi-leg freight
• Management by exception for enhanced decision-making, prompt in-line actions, and superior customer service

Because it spans the order planning stage, an order-centric TMS applies information and rules about inventory, allocation, and replenishment to make smarter planning and execution decisions when breaking up orders into shipments. The order-centric TMS is highly configurable for flexibility. When changes to partners, needs, or context call for new parameters, updated rules allow the system to immediately adapt. When issues or obstacles are met along the way, real-time communication and alerts offer agility and immediate course correction. And, because of its comprehensive overview of both the individual order as well as the end-to-end supply chain, businesses can effectively orchestrate orders across their networks while also addressing details on a granular level.

The order-centric structure captures not only transport costs, but all logistics costs including handling, detention, and warehousing.

Transportation management systems can help you reduce costs and grow revenue. Capabilities like automated and optimized flows with ideal carrier selection and timely exceptions management can often reduce transport costs by 10-15%.

Logistics teams can also reduce operating costs by about 7% through various efficiency gains. For instance, by using precise rating, intelligent planning, and minimizing 3rd party fees, detention penalties, and demurrage fees with visibility, alerts, and pro-active issue resolutions directly within the application.

As part of a neutral, supply chain cloud platform (or multi-party orchestration platform), implementing a TMS may actually be the path of least resistance today.

These transportation management systems can support real-time integration, so teams can typically begin enacting transformative change and generating value within 2-4-month increments, with breakeven in less than one year.

Fast time-to-value is also owed to its flexible and configurable architecture, as well as the ability to "unify" the systems landscape. From a single, supply chain cloud platform, teams can create a standardized solution –in this case, a transportation management solution – across multiple different ERPs and WMSs in about half a year. From there,  differentiators can be configured to adapt and scale as needed.