What is a Transportation Management System?
A transportation management system (TMS) is a logistics platform that uses technology to help businesses plan, execute, and optimize the physical movement of goods, both incoming and outgoing, and making sure the shipment is compliant and proper documentation is available. This kind of system is often part of a larger supply chain management (SCM) system.
A TMS provides visibility into day-to-day transportation operations, trade compliance information and documentation, and ensuring the timely delivery of freight and goods. Transportation management systems also streamline the shipping process and make it easier for businesses to manage and optimize their transportation operations, whether they are by land, air, or sea.
Why It’s Important to Have a Transportation Management System
Transportation management systems play a central role in supply chains, affecting every part of the process, from planning and procurement, to logistics and lifecycle management. The broad and deep visibility afforded by a powerful TMS system leads to more efficient transportation planning and execution, which ultimately results in higher customer satisfaction.
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The Benefits of a TMS
- Reduced costs for the business and the end customer
- Simplification of supply chain processes across geographies, modes, and carriers
- Automation of business operations for faster and more accurate billing and documentation
- Improvement in visibility and security, especially in transit
- Time savings: fewer manual steps result in fewer delays and faster delivery times
- The ability to track freight, both locally and globally, on a single platform
- Better import and export compliance minimizing penalties and shipment delays
- New business insights as better reporting leads to faster action and process improvement
- Improvements in customer service and customer satisfaction with real-time updates and fewer shipment delays
- The ability to scale the business by meeting and exceeding customer demands for fast, on-time shipments
Common Transportation Industry Challenges?
The top transportation management challenges in the industry this year will revolve around these core dysfunctions:
- Poor optimization of processes and resources.
- Limited planning of activities from the first mile through the final mile.
- Low visibility of inventory, logistics, annual spending, and more.
- Cumbersome freight claims’ processes.
- Higher rates of returns on e-commerce and peak shipping season purchases.
- Globalization of the supply chain and the risk of non-supply chain disruptors, like coronavirus.
How A Transportation Management Platform Solves These Challenges
To improve supply chain logistics, shippers and logistics service providers should follow these steps:
- Self-optimizing systems will reduce strain, leveraging AI along the way
- Increased data use will enable proactive management in the warehouse and beyond.
- More sensors will feed data into the TMS.
- Faster, smarter systems automate freight claims management.
- Predictive ordering and e-commerce platforms will ensure customers are happy with their orders.
- Diverse networks will reduce health-related disruptions.
A TMS Enables Data Management Through Analytics, Automation, And More
The use of a transportation management system (TMS) effectively pulls data into a single resource. Even when data is generated by other sources, such as a warehouse management system, integration between the warehouse management system and the TMS holds additional value. That is the true nature of the supply chain, and an effective TMS considers the whole scope of the supply chain and its impact on transportation management needs. The value of a TMS as a data resource is expansive. Applied across the immense global supply chain, the opportunities for freight management improvement through the use of transportation data are quite valuable. Let’s take just a quick look at a few opportunities afforded by TMS data management:
- The ability to increase proactive management of freight from inbound logistics to last-mile delivery, including reverse logistics.
- The full automation of logistics management.
- The ability to validate package details and ensure shipments are loaded according to specifications and avoiding potential issues.
- Using GPS-enabled sensors to track shipment status and location and real-time.
- Rerouting shipments to avoid adverse weather events and potential traffic congestion.
- Determining whether the current freight spend aligns with the current strategy and how current projections may rival past discounts and open the door to new negotiating power with carriers to secure lower better rates.
- Centralized documentation and record-keeping functions to improve global compliance with trade measures and also improve freight claims management.
- Integrated functions to complete payment to carriers, third-party organizations, and other business-to-business partnerships upon successful tendering, delivery, or other specified actions for each shipment.
- Reducing total freight costs by using a carrier scorecard, utilizing carriers that meet budget requirements and adhere to their delivery times.
- Improving rate negotiations with carriers are based on carrier performance instead of anecdotes.
MercuryGate offers a better way to manage transportation:
The transportation management system (TMS) marketplace typically forces you to choose between feature-rich systems that are hard to deploy and use and TMS lite solutions that lack the power to manage complexity. MercuryGate lets you transcend that tradeoff through our unique combination of power and usability to drive ROI that competitors can’t reach.
