What is Transportation Management Software?

09/05/2014

What is Transportation Management Software?

A transportation management system (TMS) is a software program that allows companies to manage their supply chain (including their internal logistics department, suppliers, carriers, and vendors). Although transportation management software was very expensive when it first became popular, the new options available for on-demand, scalable TMS software mean that even smaller companies can now take advantage of the benefits of implementation. These benefits include automation, optimization, visibility, and reporting that lead to developing more efficient logistics processes, and ultimately, time and money saved.

Common TMS Functions

Although there are some differences between the various transportation management systems available, there are some functions that are shared by almost all. Most can automate manual processes, optimize shipments, provide visibility into freight spend, and generate financial and operational metric reports.

Automation

A TMS will allow you to eliminate manual processes that could be performed automatically. For example, by integrating the TMS with your company’s existing ERP, order information can be automatically transferred from one system to the other, preventing the need for dual shipment entry. Once the shipment information is in the TMS, you will have the ability to perform all procurement processes automatically – including rate shopping for contracted carrier rates, requesting spot quotes from multiple carriers, selecting a preferred carrier based on rate or service, and waterfall tendering of the freight until it’s accepted.

Optimization

With a TMS, you can analyze a batch of shipments based on a variety of sophisticated parameters in order to determine the most cost-effective route plan. The TMS can make recommendations based on least-cost mode analyses (including parcel, LTL, truckload and intermodal), shipment consolidation opportunities (including multi-pick or multi-stop loads), continuous move opportunities, and pool distribution opportunities while accounting for factors like due dates, mileage, vehicle weight, stops in transit, and out-of-route parameters.

Visibility

A TMS can provide user visibility, supply chain visibility, and freight spend visibility. User visibility is controlled by setting constraints upon each user’s login in order to control the amount of information they have access to. Supply chain visibility comes from providing each member of the supply chain (including suppliers, warehouses, carriers, vendors, etc.) with the ability to update their portion of the shipment in order to provide accurate real-time visibility into shipment status. Freight spend visibility comes from generating reports that will help you analyze your freight costs.

Reporting

With a best-in-class TMS, you can generate advanced reports that actually drill down into the very core of the specic logistics metrics that affect your business’s bottom line. Examples of reports include freight spend totals, shipment statuses, shipment volume reports, accountability reports, analyzed freight spend reports, lane analysis reports, and carrier performance reports. These reports are dynamic and can easily be filtered, summarized and graphed.

If you believe a TMS could be beneficial for your organization, we offer free consultations so you can learn more about this software and how it can help you! Don’t forget to check out our whitepapers and download some other great resources about transportation management systems.