A transportation management system (TMS) is part of supply chain management (SCM) centered on transportation logistics. A TMS enables interactions between an order management system (OMS) and distribution center (DC) or a warehouse.
TMS handles four important operations of transport management:
- Planning: Defines the best transportation strategies based on specified parameters, which would be of higher or lower importance as per the user policy. This includes transportation expenditure, minimum stops possible to guarantee quality, shorter lead-time, flows regrouping coefficient and so on.
- Transportation execution: Enables the transportation plan execution. This includes carrier-rate approval, carrier sending, electronic data interchange (EDI), etc.
- Transportation follow-up: Permits the following up of any administrative or physical operation regarding transportation. This includes event-by-event transportation traceability, receipt editing, customs clearance, invoicing as well as reserving documents, transport alerts delivery, etc.
- Measurement: Includes or should include a strategic key performance indicator (KPI) report functionality for transportation.
Standard TMS software modules consist of:
- Load optimization
- Route planning and optimization
- Freight audit, payment, etc.
- Yard administration
- Advanced shipping
- Order visibility
- Carrier administration
- TMSs are intended to reach the goals mentioned below:
Minimize expenditures by means of more effective route planning, load optimization, carrier combination as well as mode selection. Enhanced accountability with exposure to the transportation chain.
Better flexibility to make modifications in delivery plans.
Benefits of TMS
A fully deployed transportation management system can benefit organizations in the following ways:
- Transportation order planning and execution. TMS integrates well with enterprise order management, warehouse management and purchasing systems, customer relationship management (CRM), supplier relationship management (SRM), and other systems for managing transport demand. It enables users to plan and manage both international and domestic shipments and determines the cheapest and most efficient carrier and mode using better route planning, load optimization, carrier mix and mode selection.
- Supply chain visibility and better control of inventory management.TMS enables users to track and monitor the lifecycle of orders and shipments in real time and get status updates on each. This offers users an accurate forecast for the inventory and improves the visibility and accountability of the supply chain network.
- Reduce invoice errors. By automating the freight payment and audit processes, users can reduce errors that may arise from manual procedures.
- Transport intelligence.Most TMS software offers users extensive insights and reporting capabilities that provide them with detailed visibility into freight data and metrics to help pinpoint any discrepancies. With this data, users can make the necessary changes to improve service delivery and reduce cost, and they can also create reports.
Transportation management systems can exist either on premises or in the cloud, often as SaaS.
Though organizations generally prefer TMS in the cloud due to the increasing use of connected devices, a traditional on-premises deployment is sometimes still preferred by large manufacturing and distribution firms that may have higher security requirements and want day-to-day control of TMS servers.
TMS software providers
Although TMS is commonly offered as a part of ERP or SCM platforms from large vendors, there are also sellers that exclusively provide specialized, stand-alone TMS products.
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