April 3, 2024
As a shipper, keeping an eye on your supply chain is essential—no matter the size of your company. Gathering data and closely monitoring your network serves can elevate efficiency of your business logistics, and improves how you organise the transportation process of your products at every stage of their journey.
Recent tech innovations have seen a flourishing of software solutions made specifically to support this process in the form of the Transport Management System, or TMS. Let’s explore how this functions, why it could help your business, and which system will best suit your supply chain needs.
Recent tech innovations have seen a flourishing of software solutions made specifically to support this process in the form of the Transport Management System, or TMS. Let’s explore how this functions, why it could help your business, and which system will best suit your supply chain needs.
What is a Transportation Management System?
A Transportation Management System (TMS) is a logistics platform that uses technology to help shippers plan, execute, and optimise the physical movement of goods, ensure the shipment is compliant and has proper documentation. An estimated 90% of Fortune 500 shippers adopt TMS, and these come either as in-house systems, forming part of larger supply chain management (SCM) system, or they are licensed from an external service provider.
A TMS uses complex algorithms to plan, execute and optimise the physical flow of goods. It also helps ensure compliance documentation, payments, and can analyse a business’s supply chain performance.
It does this to help shippers move goods more efficiently, bring down costs, boost profitability and ultimately deliver the best possible customer delivery experience possible.
A TMS uses complex algorithms to plan, execute and optimise the physical flow of goods. It also helps ensure compliance documentation, payments, and can analyse a business’s supply chain performance.
It does this to help shippers move goods more efficiently, bring down costs, boost profitability and ultimately deliver the best possible customer delivery experience possible.
What is TMS in supply chains?
There’s some confusion out there about what a transport management system is. Some ask: ‘what does TMS stand for in trucking’, but the truth is that trucking is one part of the overall logistics process, which is what a TMS helps to manage.
Transportation management systems are mostly used in the supply chains of businesses making regular shipments to their customers. For example: in manufacturing, distribution and retail, but also smaller e-commerce shippers. Some third-party (3PL) logistics services also use the insights from transport management systems to improve their performance.
Transportation management systems are mostly used in the supply chains of businesses making regular shipments to their customers. For example: in manufacturing, distribution and retail, but also smaller e-commerce shippers. Some third-party (3PL) logistics services also use the insights from transport management systems to improve their performance.
How a Transport Management System Works
Most modern TMSs are cloud-based, meaning that all their data is stored on a network of remote servers over different locations via the internet.
To get a bit technical, the order information comes in automatically from the business’s ERP software system, which is used to run operations and automate certain processes. TMS programs can also be integrated with warehouse management systems for the coordination, storage and fulfilment.
Once it has all the order information, a TMS deploys various data tools that help businesses enhance key functions and improve decision-making involved in logistics:
To get a bit technical, the order information comes in automatically from the business’s ERP software system, which is used to run operations and automate certain processes. TMS programs can also be integrated with warehouse management systems for the coordination, storage and fulfilment.
Once it has all the order information, a TMS deploys various data tools that help businesses enhance key functions and improve decision-making involved in logistics:
Core functions of a TMS
Load planning
A TMS gathers existing data and analytics on factors like price, service level, available carriers, journey length, allowing business owners to pick their preferred option. It uses algorithms to streamline and optimise each shipment by analysing the best way to load consignments, taking into account weight distribution, and arranging multi leg trips to avoid empty miles.
Load tendering
A TMS also allows businesses to automate how they request carriers to quote for their shipment. The system takes the shipper’s routing data and guidelines (e.g. freight conditions, expected rates, types of transport service needed) and digitally offers tenders to the right carrier it has found by sifting through masses of data, expediting what can be a lengthy process.
Timeslot management
Loading slots are known to experience disruptions, resulting in long waiting times, a drain on productivity and the additional costs that accrue from this. A TMS uses predictive time-slot management systems to give greater transparency over yard clearance times and ramp usage, and easing communications between forwarders and carriers, so that delays are prevented.
Route optimisation
The systems can also plan the fastest and most efficient route for each vehicle to make the transport journey. This is all done through the algorithm, which once more finds the best possible routes for multiple options and chooses the most cost-effective and efficient option that enables orders to be fulfilled in the shortest time possible.
Tracking & visibility
TMSs feature real-time tracking, allowing shippers to monitor cargo journeys and be kept in the loop with any changes or updates and receive automatic notifications for each step of the journey. The systems are flexible: they can adapt delivery routes along the way if there are any disturbances or a better journey suddenly becomes available.
TMSs share alerts to shippers based on real time live tracking of the truck which ultimately can prevent theft, help in better planning at warehouses.
TMSs share alerts to shippers based on real time live tracking of the truck which ultimately can prevent theft, help in better planning at warehouses.
Billing & payments
When shippers use a TMS they can also ensure payments are made automatically before the deadline, and more. The system can create invoices and digital bills of lading for carriers, and can carry out freight audits. All this allows shippers to streamline their invoicing and billing duties.
Reporting & analytics
Finally, the right TMS will let shippers see under the hood of their transport operations. With access to vast quantities of data held in the cloud, it can deliver valuable insights for better logistics performance. Shippers can get analysis of their daily operations, but also an overview of the wider efficiency of their transportation network.
What are the benefits of using a TMS?
The global market for these products is expected to grow at a compound annual rate of 14.5% between now and 2030, and this should not be a surprise to anyone. It’s going to be very hard to keep supply chains as efficient as possible without advanced management software.
E-commerce shippers in particular benefit from using TMS software to take control of their transportation, and the UK’s e-commerce market is the third largest in the world — with a value of $280bn USD. Here are the key ways they make shippers’ lives easier:
E-commerce shippers in particular benefit from using TMS software to take control of their transportation, and the UK’s e-commerce market is the third largest in the world — with a value of $280bn USD. Here are the key ways they make shippers’ lives easier:
Reduced costs
Since a TMS lets users carry out the majority of tasks associated with freight management, it reduces administrative costs and any potential invoicing issues that result from human error, as well as automating certain tasks which can mean fewer logistics personnel are needed, cutting down on labour costs.
The right data tools provide you with a choice of carriers to pick from based on desired price. When used in conjunction with a warehousing strategy, it drives efficient inventory management which can then reduce storage costs.
The right data tools provide you with a choice of carriers to pick from based on desired price. When used in conjunction with a warehousing strategy, it drives efficient inventory management which can then reduce storage costs.
End-to-end visibility
A TMS provides end-to-end visibility over the supply chain. It does so by integrating various data, i.e., order details, customer information, stock levels, to make decisions based on hard data and recognise historical patterns to help predict potential disruptions. From there shippers can make sure inventory is managed correctly, while getting insight into how their transport network can be optimised.
Simplified compliance
Today, most businesses trade in a globalised ecosystem. This provides them with access to many markets, but the downside is the difficulty of complying with trade rules. The automated features of TMS solutions help companies ensure full compliance when moving cargo across borders.
With access to large datasets, the TMS can better navigate the labyrinth of regulations than a human and provide the right documentation for each shipment, automatically. This minimises the risk of delays and the complaints which can follow.
With access to large datasets, the TMS can better navigate the labyrinth of regulations than a human and provide the right documentation for each shipment, automatically. This minimises the risk of delays and the complaints which can follow.
Business growth
Many shippers use multiple vendors or carriers as they try to scale their business. Using a diverse range of partners helps reduce the risk of delays, as shippers can substitute one partner for another, cut haulage costs, and make internal and external communications more efficient.
TMSs help businesses to grow by enabling end-to-end collaboration with a range of third-party logistics providers (3PLs) for faster fulfilment, invoicing and happier customers — all of which are important for a business’s bottom line.
TMSs help businesses to grow by enabling end-to-end collaboration with a range of third-party logistics providers (3PLs) for faster fulfilment, invoicing and happier customers — all of which are important for a business’s bottom line.
Optimised processes
It used to be that, if you were a business trying to optimise delivery and analyse business performance, you had no choice but to input data points into a spreadsheet and work from there. Now, even small businesses can leverage TMSs at a reasonable cost to maximise speed and efficiency across the supply chain, using rich data insights from its advanced reporting to optimise performance.
Automated functions
Automating complex logistics processes with a TMS also helps to reduce expenses and enables supply chains to reach their highest level of efficiency. This allows smooth data transfer between systems, reducing the risk of human error.
A TMS can also automatically monitor the shipment, leveraging tracking technology which follows the product at every stage, whether via rail, truck or ship.
A TMS can also automatically monitor the shipment, leveraging tracking technology which follows the product at every stage, whether via rail, truck or ship.
Customer satisfaction
When businesses can track freight, both locally and globally, via one integrated platform, this makes transportation easier and increases the speed and efficiency of deliveries. The ultimate goal of this is a happier customer. On top of this, TMS real-time tracking capabilities receive shipment data during the journey and send it straight to the customer, providing them with timely status updates.
Tips for choosing the right TMS for your business
1. Look at total cost of ownership
A new TMS will require upfront costs, but it can help to increase revenue in the long-run—making it a worthwhile investment. The most important factor to consider here is actually the total cost of ownership, or TCO.
Look at the cost of implementing the system, what vendors charge for maintenance and updates, and how long setup takes. Evaluating these will help you judge whether the potential long-term ROI is affected by the cost of setting up and managing a particular TMS.
Look at the cost of implementing the system, what vendors charge for maintenance and updates, and how long setup takes. Evaluating these will help you judge whether the potential long-term ROI is affected by the cost of setting up and managing a particular TMS.
2. Assess your transport goals
Think: how is a TMS going to help you solve your specific problems? For smaller businesses with budget constraints and only moving a handful of loads per week, they may not need a comprehensive TMS. Instead, they can transition from spreadsheets to using an off-the-shelf TMS software that can be set up easily and paid for in a range of instalment plans.
If your ambition is to scale up operations, you should opt for a more flexible, scapable TMS. Larger businesses with significant shipping volumes will generally benefit from the most fully-fledged, complex TMS.
If your ambition is to scale up operations, you should opt for a more flexible, scapable TMS. Larger businesses with significant shipping volumes will generally benefit from the most fully-fledged, complex TMS.
3. Test out different platforms
Transport management software covers a range of functions, but your business may not need to leverage all of them. They may also vary in their user-friendliness, and the ease with which they can integrate with your operating systems, WMS programs, or other tools.
This is why many TMS platforms provide customers with an evaluation period, which lets them try out the product and see if it’s the best fit. Use this time to see not just whether the tool completes the tasks to your standard, but to see how your team feels about it. Pay close attention to whether the team finds the interface to be intuitive or not—as this could make a huge difference in resource costs.
This is why many TMS platforms provide customers with an evaluation period, which lets them try out the product and see if it’s the best fit. Use this time to see not just whether the tool completes the tasks to your standard, but to see how your team feels about it. Pay close attention to whether the team finds the interface to be intuitive or not—as this could make a huge difference in resource costs.
See how Amazon Freight can integrate with your TMS
Amazon Freight connects with third-party TMS providers, and our straightforward EDI and API integration allows for more scalable order fulfilment. Customers can ensure convenient cargo delivery options for both on and off-Amazon customers, ensuring hassle-free shipping supported by the automated functions of TMS solutions.
Find out more about how we can help your business move freight. Or email us at freight-uk-interest@amazon.com.
Find out more about how we can help your business move freight. Or email us at freight-uk-interest@amazon.com.
Amazon Freight uses cookies to enhance your experience and help us understand how you use our website. Because we respect your right to privacy, you can choose what types of cookies you allow. Click Accept All to allow all cookies or open Cookie Settings to set your preferences.