In 2023, the global transportation management system industry was valued at USD 13.6 billion and it is estimated to grow at a CAGR of 17.4% every year till 2030.
As eCommerce and other business verticals that depend on transportation in their operations grow, so does their need to optimise and streamline the transportation management process. This may involve automation and process optimisation facilitated by transportation management systems.
So, what is it and why should you consider implementing it in your business? Let us look into this in detail.
What is a Transportation Management System (TMS)?
The Transportation management system (TMS) is a software or tool that can help businesses plan, manage and execute their transportation strategies by leveraging technology. By transportation, businesses will manage the incoming and outgoing physical movements of the goods.
Your transportation management system software can give you a comprehensive dashboard to manage every aspect of your process and offer enhanced visibility into your logistics management. However, it is a small part of your overall supply chain management system.
You can also streamline your transportation operations and shipping process to ensure timely movement of goods and prepare related documentation accurately. A robust transportation management system in supply chain can also help you automate some of the repetitive tasks of the process so you can focus on the more important and strategic parts.
5 Key Transportation Management System Functions
Now that you know the transportation management system definition, here are a few key logistical functions that it can help you manage:
1. Planning
Some of the most powerful transportation management system features are related to planning and optimisation. A robust TMS can give users access to important and insightful data such as delivery routes, turnaround times and carrier rates that can help you make informed decisions.
Moreover, some TMSes even provide many advanced options that can help you manage small and large shipments seamlessly. With the help of the planning function, you can directly control optimised freight transport, saving on fuel, and low-load truck rides. They also have functionality to facilitate better reporting and analysis among carriers.
2. Execution
For any transportation management system, the execution function is crucial but can vary from product to product depending on how the user leverages it. But broadly speaking, the execution function of a TMS is aimed at helping brands and transportation managers handle freight movements.
Some of the common features that you can expect from the execution function of your TMS include:
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Creation and Designing of Documentation
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Handling Transportation and Transporters
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Facilitating Communication with Carriers
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Tracking and Monitoring Goods
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Managing Invoices and Settlements
Some of the best transportation management system providers out there allow users to track goods in real-time and seamless integration with other apps to power up transportation processes. You can also expect communication tools that allow you to collaborate and exchange information with other stakeholders of the supply chain.
3. Optimisation
Transportation management remains an ongoing process that should be constantly improved upon, so it makes sense that optimisation is a key part of a typical TMS. A transportation management system for logistics will give you a comprehensive dashboard that gives you deeper insights into your supply chain.
Based on these insights, you can then figure out the tweaks necessary to improve your strategy and processes. You will, of course, have the ability to track and measure your performance currently and driven through these changes over time with the help of your dashboard and analytics.
The best part is you will be able to identify potential issues and delays in advance so you can make the necessary changes and prevent the issues altogether.
4. Freight Management
As a part of your transportation management or supply chain, the transportation management system technology can give you access to a lot of data and information on freight rates. In fact, calculation of the current tariffs and rates can even be performed in real-time through a TMS and can even be recorded for later use.
The freight management function of your TMS can help you address some of the key areas of the process such as delivery terms, establishing communication and trust with shipping companies, managing the workflow and more. When used to its fullest potential, transportation management system functions can complement your freight tenders and facilitate everything required in the process.
5. Administration
The bigger your company and shipping operations, the higher your need for comprehensive reporting and insights into the process. With a TMS integrated into your transportation process, you can process the necessary documentation for all kinds of compliance and audits.
You can minimise invoicing, picking and packing errors, and even automate most parts of the process as long as the TMS you opt for provides the necessary features.
7 Benefits of Transportation Management System
Here are some of the transportation management system benefits that you should consider and know about:
1. Improved Supply Chain and Business Visibility
When you’re managing the supply chain processes in your business, a key challenge is ensuring transparency and visibility in the process. With robust transportation management system capabilities, you can get end-to-end visibility into your supply chain and business.
The kind of visibility you can get through TMS can help you identify potential issues and risks in advance and eliminate them.
2. Better Customer Service
By streamlining the crucial transportation processes and automation of certain crucial parts of the process, you can expect the quality of your customer service to be elevated.
Since you will have access to real-time updates on your shipments, you can provide necessary assurances to customers and even give them more visibility into the status of their shipments. You will also be able to prevent any shipping delays in advance, thus allowing you to maintain customer service quality.
3. Reduced Transportation Costs
Transportation costs can constitute the biggest chunk of your operational budget and put quite a dent in your expenses. The transportation management system automation can help you optimise your resources and utilise your assets properly.
Businesses can today use AI-powered intelligent routing systems offered by TMSes to create optimised delivery routes that let them cater to several different types of transportation needs. A good TMS solution can help you with a tailored transportation process letting you achieve cost-efficiency in different ways.
4. Better Route Planning and Optimisation
Modern transportation management systems that are powered using AI and ML can address a list of criteria and let you manage multiple characteristics associated with your shipments. You can consider factors such as delivery location, delivery time, vehicle types and others to create the most optimal route for each shipment.
You can also get more automated updates if your driver deviates from the standard path suggested by the system and has better control of the process. As a result, you can reduce fuel consumption, transit times and even empty miles.
5. Real-Time Tracking
If you are using your transportation management system for parcel shipping, you want to know the progress of your shipment through the process. A robust TMS will have built-in capabilities to help you track shipments and transportation equipment associated with them in real time.
With regular updates and the latest info on the status of any shipment at all times, businesses can strengthen their decisions and eliminate potential risks. Real-time tracking capabilities can also improve your business’ accountability and customer service.
6. Digitised Documentation and Invoicing
With the help of a transportation management system for shippers and companies, one of the primary things you can automate is documentation. Almost every TMS offers features that let you digitise important documents and customs paperwork, and even maintain records of it.
Ultimately, you can reduce manual filing and analysis associated with your shipping process. However, a TMS can save lots of time, reduce errors in the process and even help you with logistics automation. Automation here refers to invoices, billing processes and even information related to loading and unloading.
You can also get more real-time visibility into your financial and supply chain processes, and let you monitor transport costs and allocate budgets effectively.
7. Advanced Analytics and Reporting
The sheer volume of data and analytics collected by the transportation management system industry is its biggest merit. Equipped with transportation data that can help you identify hidden trends and specific patterns in your shipping process, you can streamline the process better than ever before.
Not to forget, plenty of built-in reporting tools can help TMSes create consumable reports that can facilitate strategic decision-making. Advanced analytics and reports generated from your TMS can also help your senior-level management and executives make cost-effective business decisions.
Concluding Remarks
A good transportation management system is more than just one that lets you manage certain aspects of transporting goods in and out of your business. It also offers features that will help you automate parts of the process and manage it effectively. There are a lot of transportation management system software out there that you can consider implementing in your business.
To get help streamlining other parts of your transportation management and shipping processes, consider getting a quote from the PACK & SEND website.