What Is a Transportation Management System & 6 Ways a TMS Optimizes Shippers?
Supply chain management is a complex, ever-changing process. The actions of yesterday do not necessarily reflect the best practices of tomorrow. Amazon and Walmart continue to encroach on small businesses, and the ability to gain insight into freight spend has never been more critical. With all the hype about savings and improvements through a transportation management system, let’s go back a step to really answer the overlooked question, “what is a transportation management system?”
What Is a Transportation Management System?
A transportation management system is a type of supply chain management program that gives shippers the ability to see logistics costs and planning processes. However, systems vary in scalability and function. The core function remains logistics management, including managing freight and carriers, but modern systems are capable of much more than just management. They deploy technology to enable traceability.
A modern platform leverages cloud-based capability to offer access from anywhere with internet connectivity. They serve as an extension/ module within a company’s enterprise resource planning (ERP) software to keep freight costs under control.
Although a TMS is primarily designed with shipper goals in mind, it has additional implications for carriers and logistics service providers. Even 3PLs, have worked to develop a TMS that benefits everyone in the supply chain.
How Does a Transportation Management System Benefit Shippers?
The ability to track more information surrounding transportation management offers additional benefits to shippers through new capabilities, powered by data. Key benefits include:
- Improved auditing processes. Auditing capabilities within a TMS run automatically as the system looks for instances of over- and under-billing processes charge backs for over-billing charges and ensures shippers get what they expect.
- Real-time comparisons between carriers. Managing carriers sounds easy. Unfortunately, the number of carriers in the U.S. is much higher than just the Big 3. A breakdown of all primary, regional and local carriers, as well as their modes, reveal the number of carriers easily surpasses 100, reports Transport Topics. Meanwhile, each shipment includes a host of details and possibilities, routing between multiple carriers, and more. The complexity requires a complete view of all options and which carrier can provide the lowest-cost, timeliest service.
- Improved use of multi- or omni-modal shipping. Shippers have grown accustomed to the low-cost nature and pass-along costs of parcel shipping. That is until Amazon decided to make free, fast shipping the standard. The days of managing parcels with a single carrier are over, and the only to move freight more rapidly lies in reviewing every option, including freight consolidation and use of multi- and omni-modal shipping, to decrease shipping time and costs.
- Cloud-based systems require little, if any, need for complex integration. Faster integration with cloud-based technology remains a significant benefit for shippers that wish to really understand their freight spend. Instead of devoting many resources to integration, a cloud-based, modern platform can leverage APIs and EDIs to deploy a system within minutes. Most importantly, this means the platform can integrate with existing systems, further reducing the costs associated with system upgrades.
- Advanced platforms even enable faster freight claim management. Face it; things go wrong. Even the best-laid plans could fail, and the shipper ends up eating the cost. When a problem arises, the transportation management system may be used to manage freight claims, i.e., process cargo insurance, to avoid the pitfalls of higher freight spend as well.
- It improves eligibility for “Shipper of Choice” status. The industry is coming off the heels of a severe capacity crunch in 2018, and more shippers saw freight refusals by carriers due to the unyielding demand for more capacity and growing shipping volume. Implementing a TMS streamlines freight scheduling and management, reducing delays for carriers, and these factors make your freight more attractive to carriers. This is “Shipper of Choice” status, ensuring you have the capacity needed and freight is picked up with priority over other shippers using outdated processes.
Here is a link to a reputable software review site which lists the top 10 TMS options.
Original article from Cerasis