Studies show that the global TMS market is estimated to grow by 17.5% in 2030. This is mainly due to the surge in e-commerce operations worldwide and the accompanying need for faster deliveries. As a result, there is an increase in demand for transportation management systems (TMS).
But what features does a transportation management system offer that make it so valuable to warehouse managers, 3PLs, and eCommerce professionals? Let’s find out in this post.
What is a Transportation Management System (TMS)?
A transportation management system is a software solution that helps companies manage the movement of physical goods, either by land, sea, air, or a combination of these methods. As part of the larger supply chain, it is essential for the timely delivery of goods through route optimization, order tracking across local and international routes, and automation of time-consuming tasks, such as trade compliance documentation.
How Does It Work?
A TMS typically integrates with related systems, such as a warehouse management system (WMS), an Enterprise Resource Planning (ERP) software, and an order management system. As the ERP manages orders, the WMS coordinates order fulfillment, and the TMS handles logistics and all aspects related to shipment. The key to a smooth order fulfillment operation lies in how closely these systems are connected.
TMS typically manages three primary forms of transportation: single mode, multimodal, and intermodal.
- A single mode typically involves a specific type of carrier or mode of transportation, such as trucks. The single mode is mostly used by smaller companies that do not have a far-reaching customer base.
- Multimodal involves several means of transportation provided by a single carrier.
- Intermodal transportation utilizes multiple carriers and various modes of transportation. This method requires more oversight and is suited for larger companies.
A TMS should have a comprehensive database that contains all the necessary carrier details from pricing to travel, time, weight limits, vehicle space, and everything a business needs to execute and optimize deliveries. The amount of data a TMS carries depends on a company’s specific needs and its complexity. For example, a clothing distributor will prioritise space, while a grocery distributor will prioritise temperature control to ensure the optimum quality of orders.
Features of a Transportation Management System
Here are some features of a typical TMS.
Real-time Fleet Tracking
By knowing where and how your fleet is being utilized, you can effectively optimize your assets and maintain accurate and efficient shipment times. Relying on manual scheduling and updates can cause delays in communication and timeframes, and also hinder notifications for events on the road. Your TMS should provide track and trace capabilities, allowing you to see in real-time where your orders are as they move through the network. Not only does this feature provide automatic visibility, but it also simplifies communication and reporting processes for your entire organization.
Route Management
The organization, speed, and accuracy of orders arriving at your customers are key to a profitable business. Some TMS have perfected the planning of core transportation functions, but they struggle to deliver adequate routing. The best systems will provide route management to help you optimize your distribution operations outside the walls of your warehouse.
Route management relies on algorithms to instantly calculate the best routes, taking into account factors such as delivery time windows, vehicle capacity, and driver work hours. Dynamic rerouting will take into account multiple stops along the route and other variables that may occur during the journey.
Rate Shopping
Warehouses that don’t manage their delivery fleet rely on third-party couriers. While this removes the expense and hassle, it can leave warehouses at the mercy of outside providers. That’s why one of the most important warehouse management tools is Rate Shopping.
Rate engines enable you to automatically calculate the best rates from a range of providers, allowing you to select the most cost-effective and efficient option. Your system will integrate with multiple carriers, allowing you to select the best shipping prices and reduce warehouse costs, which you can then pass on to your customers.
This tool is particularly beneficial for 3PL and ecommerce warehouses, which process a wide range of orders with variable weights, dimensions, or destinations.
Integrations
It’s impossible to improve efficiencies in the supply chain if you’re working with information silos. Without automated communication between systems and full visibility across your operations, your fleet and shipment schedules are likely to falter. The best TMS will have comprehensive integration capabilities, so you can easily integrate with shipping couriers, shopping carts, marketplaces, and management systems. With system integrations, you can give your team and customers end-to-end visibility across operations, from order processing to delivery.
The best way to streamline both your operations and operating systems is to find an integrated TMS and WMS. Your comprehensive warehouse management tool not only provides visibility and control, but it also makes data tracking and analytics much more straightforward across your entire operations.
Reporting
A fully integrated warehouse and transportation system provides a single point of visibility and control. Through your system dashboard, you will be able to access powerful reporting tools that help you make better business decisions, from your warehouse floor to fleet utilization.
Using real-time analytics and reporting tools will enable managers to track performance based on factors such as product, route, or carrier, and utilize this information to make informed improvements. Reporting data can help you identify if a carrier is underperforming, which customers generate the largest volume, or if drivers are experiencing regular issues on specific routes.
Why You Need a Transportation Management System
Here are some reasons why you should consider adding a TMS to your software stack for improved efficiency and productivity.
Cost savings
A TMS reduces administrative costs and makes it easy to compare carrier rates and find the best option. By automating the rating comparison process, the software identifies the most cost-effective options. It also automates the booking process, thereby reducing time-consuming and expensive phone calls. The software streamlines and automates processes such as auditing, payment, and order scheduling for improved efficiency and reduced errors.
Better customer satisfaction
Meeting customer expectations is the hallmark of every business competing in today’s global market. On-time delivery is now a crucial factor that every business must consider. Customers now expect same-day delivery or strict adherence to a delivery schedule. A TMS software provides the visibility needed to track, identify, and resolve issues resulting from delays, delivery exceptions, and customer frustrations. The software can enhance the customer experience by allowing them to track their delivery progress and streamline the logistics process easily.
Carrier management
The more carriers and transportation modes a company uses, the more complicated it becomes to manage logistics. A TMS provides visibility across all carriers, down to the carrier level, and tracks package location and efficiency.
Modal conversions
Shipments typically need several carriers and transportation methods to reach their final destinations. For example, for a shipment to get overseas, it needs to travel on a ship or an airplane and then be transferred to a truck. This can take a lot of time if not handled by a TMS. The software plans routes and carriers to ensure there are no hiccups along the way.
How to Pick a Transport Management System
The tips below will help you pick a great TMS for your business.
Consider your goals
You should start with a clear idea of what you need as a business. An ideal TMS will rely heavily on the information you provide it. Consider the size of your logistics operations and the specific problems the TMS can help you solve. This way, you can adequately rule out any provider that doesn’t provide you with the data you need. Consider your budget and how much you are willing to spend to obtain the best software at a reasonable cost.
Look for an outstanding system
There are many TMS solutions in the market with comprehensive features; however, few are equipped with optimisation engines. A tool like Da Vinci, which can be easily integrated with other necessary software, can offer you TMS along with ERP solutions that help you optimize your routes and loads, as well as select the best carrier.
Prioritise carrier contracts management
If your business deals with multiple carriers, your TMS should be able to consolidate your carriers in one place. It should be able to simplify the terms in your contracts, allowing you to keep track of important details. With a TMS, you should be able to track the transit times, zones, lanes, and agreement expiration dates across your contracts.
Prioritise integration features
You should never compromise on integration with a TMS. Your preferred TMS solution should enable integration with leading WMS systems, such as Da Vinci, and ERP systems. Always use a TMS system that is easily integrable, as it makes operations smoother and more visible.
FAQs
What is a transport management system?
A transport management system is software that manages the movement of products across different modes of transport. It achieves this through route optimization, carrier and load management.
What are the benefits of TMS?
A TMS helps streamline logistics operations, thereby making delivery faster and meeting customer expectations. It reduces shipping costs and helps optimize modal conversions during the shipping process.
How long does it take to implement a TMS?
A fully integrated TMS typically takes 4-5 months to be fully implemented.
Maximise Logistics Efficiency with the Right TMS and Da Vinci WMS Integration
A transport management system is an essential part of the logistics process. It streamlines operations, reduces costs, and delivers a superior customer experience. A TMS supports efficiency at all levels, from optimizing routes and automating administrative tasks to providing real-time visibility into shipments.
Whether your business relies on single-mode, multimodal, or intermodal transportation, the right TMS helps you manage your carriers, track deliveries, and respond to disruptions. To get the most out of your TMS, integrate it with an ERP and a cloud-based WMS, such as Da Vinci, which provides a broader view of your operations, the best routes, and facilitates administrative tasks.
With Da Vinci, your TMS can reach a new level of efficiency, making all processes seamless. Book a demo now and begin the process of seamless operations.
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