Transportation Management

What is a Transportation Management System?

What is a Transportation Management System?

TMS Helps You:

  • Improve shipping efficiency
  • Cut operational costs
  • Automate tasks through connected workflows
  • Enhance customer service practices
  • Gain valuable data visibility
  • Select the best carrier

What is a transportation management system, and how can TMS software boost operational efficiency?

At its most basic, transportation management falls under supply chain management and has to do with the physical movement of goods. Some of the core tasks a transportation management system takes on are finding rates for orders, booking them for delivery and tracking the products as they go. Let’s take a look at some other ways a transportation management system can make life easier.

Improve shipping efficiency

Transportation management systems (TMS) are all about improving the efficiency of moving product. These solutions give shippers the tools to make routing decisions, select carriers and the time it takes to move goods work together. By automating manual processes and speeding up quoting and booking, time can be spent elsewhere on more valuable tasks. By integrating ERP features, a TMS can tackle tedious, resource-eating tasks like booking accuracy and accounting. Data flows from the ERP system directly into the transportation management system and populates the necessary fields. This cuts down on user errors and further speeds up daily processes.

TMS software can also optimize the routes that drivers take when delivering products to clients. Optimized driving paths cut down on time spent on the road and reduce fuel costs at the same time. There are many other features that can help boost efficiency, so when looking for a system, keep these inclusions in mind:

  • Route optimization
  • Integrations with ERP modules
  • Automatic scheduling
  • Multi-modal shipping options
  • Cross-docking

Cut operational costs

At the end of the day, a management system is all about saving money and cutting costs. Lowering resource usage in one area allows valuable funds to be funneled into areas of the supply chain that need the help. By integrating a TMS, users can reduce costs associated with transportation and focus on areas that need improvement. Shipments can automatically be consolidated into their most optimized forms to save space and cut down on truck usage. This consolidation helps arrange shipments by weight and which palettes the shipment is grouped with. This way, every truck is optimally packed, space isn’t wasted and multiple deliveries can be made via one truck.

Simplifying billing processes can also reduce resource waste. Manually entering accounting data is prone to costly human errors, a transportation management system streamlines these tasks by speeding them up and improving accuracy. Depending on the operation, a TMS can handle cost-plus and door-to-door billing models. Instead of taking up valuable employee time calculating carrier costs, allow a transportation management system to handle the heavy lifting. These systems can cut costs in many ways, make sure these features are included in your final choice:

  • Invoice management
  • Carrier cost calculation
  • Shipment consolidation
  • Claim management
  • Cost-plus and door-to-door models

Enhance customer service practices

Every piece of the supply chain affects how happy a customer is when they receive their product. However, transportation management may be the most visible when it comes to making customers happy. After all, when a package shows up the client isn’t dealing with the manufacturing side of the chain. A transportation management system contains multiple performance and customer satisfaction tracking tools. Leveraging a TMS gives users a number of tools to stay on top of their deliveries to customers. Notifications can be set to ensure deadlines are made and any disruptions along the way can be enabled as pop up event notifications.

Fleet management features give users the ability to get the most out of their drivers and trucks. Quickly look up qualifications and experience to assign the right driver to the right shipment. Pairing the perfect driver with an optimized route and real-time shipment tracking is a guaranteed way for customers to feel taken care of. Ensure that these features are available when picking out a transportation management system:

  • Fleet management
  • Real-time tracking
  • Plan shipments in advance
  • Customer management
  • Dispute management

Gain valuable data visibility

If you’re looking to improve transportation management, good data visibility is the key. Leveraging analytics and reporting tools gives users insight into valuable metrics. Intelligence tools can also identify recurring discrepancies and give users the chance to correct them before they get out of hand. A TMS can store shipment info which can be used to compare rates against final invoices to make sure there are no irregularities.

Identifying weak points is one of the quickest ways to get a supply chain up to speed. A management system is able to track vital KPIs that can illuminate problem areas in need of change. Most systems include customizable dashboards and reports that can be tweaked to fit a variety of unique requirements. Intelligence tools are some of the most valuable features transportation management systems can contain, so be sure to identify some of these key inclusions when choosing a system:

  • Reporting tools
  • Business intelligence
  • Analytics tools
  • KPI management
  • Performance management

Selecting the best carrier

Partnering with the right carrier is vital to the health of transportation management. Not only will the right carrier ensure the safety of your goods, they are trained to handle them and get them to their destinations quickly. Manually searching through the many carriers out there is time consuming and can eat up valuable resources. A transportation management system can streamline the carrier selection process by evaluating merchandise ready for shipment and matching it to a carrier via the network. Some TMS solutions include access to supplier networks, giving users another avenue to look for a partnership.

These systems also allow users to go back and revisit their older shipments to match similar shipments to carriers that can handle the job. After narrowing down the field of prospective carriers calling up each one for a quote can take a while. A TMS can solicit quotes automatically while employees focus on more important tasks. When searching for the perfect carrier, make sure your transportation management system contains these helpful features:

  • Past orders
  • Carrier performance management
  • Auto carrier selection
  • Network inclusions


How Do I Create a TMS RFP?

Putting together a strong transportation management RFP is a daunting task. While we can’t go into the full process here, we can go over the major steps involved in putting one together:

1. Gather your TMS requirements
2. Put together your transportation management system RFP
3. Identify which vendors to send your RFP off to
4. Review proposals and send your responses
5. Follow-up and make a choice

It sounds easy on paper, but a lot of time and thought needs to go into creating a TMS RFP. There are a few special considerations to keep in mind during this process that are TMS specific, however. For example, do not focus on what the solution you are looking at does, but how it does it. Check out in-person demos to see exactly how a management system can solve your problems. Dig deep into vendor reviews to see if they will make a good partner. You want a stronger relationship than just client and supplier based communication.

Do I Choose an On-Premise or Cloud-Based System?

It’s no secret that on-premise management systems are going out of style. They cost more money to set up, take up huge chunks of time to update and are much more expensive than their cloud-based peers. Cloud-based systems are becoming more popular by the day as they confer multiple benefits to users that adopt them:

  • No need for lengthy setups
  • Lower cost of entry
  • Secure data storage
  • Mobile access via internet-enabled smart devices
  • Easy document exchange and file recall

Cloud-based systems come with too many benefits to ignore. As time goes on, more businesses will adopt this deployment strategy. If you haven’t considered adopting the cloud, now is the time.

How Do I Select a Transportation Management System?

Tracking down a TMS system that perfectly fits your operation can be an overwhelming task. The market can be a tad difficult to peruse with so many vendors out there. In order to narrow down the expansive field of vendors, try asking a few of these questions to get started. How big is your business? How much room in the budget is there for a new management system? What type of deployment strategy would work best with your business? By answering a few of these, you’ll have a better idea of which vendors best suit your unique requirements. If you’re unsure of how to start, or just need a little guidance to get going, take a look at our Transportation Management Requirements Checklist or our list of Transportation Management Features.

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Transportation management system articles are written and edited by:

Hunter Lowe

Hunter Lowe

Team Lead Editor and Market Analyst

Hunter Lowe is a Team Lead Editor and Market Analyst at SelectHub. He writes content for Construction, Inventory, Warehouse, and Supply Chain Management.

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