When transportation management software (TMS) was first introduced back in the 1980s, the goal was to facilitate the movement of freight between trading partners. Back then, TMS software had only basic features and rudimentary applications. Nevertheless, it still managed to get the job done.
Over the following decades, transportation management software maintained the same uses, such as increasing efficiencies and cutting transportation costs. Old-school TMS solutions did so mostly by allowing users to choose between different transportation modes and to manage their orders more effectively. While modern TMS software still fulfills the same functions, it has also evolved to provide more comprehensive solutions, especially in improving supply chain visibility.
With supply chains increasing worldwide, the need for robust software solutions is at an all-time high. Because of the high maintenance and implementation costs, TMS software was mostly limited to large enterprises that were able to afford it. Today, when the global logistics industry is estimated at anywhere between 8 and 12 trillion dollars, and the United States sector represents roughly $2 trillion, or about 10% of the country’s entire GDP, TMS systems are also more relevant and in-demand.
Thanks to the proliferation of cloud computing and software as a service (SaaS), transportation management system software has also increased their market. In fact, the global TMS market is expected to increase at a CAGR of 14.%, going from $2.5 billion in 2019 to $4.33 billion by 2025. Below, we will be taking a look at all that TMS software has to offer.
What Is a Transportation Management System – TMS Software?
A transportation management system is a logistics platform that helps companies plan, execute, and optimize the different aspects of moving goods. This applies to incoming and ongoing freight, facilitating carrier selection, route optimization, analytics, freight billing, and other accounting automation, while making sure that shipments are compliant and that proper documentation is available.
According to Gartner, “A TMS (transportation management system) is used to plan freight movements, do freight rating and shopping across all modes, select the appropriate route and carrier, and manage freight bills and payments.”
Transportation management solutions are usually part of a larger supply chain management (SCM) system. The TMS plays a central role as part of the supply chain, influencing every aspect of it. This includes everything going from planning and procurement to logistics and lifecycle management.
Better supply chain visibility also leads to more efficient planning and execution, and an overall increase in customer satisfaction. As part of the larger supply chain management, transportation management solutions streamline the shipping process, making it easier for the logistics service provider to manage their operation, regardless of the transportation mode—be it land, air, rail, or sea.
In many organizations, the TMS system will sit between the Warehouse Management System (WMS) and the Enterprise Resource Planning (ERP) system. The TMS solution bridges the two for an overall increase in the supply chain. Any orders flowing between the three systems will create more continuity and speed up the logistics process from when an order is placed to when it’s delivered.
Why Use a Transportation Management System
Trying to keep up with today’s customer demands in terms of same-day shipping and real-time tracking puts an unprecedented level of pressure on businesses. The supply chain is where this issue becomes most apparent.
The physical movement of goods is a critical link within supply chains, and more businesses are relying on TMS systems to help them manage this function. The increased visibility leads to better efficiency and customer satisfaction, which in turn, leads to more sales and business growth.
Companies can opt for either a standalone TMS system that can integrate with the organization’s existing WMS, ERP, and/or SCM software. Some TMS applications can also provide trade documentation capabilities and complement a global trade management system. On the other hand, other systems will provide fewer overall features based on the users’ needs or can be presented as modules within a larger SCM system.
Depending on the company’s unique requirements, a TMS solution can provide multiple benefits. Among these, we can include the following:
- Lowering operation costs for both the company and its customers
- Optimizing and streamlining supply chain processes across both carriers and modes of transportation
- Automating business operations to increase the speed and accuracy of accounting, billing, and documentation
- Increasing the security and visibility of cargo, especially during transit.
- Decreasing delivery times, delays, and human errors
- Real-time shipment tracking from a single, centralized location
- Have access to better actionable insights, useful for improved decision-making
- Improved customer service and customer satisfaction by providing real-time updates and fewer delays and unforeseen circumstances
- The possibility to scale the business by meeting and even exceeding customer demand through fast and on-time shipments
Who Uses Transportation Management Software?
Businesses that typically move, ship, or receive goods regularly will most likely benefit from a TMS solution. That said, the most common TMS users include distributors, manufacturers, eCommerce companies, retailers, and logistics service providers. Logistic service providers include the following:
- Domestic Couriers – This includes companies that deal with local goods and deliveries. These local transport companies typically look for a smaller and simpler TMS system that doesn’t have international or warehousing functionalities.
- Specialized Logistics Service Providers – This includes businesses that specialize in a specific part of the supply chain. A trucking company, for example, might be looking for more advanced transportation functionalities. Warehouse managers, on the other hand, might be more interested in inventory and warehouse management functions.
- Freight Forwarders – These are logistics providers that handle the warehousing and delivery of freight. As such, freight forwarders need TMS features that cater to those needs.
- Third-Party Logistics Providers (3PLs) – With most 3PLs serving a multitude of customers from numerous and disparate locations, they will typically need TMS functions similar to a comprehensive CRM. Other desired features by 3PLs may include accounting and inventory control.
- Private Fleet Managers – Some enterprises and other large organizations, where supply chain management makes up a major component of the operation, may have their own private fleets. They will usually be interested in TMS systems that can integrate easily with their organization’s other legacy and logistics software.
- Freight Brokers – Freight broker software streamlines freight brokerage operations such as entering loads, sourcing and qualifying carriers, dispatching drivers, paying carriers, and invoicing customers. These solutions can be customized to handle the real-time requirements of FTL (full truckload) and LTL (less than truckload) brokers, handling trucking dispatch, tracking fuel tax, billing, monitoring drivers’ logs, route optimization, and more.
What Are the Key Functions and Features of TMS Software?
There’s a wide range of choices for selecting a TMS platform that can optimize the daily logistics processes of an organization. At its core, a TMS solution has rating, tracking, and booking functionalities. However, more advanced systems can also offer dashboards, freight audits, reporting, and similar modular features that can be added based on the specific needs of an organization. Below is a short rundown of some of the key functions and features of TMS software:
- Carrier Management – Carrier management is a function that helps planners choose between different transportation carrier providers. The carrier selection process is done based on the services they provide, their geographical coverage, their price, and the overall quality of the services offered.
- Automated Order Processing – Many TMS software allows users to share their purchase order details directly with suppliers, and streamline sourcing and procurement by automatically pulling data from past orders.
- Fleet Management – This function helps businesses manage their trucks. TMS systems with fleet management functionalities are used for maintenance, fuel management, and overall fleet optimization.
- Load Management – Companies can organize, track, and update their load tracking through the entire load cycle. The TMS will typically highlight data such as loads by a customer, drop dates, carriers, drivers, or load status and use it to sort loads based on similar criteria.
- Shipment Planning – This functionality allows logistics managers to schedule shipments based on inventory availability, transportation mode, and estimated delivery dates. This module also tends to include yard management features that assign trucks to docks for loading and unloading.
- Driver Dispatch – Using direct and real-time wireless communication to dispatch truck drivers allows dispatchers to create, plan, and track shipments through the TMS.
- Route Optimization – This module allows dispatchers to optimize the distribution routes by combining locations based on distance and transportation type. By analyzing speed limits, maps, traffic data, weather forecasts, and fuel costs in real-time, businesses can find the best routes. Shippers are also able to determine the best carriers for their deliveries, and help them consolidate their shipments into more efficient loads.
- Cargo Tracking – This feature makes it possible for companies to locate products based on SKU identification while the cargo is en route. It can also help increase customer satisfaction and trust by providing real-time notification of their transports.
- GPS Tracking – By using geographic information system (GIS) technology, logistics providers can monitor vehicles and drivers while on the road. This feature will require tracking devices on trucks, while drivers use mobile devices to share their location and itinerary.
- Quotations – Some TMS software also generates and sends out quotes for the different modes of transportation. It can also track the quote status and convert it into an order whenever necessary. Some systems also automate the creation of impromptu quotes and shipment rate generation.
- Financial Management – Transportation management system software helps streamline and automate a business’s logistics-related accounting needs.These can handle claims, set shipping transactions, or handle last-minute changes. By using this feature, many issues related to human error can be avoided.
- Electronic Document and Data Management – Modern TMS solutions can receive and archive documents in a secure digital environment. Users can also customize templates and generate documents with meta tags for easy search, retrieval, and indexing. These TMS platforms also tend to add extra security and access features tailored for each team member when accessing and sharing files both internally and externally. The exchange of documents between trading partners is also facilitated by using a standard electronic format (EDI).
Advanced TMS Functions
Aside from the features mentioned above, some specialized TMS solutions may also provide some advanced functionalities like the ones below:
- Mobile Access – With the proliferation of mobile devices, the possibility of accessing the TMS through these devices will ensure that users can keep a constant eye on their logistics process and make in-the-moment, informed decisions from anywhere with an internet connection.
- Advanced Logistics Intelligence – Analytics tools help companies access transportation data from all across the supply chain. This includes information such as carrier margins, profits, and transaction data. By tracking these KPIs, users can get better supply chain visibility and make more informed decisions about what is and isn’t working.
- Multi-Modal Shipments – Using a TMS platform to plan, optimize, and execute multimodal shipments, logistics providers can solve more complex rate shipment structures that involve multiple transportation modes with multiple stops.
- Dispute Management – Some TMS solutions also offer dispute management. This functionality notifies users about any claims and damages in real-time, giving them the possibility to address them before they grow and cause even more damage.
What Is The Future of Transportation Management Software?
With customer expectations constantly changing, the need for a transport management solution that can keep up has never been higher. As new technologies appear on the market, TMS systems need to incorporate state-of-the-art features that provide faster response times and more detailed information. Below are some of the trends that will greatly influence the TMS market over the coming years.
- Cloud Computing – There is a significant increase in the use and proliferation of SaaS, cloud-based TMS for a good reason. Traditionally, TMS software was limited to only large companies able to afford them. However, cloud computing has made these systems a more affordable option, both in implementation and maintenance. Users will no longer have to invest in expensive infrastructure, servers, and dedicated staff, and will be able to access it from everywhere with an internet connection.
- Full Integration with Other Logistics Software and Technologies – Internet of Things devices and sensors make the real-time tracking of cargo and vehicles much easier. Trucking companies can lower their fuel and maintenance costs, increase driver safety, reduce delays, and improve customer satisfaction. By integrating with various logistics software and technologies, TMS systems become more effective than ever before.
- Machine Learning – Through machine learning, modern TMS software can analyze trends and historical data to better predict transit times, plan capacity, and identify at-risk shipments. Artificial intelligence will help logistics managers make better decisions based on this information.
- Meta Intelligence – To add TMS visibility and big data into the enterprise decision-making process, developers are adding meta intelligence into the mix. This way, TMS solutions will become increasingly important in other departments, such as marketing, sales, distribution, and customer service. By making use of the information coming from the transportation network, logistics providers will work with better data. They will know the exact costs of every load in every lane and will be able to anticipate and adjust to any potential capacity constraints.
- Blockchain Technology – This technology is used to create complex integrations between freight brokers, forwarders, shippers, carriers, and other stakeholders within the supply chain. It can increase transparency and visibility, as well as greatly secure the transfer of information between partners.
What Questions to Ask When Evaluating TMS Products?
When choosing a TMS solution, you will need to make sure that you will select the one that will best suit your company’s needs. To do that, it’s best to ask the TMS provider a series of questions that will detail all of the information you need. Below are some of the questions you will need to ask:
Will this technology become obsolete? Is it updated regularly? – Regular updates will make sure that you will always have access to the latest functions. Cloud-based TMS will be updated during off-hours, meaning that any downtime will be kept at a minimum.
What’s their level of customer support? – Customer support is critical if any time-sensitive issues need to be addressed. Customer support can also be beneficial when learning to use the new system for the first time.
Does the software integrate with your supply chain? – When choosing a TMS solution, it must integrate with the other logistics software that your company uses. It’s no use getting a new transportation management software if it doesn’t fit with the rest of your digital infrastructure.
How intuitive is the TMS? – Last but not least, the system also needs to be user-friendly and intuitive. The less training and onboarding you need, the better. By choosing an easy-to-use system, you will be saving a lot of time, money, and energy in the long run.
Today’s modern TMS software operates much more like a central hub, covering all or almost all organization supply chain activities. By optimizing both their logistics and supply chain operations, businesses will gain a significant competitive advantage.
TAI Software is a solution that addresses every aspect of the shipment lifecycle, making it a great TMS software platform for freight brokers. 3PLs, freight forwarders, and large shippers can also benefit from it. With a dedicated team of logistics software experts with over 20 years of freight software experience, our team is here to ensure your success. Request a free demo today!