The Complete Guide on Transportation Management Systems – in 2020

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As the transportation industry is becoming more complex and sophisticated, logistics service providers are beginning to realize the importance of modernizing their supply chain operations. While logistics and supply chains require an optimized transport process, a well-trained workforce, and a favorable market to operate effectively and be successful, they also need innovative transportation technology. By keeping up with the latest technology trends, they will be able to thrive and gain a competitive advantage. 

While finding the right software to achieve this task can be a significant challenge in its own right, it can also be a huge catalyst capable of driving big operational improvements and streamlining entire workflows. One such innovative technology capable of aiding organizations in making these huge strides is a transportation management system (TMS) software

Today’s TMS market is at an all-time high, making it among the most dynamic and most competitive in the entire logistics and transportation industries. In 2018, more than 38% of shippers and 67% of third-party logistics providers have invested in TMS. In 2019, the global TMS market size was at $2.45 billion and it is expected to reach $6.63 billion by the end of 2026. 

With the right TMS platform, organizations will be in a far better position to achieve certain key strategic and business goals. Among these, we can include the following: 

  • Increased control over all logistics operations
  • Improved overall performance
  • Reduced freight costs 
  • Enhanced customer service
  • Higher supply chain visibility
  • More control over regulatory issues
  • Finding and acquiring freight capacity in a fraction of the time

If you are looking to implement a TMS or are looking to upgrade your old system, this guide on transportation management systems (TMS) technology will help you make an informed decision 

What Is Transportation Management Software?

Simply put, a robust TMS solution represents a subset of the larger supply chain management software. It’s situated between a company’s warehouse management system (WMS) and its enterprise resource planning (ERP) system, handling all transportation-related operations. Transportation management systems handle both inbound and outbound freight, offering suggestions on how to best plan and manage their routes. 

To put it differently, a TMS will provide third-party logistics carriers and shippers the opportunity to move freight reliably and effectively, while also saving time and reducing costs. This tool supports all transportation modes, such as national and international ocean, air, over-the-road, as well as intermodal freight. TMS covers LTL freight, full truckload, expedited freight shipping, and more. Below are some of the benefits of TMS technology. 

What Are The Major Features and Benefits of TMS?

As the business environment becomes increasingly digitized, companies can’t expect to operate effectively by simply relying on traditional phone calls, emails, and spreadsheets. Over the past several years, TMS solutions have developed way beyond simple freight management capabilities, becoming fully-connected fleet management systems. They have also become more accessible to all organizations, regardless of their size or specific industry. 

Of all the supply chain technologies available, TMS provides freight brokers and all other logistics companies with significant benefits. Among the most important reasons logistics organizations choose to implement a TMS solution is to lower their freight spend. Such cost savings can only be achieved if the TMS software offers core features, such as analytics, process enforcement, optimization, and reporting capabilities. Compared to other similar systems, a TMS solution will enable enhanced customer service, better operations, and help with decision-making. Some of the most noteworthy TMS benefits are: 

  • Freight Optimization – It can be a challenge to keep all shipments and transportation modes organized. Important details can be forgotten, leading to potential delays, miscommunication, and other costly situations. By using robust TMS software, however, companies can keep all of their data organized, avoiding such situations while also consolidating their orders and improving supply chain planning, route optimization, and scheduling.  
  • Yard Management and Inventory Optimization – The TMS provides optimization opportunities for your dock configuration, minimizing congestion, offering increased visibility on all shipping vessels, and automatically updating all scorecards and route information. The system will also allow more time for inventory planning by increasing real-time information visibility of both inbound and outbound freight. This will prevent over-stockpiling or the need to maintain costly safety stock. 
  • Shipment Tracking – Traditionally, TMS tools have been used to manage outbound freight. However, the platform also makes a great tool for managing inbound freight. When it’s incorporated into the overall logistics strategy, the TMS will provide a comprehensive, birds-eye view of the entire supply chain. In doing so, it offers freight cost-saving opportunities, optimizes dock management, and increases customer service by providing them with full transport transparency. 
  • Carrier Rate Management – TMS solutions are also able to store contract carrier pricing data, allowing logistics companies to optimize their shipments based on cost. It also provides better visibility into carrier payment processing, allowing for customized payment options, as well as the ability to approve or reject shipper accessorials without having to wait for an invoice. 
  • Freight Bidding and Benchmarking – Carriers and freight forwarders can use their TMS for shipment bidding, saving time, and automating the freight distribution process. It will take into account multiple variables, such as award ranks, total cost, and lane percent allocation while simplifying the communications process with all carrier partners. The TMS solution can also compare different freight companies against each other in terms of on-time deliveries, contract terms, overall service, and other similar attributes. This benchmarking capability will allow TMS users to negotiate better carrier rates and select better quality carriers. 
  • Reporting and Analytics – Gathering and analyzing mission-critical data is important for making informed decisions. By automating this process, third-party logistics providers and other TMS users will get more reliable data than by doing it manually. 
  • Enhanced Order-to-Cash Cycle – A transportation management software will also have a direct impact on the order-to-cash cycle, allowing for immediate identification of which steps in the logistics process need to be improved or corrected. And by having a physical trail of all processes, TMS users can go back to locate the origin of any error that may have occurred along the way. This will tie back into how issues with freight bills and accessories charges can be solved using the audit trail found within the TMS database. 

Top Trends Impacting Transportation Management Systems

The advantages of the right TMS software appeal to companies’ desires to improve their accuracy and get things done faster within their budgets while enhancing their customers’ experience. This has helped increase the TMS market potential over the past several years. To that end, there are several top trends that companies will need to keep an eye on for the foreseeable future. Below are some of these trends. 

  • Enhanced Integration Capabilities through Blockchain 

One of the main benefits of connected technology is the increased supply chain visibility, accuracy, security, and transparency that it has to offer. Even if XML, EDI, API, and FTP connections have been incredibly useful up until now, blockchain technology will become the wave of the future when it comes to all supply chain management applications. While the technology is based on currency, blockchain can also be used in all supply chain and logistics transactions, such as tracking, exchange, payment, and contracts. 

Blockchain technology provides supply chains with particularly effective security. As transactions are moved through the system, there is always at least one transaction affecting another. This is not that different from the way ledgers get balanced in accounting. This type of balancing will create a strict chain of command on the transaction control, moving throughout the supply chain. There are also several other areas where this technology can be applied in terms of transaction integrity. One such example is in the transportation of perishable foods and pharmaceuticals, where blockchain allows companies to track precisely where their products are being consumed in the market. Blockchain also provides less friction within the larger global economy by facilitating faster payments as the chain in ownership changes. 

  • Tighter Integration of the TMS Software With Other Platforms

Transportation management software can easily communicate with a company’s other platforms, such as the warehouse management system (WMS), enterprise resource planning (ERP), and order management systems (OMS). All of these other systems are vital in taking customer orders and moving them through the supply chain, while also communicating the progress from the moment the initial order is made to the final delivery. 

While outbound logistics was the primary driver for the TMS system, the technology has evolved to become a control tower for the entire supply chain. As such, it has also become a key component in a company’s inbound activities as well. By having the ability to tie in to all the major business operation platforms, companies using a TMS will gain a full end-to-end logistics and supply chain optimization strategy. In effect, it allows them to tighten all the internal and external systems, making the TMS a primary hub for all tactical and strategic supply chain moves. 

  • Increased Shipment Transportation Modes 

With the growth of eCommerce and online ordering, shifting towards an omnichannel distribution strategy is oftentimes warranted. This transition is also useful when it comes to adapting the size of products and the increasing size of shipments. Therefore, full truckload, LTL, and intermodal are quickly becoming the norm when it comes to optimizing shipments across all channels and freight modes. And together with the inbound and outbound functionality of the TMS, the need to have all transportation modes under one platform is becoming essential. 

  • Artificial Intelligence and Machine Learning for TMS Management Capabilities 

TMS software fitted with artificial intelligence (AI) and machine learning (ML) capabilities is helping organizations greatly improve and streamline their processes. With the help of these technologies, today’s TMS can handle tremendous amounts of data, providing useful insights and forecasting capabilities. These will, in turn, facilitate better vendor communications and production plans to fulfill all customer orders with better accuracy. 

AI and ML will be able to bring additional intelligence to the TMS software, allowing it to identify existing issues and make the appropriate changes in real-time. These capabilities provide shippers with additional insight on what to do and when to do it, as well as how to fix existing issues. The ultimate goal here is to improve the customer experience and make the most use of the company’s assets. 

  • External System Connectivity 

While the TMS system can be connected with the other internal platforms, it can also be linked to external systems as well. There are numerous operational system supports that can help logistics teams with logistics regulations, settlement and document management, freight capacity, and freight rating, as well as provide even more tracking and tracing transparency. Aside from these operation tools, benchmarking collection companies will be able to enhance and add to their database, making it easier for logistics organizations to help their customers. 

  • The Cloud-based Transport Management System

Like most other software platforms, the TMS is also being steadily transitioned to the cloud. With the TMS in the cloud, companies of all sizes can have access to the highest levels of functionality, without needing to invest in expensive hardware or software infrastructure. As such, companies will only have to pay for what they need, making the TMS a Software as a Service (SaaS). Additionally, cloud logistics also brings its users the necessary scalability to implement the TMS platform more easily and less costly than it otherwise would be. 

The Cost of TMS Ownership

When taking into consideration all the costs associated with transportation management systems, it’s important to analyze the initial investment and implementation process, as well as the ongoing licensing and support costs. Luckily, the proliferation of cloud-based transportation management systems has managed to drive the overall costs down across the industry. Companies looking to implement a TMS, often take the cost of ownership into their decision-making. Those who see this cost as a major deciding factor should seriously consider cloud logistics systems. When it comes to the aforementioned costs, it’s important to keep in mind that they will vary based on each TMS vendor, as well as the product, itself. When it comes to the cost of ownership, buyers are often able to choose between the different features and capabilities, selecting those that will best suit their specific needs and requirements. 

In terms of the implementation costs, there are several common factors that all TMS solutions can be evaluated upon for the individual organization considering them. These include some of the following:

  • The total number of internal and external users
  • The total number of freight carriers 
  • The number of internal and external integration systems
  • The overall number of customers
  • The total number of TMS modules required
  • Any additional custom modifications needed

In general, the greater the quantity required within the above categories, the higher the implementation cost will be. 

Free vs. Paid Transportation Management Solutions

There are some TMS vendors and third-party logistics providers that will offer their TMS software free of charge. However, there are several things to take into consideration before choosing to go with a free TMS. In general, such an option is used as a means of getting clients accustomed to the new TMS solution, but it will, most likely, lack many of its more comprehensive features and functionalities. 

Nevertheless, a free TMS version can still prove useful, particularly with small companies that don’t require multiple accounts. This also includes companies that don’t need access to information from other services or use any other advanced functionalities capable of processing many loads, mileage markers, carrier qualifying services, and the like. 

Some logistics providers may also offer a free and customizable TMS solution with all the required functionalities as part of their managed transportation package. By outsourcing your freight activities to a third-party logistics provider, you will gain access to their TMS technology, as well as their other logistics and supply chain services. This means that you will not have to invest in an in-house system or have to install a free one. 

Takeaway

While outsourcing all or part of the supply chain and logistics operations may not be for everyone, there is a huge amount of value to be gained through this option. By working together with a professional and experienced third-party logistics provider, you will also have access to their resource network, expertise, technology, supply chain solutions, and transportation options. Additionally, the implementation of the transportation management software will be done much faster than if you would have done it yourself. 

At the end of the day, both logistics and transportation are undergoing rapid changes, trying to adapt to the effects of globalization, emerging technologies, changing customer demands, and market trends. Trying to keep up with everything, let alone gain a competitive advantage, can prove to be a significant challenge. But by investing in the right transport management software (TMS), you will better position yourself to handle these changes. 

When choosing a TMS solution, logistics managers are also gaining a valuable partner that can help them over the long-term. The solution you choose must also come attached to a provider that can help you navigate and use it to maximize its efficiency and satisfy all of your needs. Logistics Titans provides you with a TMS solution that not only offers all of the above-mentioned features, implementations, and benefits, but it’s also free of charge as part of our managed transportation package.

It’s a tool specially designed to save companies time and money, as well as help them scale their transportation and logistics operations. As a multi-modal platform, our TMs solution will provide full-scale automation over the entire shipment lifecycle. And as an app-based system, it needs no hardware installation. It can also be used to track and trace shipments in real-time, providing on-demand visibility at every stage of the shipment process. 

By using its direct integrations with all major load boards and major carriers, the platform allows companies to go from quote to delivery without the need for any manual intervention. Its rating capabilities will also pool at the shipping prices across the United States, giving you access to all of the most competitive rates. If you want to find out more about our robust TMS offering, feel free to request a quote or contact us directly

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