10 Reasons to Consider a Transportation Management System (TMS)

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by Nilam Oswal

If your company functions in retail, distribution, manufacturing, e-commerce or third party logistics, chances are you already know. A Transport Management System/Software (TMS) is a logistics platform that allows users to manage and optimize the daily operations of their transportation fleets. It comes under the subset of Supply Chain Management (SCM). Its primary function is to plan and execute the physical movement of goods.

A Transportation Management System's (TMS) primary function is to plan and execute the physical movement of goods. Here are 10 reasons you need one... - @nilam_oswal @softwaresuggest Share on X

Why do you need a Transport Management System?

Instant gratification is embedded in the psyche of today’s consumer. Whatever it is that the consumer wants, he wants it to be in stock, and he wants it now.

For most multi-channel businesses, overhead shipping cost now exceeds even essential costs such as direct and indirect payroll or utilities. Whether a business has complex logistics requirements or basic transportation needs, its bottom line is affected greatly. A recent Pitney Bowes report indicates that parcel shipments will rise at a rate of 17% to 21% each year between 2017 and 2021.

By 2020, same-day delivery will account for up to 50% increase in logistics costs as a percentage of revenue. Hence, companies are now looking for every opportunity to keep the increasing shipping costs in check, such that overall service quality is not compromised.

With supply chains grappling to keep up with the Amazon Effect, the choice of an effective Transportation Management System (TMS) has become crucial.

There are many types of TMS solutions, that vary from more traditional on-premise TMS solutions, to network TMS solutions. The right TMS can optimize your core operations and transform the way your business functions.

Here’s how:

1. Improved Cash Flow

A good transportation management software will help a business immensely in reducing shipping costs. The right system will analyze the financial aspects of each logistical route. It will generate user-oriented suggestions for reducing expenses in specific areas such as fuel consumption or driver overtime.

2. Integrated Planning and Execution

The new generation transport management systems integrate smoothly with existing systems that are essential for managing the transport needs of a company. These include:

Purchasing and order management systems
Warehouse Management
Customer Relationship Management
Supplier Relationship Management

This integration will enable the company to execute orders through the most cost-effective carrier. It confers the advantages of better route planning and load optimization to the company. Simply put, planning and execution of orders will be better and quicker.

3. Minimal Paperwork

Automation of all accounts using a TMS will save precious time and money spent on bulky paperwork. Administration expenses are reduced to a great extent. Blunders such as incorrect billing or invoice errors are minimized and overall efficiency shoots up.

4. Inventory Management

Through TMS, businesses can monitor the lifecycle of orders and shipments in real-time and get status updates on each. This offers users an accurate forecast for the inventory and improves the accountability of the supply chain network. In addition, some network-based TMS solutions provide other inventory management solutions (such as VMI and MEIO) that work hand-in-hand with the TMS, which makes both the inventory solution and the TMS more efficient and intelligent.

5. Supply Chain Visibility

New generation Transport Management Systems that integrate across the supply chain, provide a bird’s eye view of the entire supply chain system. Having this full operational visibility and access to real-time data from all systems is a huge plus. It enables managers to quickly act on any opportunities or resolve any issues that may arise. This keeps you in the customers’ good books without compromising performance.

How to get a birds eye view of your entire supply chain system and respond and resolve issues immediately, to enhance customer service. - @nilam_oswal @softwaresuggest Share on X

6. Optimized Routing through Pool Distribution

Order cycles have shortened and shipment sizes have shrunk. As a result, routing is more critical than ever. The right TMS equips users to implement pool distribution, which is a cheaper and faster method of delivery offering greater visibility and control. The user chooses the optimum pool point to determine which shipments should be picked up or delivered. Complex orders are broken down and routed separately, saving both time and money.

7. Tracking Drivers En-Route

Driver tracking enables users to assess the optimality of different routes taken by the drivers, which can help to generate a more efficient schedule. Additionally, assessment of individual drivers can be done easily. The user can track their efficiency and provide feedback where improvement is required. Real-time tracking also provides huge safety benefits, especially in cases of accidents.

8. Accurate Order Fulfillment

With a reliable transport management system ensures that shipping becomes more accurate. With real-time tracking and full supply chain visibility, the accuracy of order fulfillment increases sharply. Through the software, shipping errors and discrepancies are obviated. And even if minor pitfalls are encountered, the situations can be resolved without the customer being negatively impacted.

9. Improving Customer Experience

Today customers demand lightning-fast delivery, last minute order changes, customized delivery times and more. They don’t just demand it, they consider these services a part and parcel of each order they have placed. It’s a real challenge for businesses to adapt their operations to meet the expectations of the consumers. This is where TMS comes in, more specifically new generation tier-1 transport management systems. TMS will bridge the gap between order management and warehouse management systems. It will help to consolidate all customer orders to find the best carrier at the lowest possible price. A win-win for both consumers and businesses!

10. Repeat Business and Referrals

The right TMS saves your time and money. It enhances your company’s overall productivity and efficiency. But most importantly, each of the aforementioned aspects contributes towards your ultimate aim as a business: getting repeat business. You want your customers to choose your services repeatedly, and the right Transport Management System will ensure that they do so. Improved customer experience through TMS will also increase the likelihood of referrals.

Bottom Line

A Transportation Management System is an essential weapon in any company’s arsenal. To keep up with the ever-changing business environment, a TMS is a necessity. Although the rate of savings may be slow initially, the incremental benefits will snowball into improved business practices and deliverance of the promises made to your customer.

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Nilam Oswal is a software analyst at SoftwareSuggest, as well as a gadget enthusiast. When she’s not hard at work, she can be found wandering, reading and just generally having a good time in life. She blogs about CRM software, lead management system, recruiting tools, transportation management software, BI software and the latest software updates.