Transportation Management System (TMS) – What is it?
A Transportation Management System is software that helps businesses manage the execution of its logistics supply chain, in particular coordinating and optimizing the movement of products and materials.
The general functions and benefits of a TMS include the following:
Shipment Load Planning and Shipment Routing Optimization – This functionality helps in areas such as determining the most cost effective mode to ship an order (truckload, ltl, air freight, intermodal, etc.), or the optimal way to combine multiple orders together into larger shipments. Carrier rate agreements and contracts are often housed within this area as well.
Routing Guide – Helping to ensuring vendor compliance to inbound routing guides is crucial to cost management. Centralizing the routing instructions for a company with multiple shipping locations can improve compliance.
Execution Management and Carrier Communication – This includes tools for assisting with carrier selection, calculating shipments costs (including line-haul, fuel surcharges, and accessorial charges), tendering loads and facilitating carrier communication (bills of lading and proof of delivery).
Visibility/ Shipment Tracking – Providing delivery status updates and alerts, this tool allows proactive program management and notice of potential delivery problems in advance.
Freight Bill Audit & Payment – Automating the freight audit and payment process, saving time and improving accuracy, or ending reliance on an outside third party. It is estimated that performing regular freight invoice audits can save 4-5% in transportation costs per year.
Business Intelligence/ Reporting
TMS systems are can be deployed on client’s systems or on-demand SaaS (Software as a Service).