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Transportation Management System and its impact on logistics management
FREMONT, CA: What Is a Transportation Management System?
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A transportation management system (TMS) is a subset of supply chain management concerning transportation operations and may be part of an enterprise resource planning (ERP) system. A TMS usually exists between an ERP and warehouse/distribution module. A typical scenario would include both inbound (procurement) and outbound (shipping) orders to be evaluated by the TMS Planning Module offering the user various suggested routing solutions. These solutions are evaluated by the user for reasonableness and are passed along to the transportation provider analysis module to select the best mode and least cost, provider. Once the best provider is selected, the solution typically generates electronic load tendering and track/trace to execute the optimised shipment with the selected carrier, and later to support freight audit and payment (settlement process). Links back to ERP systems (after orders turned into optimal shipments), and sometimes secondarily to Warehouse Management System (WMS) programs also linked to ERP are also common.
Types of TMS
There are many types of TMS to use in the daily shipping processes. However, most companies rely on the Enterprise Transportation Management System and a team of industry experts. Enterprise TMS allows people to automate their current shipping process while gaining valuable insights that save them time and capital. Enterprise TMS is ideal for large shippers who need customised solutions, such as dedicated account managers, customer-specific pricing, etc.
TMS Challenges
1. Keeping quotes organised: If a person is working with several different shipments, they don’t want to be on the phone or jumping from website to website asking for rates from the carriers in their network. Dialling different carriers and requesting quotes can be a time-consuming process.
2. Selecting the best carrier: Not all shipments are the same. Sometimes, shipments are time or temperature sensitive, require special delivery services, or need to be handled with extreme care. Consequently, not all shipments should be handled by a single carrier. While some carriers might be best suited to handle long hauls, others might offer the specialised services a business needs for a small added price.
3. Tracking shipments: Businesses don’t always utilise the same carriers for all their freight. It’s common for several different shipments to be in transit aboard different company trucks all over the map. Consequently, the freight tracking process can become very challenging. Without a TMS, organisations may have to input shipment numbers into forms on several different carrier sites.
4. Gathering insights: Without a TMS in place, businesses may have a general idea of who the cheapest carrier has been over the past year, or which carrier had the highest percentage of on-time shipments.
Importance of a TMS
A TMS is a necessity for any company with direct responsibility for transporting a significant volume of goods or hiring service providers to do the job. The complexities of today's supply chains, transport modes and regulations make the task arduous without computerization. Automation of complex processes helps ensure that transportation services are secured as inexpensively as possible without a loss of quality or efficiency. Two-thirds of respondents to a survey conducted reported saving money on freight, with a third saving 10% or more.
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