What is a Transportation Management System (TMS)?

01 August 2022 |
7 minute read

A transportation management system (TMS) is a software application designed to plan, implement, and optimize the coordination and execution of activities related to the transportation of goods.  A TMS can help businesses reduce transportation costs, improve customer service, and increase operational efficiency. Many TMS solutions are available on the market, and each offers a different […]

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A transportation management system (TMS) is a software application designed to plan, implement, and optimize the coordination and execution of activities related to the transportation of goods. 

A TMS can help businesses reduce transportation costs, improve customer service, and increase operational efficiency. Many TMS solutions are available on the market, and each offers a different set of features. 

However, all TMS solutions share the same goal: to help businesses manage their transportation operations more effectively. The following section will provide an overview of some of the most important features of a TMS.

What Is A Transportation Management System?

A transportation management system (TMS) is a software application that is designed to streamline the process of shipping goods. A typical TMS will allow users to track shipments, schedule pickups and deliveries, and generate reports. 

In many cases, a TMS will also integrate with other software applications, such as accounting and inventory management systems. By automating the process of shipping goods, a TMS can help businesses to improve efficiency and reduce costs. 

In recent years, the use of cloud-based TMS solutions has become increasingly commonplace, as they offer a number of advantages over traditional on-premise systems. 

Cloud-based TMS solutions are typically more scalable and easier to implement than on-premise systems, and they can provide users with real-time visibility into the status of their shipments.

transportation management system

Difference Between TMS And Delivery Management

There are a few key differences between transportation management systems (TMS) and delivery management systems (DMS). 

First, TMS software is typically used by businesses to manage their shipments, while DMS software is mostly used by e-commerce companies to manage their deliveries. 

Second, TMS software is typically much more complex, while DMS software is designed to be more user-friendly. 

Third, TMS software often includes features such as advanced tracking and reporting, while DMS software typically focuses on simplifying the delivery process. 

Finally, TMS software is usually much more expensive than DMS software. Ultimately, the decision of which type of system to use depends on the specific needs of the company.

Difference Between TMS And WMS (Warehouse Management System)

A warehouse management system (WMS) is a software application that supports the day-to-day operations in a warehouse. A WMS helps to track inventory levels, manage stock locations, and monitor the movement of goods throughout the warehouse. 

In contrast, TMS is a software application that helps businesses to plan, execute, and track shipments. A TMS can be used to book transportation, track shipments, and optimize routes. 

While a WMS and a TMS share some common features, they are designed to support different aspects of the supply chain. As a result, each type of system offers unique benefits for businesses.

Who Uses a TMS?

If you’re like most people, you probably think of transportation management systems (TMS) as something that big businesses use to manage their complex supply chains. But TMS is actually useful for a lot more than just managing large shipments. In fact, any business can benefit from using a TMS. 

eCommerce

eCommerce businesses have unique shipping needs that require a specialized transportation management system (TMS). An eCommerce TMS streamlines the shipping process and allows businesses to stay competitive in the online marketplace. 

By automating order management, tracking, and shipping, an eCommerce TMS can help businesses save time and money. 

In addition, an eCommerce TMS can provide real-time visibility into the shipping process, allowing businesses to make changes on the fly. As a result, an eCommerce TMS is an essential tool for any business that ships products online.

transportation management system

Manufacturers

Transportation management systems (TMS) are used by manufacturers to streamline their shipping process and improve their bottom line. TMS software enables manufacturers to plan and execute shipments more efficiently, resulting in reduced transportation costs. 

In addition, TMS systems can provide visibility into the entire shipping process, from order management to delivery, allowing manufacturers to identify and resolve issues more quickly.

There are a number of different types of transportation management systems available on the market today. Some are designed for specific industries, while others are more general purpose. However, all TMS systems share a common goal: to help manufacturers save money on their shipping costs.

Distributors

As a distributor, you are responsible for ensuring that goods and materials are delivered to your customers on time and in good condition. 

A transportation management system (TMS) can help you optimize your shipping operations by providing visibility into your supply chain, streamlining communication between different parties, and automating various processes.

With a TMS in place, you will be able to better track and manage your shipments, which can help you avoid delays and disruptions. In addition, a TMS can help you reduce transportation costs by identifying opportunities for route optimization and load consolidation.

3PLs

There are many different types of businesses that use transportation management systems (TMS), but one of the most common is 3PLs

3PLs, or logistics service providers, are companies that manage the logistics and transportation for other businesses. In many cases, they will use a TMS to help them plan and execute shipments, track shipments, and invoicing.

3PLs often work with a variety of different clients, each with its own unique shipping needs. This can make it difficult to manage logistics without a TMS in place. 

A good TMS will help logistics service providers plan and execute shipments more efficiently, while also providing visibility into the shipment process. This is essential for ensuring that shipments arrive on time and at the correct destination.

transportation management system

Benefits Of Using A Transportation Management System

A TMS can help you manage your transportation more efficiently and save you time and money. Here are just some of the benefits of using a TMS: 

Planning

A good TMS will have tools that allow you to consider different shipping options and find the best route for each shipment. This can save you time and money by ensuring that your goods arrive at their destination quickly and without incident.

In addition to helping you plan your shipments, a TMS can also help you track them. This is important for two reasons. First, it allows you to see where your goods are at all times and make sure that they are on track. 

Second, it can help you identify any issues that may arise during transit. This information can be used to improve your shipping process and avoid future problems.

Finally, a TMS can help you manage your carrier relationships. This is important because it allows you to keep track of which carriers are performing well and which ones are not. This information can be used to renegotiate rates or find new carriers.

Executing

A TMS can be used to track, schedule, and monitor the progress of shipments, as well as optimize routes and manage fleet resources.

In many cases, a TMS will interface with other software applications, such as a warehouse management system (WMS) or enterprise resource planning (ERP) system. This allows for a more seamless flow of information and can help to improve the accuracy of data.

A TMS can help organizations to better manage their transportation processes, which can lead to improved efficiency and cost savings. In addition, a TMS can help to improve customer service by providing visibility into the status of shipments.

Tracking

Tracking and analyzing your transportation data is critical to reducing your shipping costs. A transportation management system (TMS) can help you do just that. TMS software provides a central location for all your shipping data, making it easy to track and analyze your transportation spending.

In addition to cost savings, a TMS can also help improve customer service. By providing real-time visibility into your shipping operations, a TMS can help you identify and fix problems quickly, improving customer satisfaction.

Payments

A TMS can also help streamline your payment process, reducing the time and cost associated with processing invoices. A TMS can automate the invoice process, ensuring that invoices are accurate and paid on time. 

This can save you money by reducing late fees and improving your relationships with your carriers. Furthermore, by automating your payments, you can free up your staff to focus on other tasks, improving efficiency and productivity. 

Reporting

A transportation management system can also provide valuable insights into your shipping operations through reporting. TMS software can generate reports on a variety of metrics, including shipment costs, transit times, and customer satisfaction. 

This data can be used to improve your shipping process and identify areas where cost savings can be achieved.

logistics operation

Types of TMS: Which One Is Right For Your Business?

On-site

There are several types of transportation management systems (TMS), but the most common type is on-site. On-site TMS is usually implemented by businesses with their own internal transportation operations, or by 3PLs that manage transportation for their clients.

On-site TMS gives organizations more control over their transportation operations and can be customized to fit their specific needs. They are typically more expensive than cloud-based TMS but can offer a higher level of service and flexibility.

If you’re considering an on-site TMS, it’s important to make sure that you have the resources in place to support it. You’ll need trained staff to operate the system, and you’ll need to invest in hardware and software.

Make sure you understand the costs and benefits of on-site TMS before making a decision. It may be the right choice for your business, but it’s not right for everyone.

Cloud-Based

If you’re looking for a system that is both effective and efficient, then you should consider a cloud-based transportation management system.

There are many benefits to using a cloud-based transportation management system. For one, it eliminates the need for hardware and software. All you need is an internet connection and you’re good to go. This means that you can save on upfront costs and maintenance fees.

Another benefit of using a cloud-based transportation management system is that it’s accessible from anywhere. This means that you can manage your transportation from any location. This is especially helpful if you have multiple locations or operate in different countries.

Finally, a cloud-based transportation management system is scalable. This means that you can easily add or remove features as your business grows. This is important because it allows you to tailor the system to your specific needs.

Conclusion

In today’s competitive marketplace, a TMS can be a valuable tool for companies that rely on transportation to move goods or provide services. Top-performing TMS systems are constantly evolving to meet the ever-changing needs of the marketplace. 

As such, they are an essential part of any company’s logistics operation. By investing in a TMS, businesses can gain a competitive edge in the market and improve their bottom line.

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