What Is a TMS Platform? How Technology Helps Manage Freight
If you're here, it's probably because you want to know what a TMS platform is. And you may be wondering if you really need one. Well, let me explain why you do.
Let's say you ship products. You love it. And you're good at it! Nobody else in the company can rival your knowledge of carriers, shipment modes, rates, and carrier performance.
That’s a problem.
Being appreciated is nice, but you don’t want to be the person they always call on.
You look at the piles of paper on your desk, and your heart sinks. You never really liked all the paperwork, and now that the business is rapidly expanding, it’s drowning you.
Something has to change.
Talking to peers in other businesses, you’ve heard about a possible solution: a TMS platform. But what is a TMS platform? They’ve tried to explain, but time is always short, and you’ve only got bits and pieces. You struggle to put everything together.
Well, then, read on. This post is going to tell you exactly what you want to know about what a TMS platform is, what it does, how you can benefit from it, and more.
What Is a TMS platform?
TMS stands for transportation management system. It’s a software application you can use to help you manage the transportation of your products to your customers.
So if a TMS is a software application, what then is “platform” all about?
Generally, a platform is software that you or other software vendors can extend to make it do extra work for you. But to understand what transportation management software is and does, you don't need to worry about platforms.
How Is Transportation Management Related to Logistics?
For many businesses, logistics is about getting the raw materials and components to a factory, moving them around there, and sending the finished goods to customers. Transportation management deals with the distribution to customers. Of course, you need to manage your supply logistics as well, but your suppliers probably take care of transporting your supplies.
What's the Difference Between Transportation Management and Freight Management?
That’s a bit of a trick question. Some people talk about freight management when they mean outsourcing all transportation, including keeping materials and finished products in warehouses.
Others see freight management as that part of a TMS that deals directly with the actual transportation of goods and nothing more.
What Does a TMS Application Do for You?
A TMS application covers these main areas:
- Keeping track of carriers
- Planning who's going to carry what for you where
- Shipment status and tracking
- Your own performance
Let's talk about some of these points in more detail.
Keeping Tabs on Your Carriers
Imagine (or recall) that you have to keep track of dozens or even hundreds of carrier companies—their rates and conditions, the modes of transportation they offer (truck, train, plane, boat), and any special conditions that you've negotiated with them. And, of course, you want to know whether a carrier you used for speed actually did deliver with speed.
Manually writing down all this information isn't so much of a problem. Keeping it up to date—for example, when a carrier changes its rates—is somewhat more challenging. The real challenge is using the data you’ve recorded.
For example, how do you select the best carrier for a shipment given the goods’ characteristics, the customer’s requirements, and the carrier’s rates and past performance? You'd have to dig through piles of paper, do dozens of complicated calculations, and keep track of the communication on all tenders that you put out.
That’s where a TMS shines.
A TMS readily selects and sorts through data, performs calculations, and maybe even receives automatic notifications of changes in rates by carriers you use. It makes using what you record easier, quicker, and more accurate.
Taking the Guesswork Out of Planning and Selection
When you have a TMS, comparing carriers and routes for a shipment can be as easy as pushing a button.
Freight estimation calculations using cargo weight, mode of shipping, and distance are done for you. All you have to do is compare the results and select the one you want. You can even set up a TMS to select a carrier for you automatically.
Using order information supplied by your order software—for example, an Enterprise Resource Planning (ERP) system—TMS optimizes and schedules deliveries. It combines lighter-than-truckload (LTL) shipments where possible so you don’t pay for a half-empty truck. It optimizes delivery routes for fuel and labor, and it minimizes empty miles. Can you see how these qualities could make your life easier and your business more efficient?
Letting Everybody In On the Secret
With the communication that the internet and mobile telephone networks make possible, a TMS can track shipments in real time. All it takes is a driver entering the information as it happens and a carrier that can and will share this information with you.
It's possible to make entering information even easier and more accurate for drivers and other carrier personnel. For instance, drivers can scan bar codes or entire documents with an application on a tablet or mobile phone that's integrated with your TMS. Vector’s Mobile Scan uses artificial intelligence to make sense of a document as a human would, and it can do so even when documents are crumpled or torn.
Getting all of this information into your own TMS means that you know when a shipment has been loaded on a carrier, where it is (if the carrier uses and shares GPS location information), and when it's been delivered to your customer. If you wish, you can share this information with those customers.
Avoid Paying a Penny Too Much
Receiving the shipping and tracking information from your carriers, as it happens, makes the settlement and payment of invoices easier, more accurate, and faster. You have proof that the pickup happened, and the delivery was made. You know exactly how much time your shipment has spent in transit. So you don’t have to pay more than you need to. And you can avoid errors in payments and late payment charges. Also, speeding up processing means you get paid faster.
Perhaps more importantly, your TMS tracks every carrier’s performance and uses it when you next need to select a carrier.
A TMS Tracks Your Performance Too
Of course, you love that a TMS tracks the performance of the carriers you use. But it also tracks your own. For instance, it offers dashboards that tell you at a glance how your actual performance compares to your key performance indicators (KPIs).
What Benefits Can You Expect from a TMS?
Using a TMS, integrated with other applications and devices, has many benefits. We've already touched on many of these when exploring what a TMS does.
What benefits you can expect? Of course, it depends on the TMS you select or already use. But advantages may include:
- Cost reduction by eliminating time-consuming manual procedures
- Huge time savings in reporting on and using data for decisions
- Saving time and raising accuracy in estimating freight costs
- Accurate carrier performance information, which is useful for carrier selection and contract negotiations
- Reducing costs through load optimization and route optimization
- Higher customer satisfaction by keeping them in the know. This helps even when delays or interruptions occur.
- Up-to-date performance information for better decisions and early problem detection (for example, spotting a diminishing transportation capacity and being able to divert shipments to other carriers)
- Cost reduction on labor, warehouse use, and transportation through planning optimization
- Lower costs by avoiding payment errors and late charges
- Eliminating data entry errors by scanning barcodes or entire documents
Now that you know some of the benefits, let's get into the variety of TMS software available.
What kind of TMS software is out there?
While there are still “on-premise” TMS applications, most TMS software now comes as SaaS (software as a service) subscription services in the cloud. Running in the cloud means you don’t have to run your own servers. Also, you don’t have to worry about access to your internal network to integrate with other software applications.
A TMS can come as part of a larger software suite, such as an enterprise resource planning (ERP) or supply chain management (SCM) system. Microsoft, Oracle, and SAP offer ERP systems with a TMS module. Supply chain management makers that provide TMS functionality include JDA, Manhattan Associates, E2Open, and BluJay.
Many companies develop dedicated TMSs. The most well known are Kuebix, MercuryGate, Transwide, 3Gtms, Navisphere, 3T Logistics, and Nexus.
What Does a TMS Cost?
It depends on which TMS you choose and what its vendor factors into its plans’ pricing. Most commonly, the price increases with the number of users. Monthly costs range from $100 to $5,000 in U.S. dollars. And the initial setup cost ranges from $500 to $150,000.
There Be Dragons
We've discussed the many remarkable and useful things a TMS can do, but a TMS isn't a cure-all for your transportation management challenges. Getting TMS software when you have problems in your processes is only going to increase your pain.
For example, let's say you do one thing in two steps. Maybe you even use two different departments. And the software doesn't support that because most other companies see it as one task. Then you'll have to change your process and deal with the upheaval that causes.
Or maybe you do more than you need to because that's how you've always done it. Adding software will make executing and reporting on these tasks more efficient. It'll feel like a win. But superfluous tasks remain superfluous—and now that you have data and reports about it, it'll be even harder to ditch.
Even if your processes function smoothly, that's not a guarantee that you'll reap all the benefits of a TMS. To get those, you'll still have to invest in ongoing training for your staff to use it properly.
Enjoy and Use Your Newfound Knowledge!
Congratulations! You made it all the way down here. Now you can answer the question, “What's a TMS platform?” You've learned how technology helps manage freight, and you got a glimpse of the benefits you can achieve. Now all you need to do is figure out which one to use.
When you do that, consider the input methods it supports. Scanning apps that read documents and labels as a human can is becoming the norm—and with good reason. As any developer can tell you: “The problem sits between keyboard and chair.” Your TMS will be even more beneficial when it can rely on accurate data.
This post was written by Marjan Venema. Marjan is a Smart Blogger certified content marketer, working from the Netherlands with over 30 years of experience in software requirements, analysis, development, and support for the Business Planning and Analytics, Financial and Manufacturing industries. Her specialty is writing comprehensive engaging content that makes complicated and complex topics easy to understand and consume. She writes straightforward language in a conversational style and illustrates abstract topics with concrete examples.