Today we're covering transportation management systems (TMSs). All companies in the logistics industry need a TMS, regardless of their size. The vast majority of shippers and brokers use a TMS. Put simply, they want carriers that use a TMS as well.
We'll introduce the TMS basics, highlight some key features, and suggest some popular TMS options.
A TMS is the backbone of the trucking industry. It's a piece of software that organizes all the electronic data involved in the operation of a fleet. In reality, a TMS can do a lot of heavy lifting, with features that include:
We'll cover all these key features of a TMS. But to fully appreciate what a TMS brings to the table, let's remember what it was like before they existed.
Prior to the widespread use of TMS platforms, everything required a phone call. A dispatcher would have to call a broker or a customer and see if they had any freight. On the off chance either had a load near your truck, then you'd have to negotiate a price. This approach was akin to throwing a Hail Mary pass in football—on every single play.
Now that TMS platforms have seen widespread adoption, the reality is if you don't have one, your company isn't connected to the industry network. When you have a TMS, the system has the functionality to take all your available trucks and send that information to all your customers. This makes the process of matching a load much more efficient.
Thus, a TMS allows you to no longer waste your time or your customer's time. Instead, everyone can spend time on value-added tasks.
Trucking is a fast-moving industry where time is money. Do you have the time and organizational energy to chose the wrong TMS? Of course not. So, start your search with some of the most popular TMS platforms on the market like those from McLeod or Tailwind.
When a carrier and a shipper's TMS communicate and match trucks with freight, the entire process is accelerated for everyone involved. In addition, most TMS platforms will connect you with one, if not several, load boards.
Now you don't have to constantly call customers asking for freight. This alone fosters better relationships and keeps you from coming across like the boy who cried wolf.
Inside a TMS, you'll be able to save information to build a history on lanes, quotes, and landed cost, as well as make notes for future reference. Unless you have the memory of an elephant, this will save you the time and frustration of having to constantly look up the same information.
It's been said that the definition of insanity is doing the same thing over and over yet expecting a different outcome. Thus, using a TMS can help make trucking slightly less hair-raising.
Once there's a match between carrier and shipper on a load, the load tender goes from the shipper to the carrier through electronic data interchange (EDI) and application programming interface (API). To summarize, this allows for the secure exchange of information.
Having the same information accessible by all will also eliminate duplicate data entries—both internally (by team members and the back office) and externally (by the driver and customers).
You might say the data exchange and storage capabilities alone make a TMS worthwhile. Depending on how you organize it, many TMSs can integrate with a data management system (DMS) that allows for electronic indexing, sorting, and searching. In short, the electronic exchange of information saves time and money.
Once you're ready to dispatch a driver, a TMS can calculate their pay and expenses based on the lane. The TMS can also provide the driver with load and routing details electronically. This can reduce or eliminate calls to the driver to describe the freight.
Dispatchers can communicate to drivers through the TMS. And drivers can communicate with dispatch through the TMS, as well as upload documents directly into load files.
When drivers are unloaded, they can then upload digital documents to your TMS via imaging software. Without a doubt, the integration of mobile document scanning software with your TMS is the cutting edge of trucking. It makes sense because trucking involves a ton of paperwork.
With perfect scan technology, document scanning software can now "read" the information off paper copies. Advanced features of imaging software can also read bar codes, handwriting, PODs, BOLs, lumper tickets, and scaling tickets. All of these can be digitized and attached to a load file.
Another common-sense use of software like Vector's might be an industry-wide procedural change—specifically, the paperless handoff. Social distancing and driver safety are becoming heightened concerns. There's a great possibility with electronic signature tech and digital documents that paperless hand offs may become the new normal.
The customer wants to know the location and status of their freight. Now there's no more calling the driver and then calling the customer with the current update. Customer load tracking provides them the peace of mind that their load of freight is going smoothly. Also, the ability to track their freight online versus making a phone call is convenient and efficient for the customer.
Types of information exchanged through TMS include:
A TMS tracks information electronically through integration with onboard systems in the truck. Those include (the now mandated) ELDs, telematics, GPS, and/or driver mobile apps. It's possible to share the information with the customer and other authorized personnel through the secured TMS network.
A fully integrated TMS has the potential to invoice customers automatically. For example, through the Vector mobile app, a driver can trigger load invoicing immediately after delivery.
Automated invoicing shaves days off the process of getting paid. It offers the potential for your fleet to go paperless. This eliminates the need for a driver to fax their paperwork. It removes the bottleneck of packet paperwork on Friday, when everyone returns to the yard.
Automated invoicing also saves your company the time it takes for additional back-office data entry. When integrated properly, the same TMS data can be used to automatically create driver payrolls. Automatic invoicing will thus improve overall cash flow and provide faster access to working capital.
Another feature of TMS is key performance indicator (KPI) tracking. One way to measure the degree of success of your company and your individual goals is by using the data your TMS collects. The first step is to identify a relevant data point. In trucking, typical areas a TMS will track include:
KPI analysis can shine a spotlight on your overall profitability. As such, KPIs help avoid pitfalls and direct you toward positive future outcomes.
Customers are like you—they appreciate easy loads. Customers are busy too. They like knowing their freight is moving. Customers don't like unnecessary phone calls about avoidable issues. A positive customer experience features the smooth exchange of information and a clean bill of lading.
A satisfied customer will come back to you for repeat business. If they're wise, they'll put a premium on your effective customer service. Thus, a TMS forms the backbone of your entire organization. When you consider the return on investment, a TMS is a relatively small investment.
Today we drilled into TMS platforms. As seen above, they're a lot like a Swiss army knife when you consider the tools they offer. It's time to implement a TMS for all the reasons we looked at today.
If you don't have one already, begin your TMS search with one of the popular ones like McLeod, Tailwind, and TMW. Good luck as you strengthen your business and reduce the number of hassles you face daily!
This post was written by Brian Deines. Brian believes that every day is a referendum on a brand’s relevance, and he’s excited to bring that kind of thinking to the world of modern manufacturing and logistics. He deploys a full-stack of business development, sales, and marketing tools built through years of work in the logistics, packaging, and tier-1 part supply industries serving a customer base comprised of Fortune 1000 OEMs.