Transportation Management System (TMS)
Transportation Management System (TMS)
A transportation management system (TMS) is a shipping software platform designed to automate and optimize a wide range of transportation activities related to shipment planning, execution, and tracking. These tasks could include the following:
- Carrier freight rate management and selection
- Shipment routing
- Delivery status tracking
- Shipment reporting and analytics
Shipment Rating, Routing and Shipment Processing
Because TMS systems are typically software-based, they often provide the functionality to add shipment business rules and logic to ensure that shipments are automatically processed according to the shipper’s and/or customer’s requirements.
For example, does a customer require their shipment to arrive in one day, but it only needs to be delivered across town?
- Today’s advanced TMS systems can compare different carrier rates, services, transit times, and accessorial charges to determine which option will meet the delivery date for the lowest possible shipping cost.
- In this case, it may determine that an express service isn’t required because the carrier’s ground service option can meet the delivery date for a much lower rate.
Perhaps another client requires Service A to be used for shipments up to 150 pounds, but Service B be used from 150.01 to 1,000 pounds?
- A good TMS system will automatically consider these types of thresholds and ensure the correct service is selected every time.
- The TMS system also eliminates manual decision-making, saving time, reducing shipping errors, and lowering labor costs.
Advanced TMS systems enable shippers to manage multiple carriers and transportation modes (ex. small parcel, less-than-truckload or LTL, or truckload or TL) on a single platform and automatically compare carrier’s rates, modes, and costs to select the lowest delivery mode and cost.
- Have a shipment that is big enough to consider having it go out via a small parcel or LTL carrier?
- A good TMS can quickly analyze the shipment details and calculate rates for both small parcel and LTL modes to select the cheapest based on custom rating structures.
- The TMS should will handle manifesting shipments to the carriers, generating documentation such as bills of lading (BOL) for freight shipments, and print shipping labels required for each carrier, service or customer.
Delivery Status Tracking
Once a shipment leaves the building, where is it? Today, thanks to electronic status tracking capabilities being implemented by the carriers, TMS systems can be configured to can query a carrier’s system for the latest status updates to determine where the package is according to the package scans taking place as it follows the delivery route.
- Have a package that was sent via a Two-Day service to be delivered on the 1st of the month, and it didn’t get there until after that date?
- Today’s TMS systems, because they know the original service and expected delivery date, can offer insights into these types of metrics.
Shipment Reporting and Analytics
By offering an all-in-one solution for the transport of a company’s goods, a TMS offers its users vast amounts of shipment data, and therefore metrics, on their operations, as well as the carrier’s. Some of those include:
- How many orders did we process over X period?
- How many shipments were we able to save money on by rate shopping based on transit times?
- How many packages did we print shipping labels for, but the carrier doesn’t show ever receiving or delivering them?
- For each carrier and/or service, how many shipments missed their delivery commitment?
- If we were to open another warehouse, where would be the most efficient options, based on where most of our cross-country shipments are being delivered?
The above are but three of the many tools that a top-tier TMS system can offer its users, all working towards the goal of improving efficiency, reducing distribution costs, offering visibility, and automating shipping operations.
Creative Logistics Solutions (CLS) is a leading provider of multi-carrier parcel transportation management solutions that help companies reduce labor, freight costs, and unexpected shipping fees. Please contact us today for a complimentary consultation and software demonstration.
For other cost-saving transportation management and shipment processing techniques, please see:
Case Study: Dollar Shave Club Boosts Shipping Volume with InfoShip/Vx and Black Box Shipping Automation
Blog: Five Ways to Reduce Unexpected Carrier Back Charges
Blog: Four Proven Ways to Reduce Shipping Costs