Transportation management system

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A Transportation Management System (TMS) is a software system designed to manage transportation operations.

TMS are one of the systems managing the supply chain. They belong to a sub-group called Supply chain execution (SCE). TMS, whether it's part of an Enterprise Level ERP System or from an integrated "Best of Breed" Independent Software Vendor(ISV)has become a critical part of any (SCE) Supply Chain Execution and Collaboration System in which real time exchange of information with other SCE moidules has become mission critical.

Transportation Management Systems manage three key processes of transportation management:

  • 1. Planification and Decision

TMS will define the most efficient transport schemes according to given parameters, which have a lower or higher importance according to the user policy: transport cost, shorter lead-time, fewer stops possible to insure quality, flows regrouping coefficient…

  • 2. Transport follow-up

TMS will allow following any physical or administrative operation regarding transportation: traceability of transport event by event (shipping from A, arrival at B, customs clearance…), editing of reception, custom clearance, invoicing and booking documents, sending of transport alerts (delay, accident, non-forecast stops…)

  • 3. Measurement

TMS have or need to have a Logistics KPI reporting function for transport.

Various functions of a TMS:

  • Planning and optimising of terrestrial transport rounds
  • Transportation mode and carrier selection
  • Management of air and maritime transport
  • Real time vehicles tracking
  • Service quality control
  • Vehicle Load and Route optimization
  • Transport costs and scheme simulation
  • Cost control, KPI (Key performance indicators) reporting and statistics
    • Typical KPIs include but not limited to:
  1.  % of On Time PickUp or Delivery Performance relative to requested
  2. Cost Per Metric - mile; km; Weight; Cube; Pallet

More examples of Transportation Management System KPIs

What Can You Expect from Implementing TMS ?

“Through the implementation of TMS, companies on average can expect to lower freight budgets by 5 percent to as high as 25 percent in first year depending on mode mix and existing adherence to best practices.” - Global Logistics & Supply Chain Strategies

  • Efficiency and productivity in daily operations
    • TMS systems enable companies to centralize the logistics function, providing support across their entire organization. This aggregation can increase purchasing power and contract negotiations with carriers.
    • Adhering to and enforcing business rules and processes to ensure proper execution.
    • Order processing is automated through the point of load costing, carrier selection, tendering, carrier acceptance and shipment visibility.
    • TMS systems improve carrier communications through EDI, Internet portals, and the use of email.
    • Access to data through standard reports and additional report writers for customized reporting and tracking of data such as Freight accruals, fuel surcharge, and accessorial charges.
    • Automated electronic reconciliation improves the speed and accuracy of freight bill audit and payment.
  • Reduced costs through carrier selection compliance and optimization
    • Automated carrier rating and selection of lowest cost carrier and tracking of service levels.
    • Monitoring carrier performance, contracts, and balancing load distribution.
    • Visibility to loads for load planning and consolidations increases savings potential YIELDS of 5 to 15%.
  • Improved customer service levels through consistent and expected delivery.
    • Improve customer service levels by monitoring on time performance
    • Tracking of shipments and identifying service failures, thus improving overall supply chain visibility.