The transportation market is constantly changing. Over the last couple of years, it has become affected by lockdowns and other unexpected supply chain bottlenecks. Nevertheless, customer expectations regarding shipments are persistently growing – many of them expect same-day or next-day deliveries. This puts transportation businesses into tricky situations, where digitalization and transformation of the tech stack is the only solution capable of handling emerging issues. Therefore, a transportation management system becomes imperative for organizations that want to keep up with the pace of the modern world.
While the transportation management system landscape is already mature and technology has become a primary source of competitive advantage, there are still supply chain and transportation companies that do not leverage technology to the fullest despite its spectrum of benefits. According to the report , only 46% of transportation organizations adopt supply chain and transportation management systems, which is around half of all companies.
Another half of transportation companies that have embraced technology and invested in software were driven by the need for productivity improvements, competitive pressure, and the urge for new tools to keep up with the organization’s growing needs.
These figures prompt the idea that awareness about the business value of transport management software should be increased. Therefore, in this article, we will break down what the transportation management system is and how your business will win by modernizing your IT environment with this tool.
What Is a Transportation Management System & How Does It Work?
Before we move to the nitty-gritty of transportation management system software, let’s go over the basics and figure out what this notion denotes.
Gartner defines a TMS management system as the category of software that helps plan and execute the physical movement of goods across the supply chain. It is handy for shippers (manufacturers, retailers, distributors, etc.) and third-party logistics organizations.
Based on Oracle, one of the leading transportation management system providers, the TMS is a platform, which is a part of a larger supply chain management (SCM) system. It helps businesses plan, execute, and streamline the physical movement of incoming and outgoing goods. It also assists with shipment compliance and documentation management.
Another definition of transportation management software reads that this is a part of a supply chain management system that enables organizations to manage operations associated with the physical movement of goods by different means of transportation – land, air, sea, or a combination of several transportation modes.
What Is TMS in Trucking?
When we narrow down the concept of TMS to the trucking domain, this software will be defined as a platform for planning, executing, and optimizing the transportation of goods by truck. It allows companies to streamline the use of resources, enabling them to move goods over the most beneficial routes and within the shortest time. Moreover, TMS transportation software enables drivers and other company members to ensure legal compliance and automation of administrative tasks.
Why Use a Transportation Management System and Why It’s Important for Businesses?
As a part of the larger supply chain management system, TMS logistics software plays a central role in the whole logistics architecture. It ensures the timely delivery of goods by streamlining day-to-day transportation operations and enabling easier management of documentation and compliance information. This tool allows businesses to optimize loads, delivery routes, track freight, automate time-consuming tasks, and more.
In other words, transportation management systems affect every aspect of the transportation process. From planning and procurement to lifecycle management and logistics, the TMS leads to better visibility and more efficient transportation planning and execution. The optimization of the operations inevitably leads to higher customer satisfaction. As a result, the company gets more sales, which results in higher profit and business growth.
Also, an automated transportation management system is a necessity in the dynamic global trade environment where businesses should be flexible and agile. This software is the key to successful navigation between complicated processes that involve compliance with trade policies, forecasting potential bottlenecks, responding to emerging unpredictable challenges, and more.
Who Uses Transportation Management Systems?
Nearly every business that ships, moves, and receives goods may use transportation management systems software. Therefore, we can break down the main users into two groups:
- Ecommerce businesses (manufacturers, distributors, retailers, shippers, etc.) – companies that manage logistics-related processes on their own to satisfy their business needs;
- Outsourcing service providers (third-party or fourth-party logistics (3PLs or 4PLs) providers, logistics service providers (LSPs) – companies that provide fulfillment services to other businesses.
Considering the industry vertical, the transportation management system market is mainly taken over by retail & eCommerce, manufacturing, logistics, government, healthcare, energy & utilities, and other organizations. For instance, Alibaba, Walmart, and Amazon invest in TMS solutions heavily to minimize overhead spending and bring fluency into their business operations.
TMS vendors offer nearly the same functionality for all groups of users. However, there might be options to configure the app and use add-ons for extra fees that may satisfy niche-specific needs.
What Does a Transportation Management System Do and How Does It Work?
So, how does a transportation management system work? As we already said, this app is a component of the supply chain management system, so it is often used along with other software like enterprise resource planning (ERP) and warehouse management system (WMS). When used together, they make a digital tripod to cover the full range of logistics processes.
- ERP – allows to handle accounting, manage orders, and issue invoices.
- WMS – enables to manage warehousing processes, including labor scheduling, yard management, palletization, inventory tracking, and more.
- TMS – handles freight management and optimizes routes.
Aside from integration with other business management systems, transport management system software also gathers, accesses, stores, and analyzes data about carriers to optimize routes and transportation modes as well as improve delivery tracking progress. So, this app heavily relies on data, which may be scattered across different data centers and sources before it is brought into one TMS dashboard.
By consolidating data in a single place, you can:
- Make more informed decisions;
- Select the optimal mode of shipment and the best carrier;
- Forecast the needs or possible delays to overcome potential bottlenecks;
- Manage carriers and communicate with them;
- Provide real-time information exchange among carriers, distributors, warehouses, and customers;
- Optimize routes;
- Arrange and track shipments;
- Handle payments;
- Measure and track performance;
- Generate and store compliance paperwork.
Therefore, TMS systems enable you to plan, execute, and optimize the physical movement of goods by unveiling and consolidating business-critical data.
Key Features of Transport Management System
There are an ample number of TMS solutions on the market. Even though they are meant to do the same thing – improve transportation of physical goods, you may find different sets of functions of transportation management system in logistics. We will detail the most common and more advanced features inherent to these apps you will want to see in the TMS of your choice to handle day-to-day transportation operations.
What to Look For in a Transportation Management System
Every logistics TMS system is different due to the functionality it delivers. However, when you decide to integrate this software into your company’s workflows, you will want to be sure it has all your staff needs to be more efficient and productive. So, here are the features to look for in a transportation management system.
Transportation Control Tower
A transportation control tower is a connected and personalized dashboard that brings key business metrics and events across logistics in one place. The control tower enables you to understand, prioritize, and resolve critical issues in real-time. It delivers advanced shipping notifications, track-and-trace information, en-route shipments, and delivery data to give you better visibility into inbound and outbound logistics. Moreover, it will enable you to better predict disruptions and how they may affect your customers to prioritize the response. In addition to that, a transportation control tower improves collaboration between all the participants of the supply chain, which allows for handling tasks faster and responding to unplanned events without delays.
Optimization Engine
To help you plan and orchestrate transportation workloads, transportation systems management should have an in-built optimization engine. It can give you different capabilities, including:
- Load optimization – to maximize the loading space in the vehicle according to regulatory compliance;
- Route optimization – to determine the most cost-effective or the fastest route between two points;
- Freight management – to arrange bids with carriers based on critical parameters like cost, capacity, risks, and more.
These engines will let you process big chunks of critical information quickly to help you make realistic and data-driven plans that reduce freight spending.
Freight Audit and Billing
A TMS transport management system has the capacity to help businesses solve one of the biggest issues in the transportation industry – freight audit. The app examines the bills, verifies their accuracy, and ensures no duplicates emerge. Moreover, the TMS makes the payment and sharing of ePODs easy thanks to the automation of processes. Owing to the digitalization of operations, error-free calculations are made without human intervention, which reduces billing reconciliation time and eliminates errors.
Contract Management
Management of contracts with carriers is one of the most challenging parts of the highly-regulated transportation industry. Advanced transportation management systems will take the burden of manual contract management off your team’s shoulders. With the in-built contract management module, your staff will manage complex agreements with extensive compliance and line item tracking. The TMS will let you define insurance requirements and set thresholds on the set policy amounts and track regulatory compliance details. It will also enable you to store and quickly locate contracts, terms, or other essential information in an e-database.
Integrations with ERP, WMS, and OMS
As we already stated, a transportation management platform works in close integration with other tools like ERP, WMS, or OMS. When you use the off-the-rack TMS, you have to make sure it seamlessly integrates with your tech stack. This will ensure a flawless data exchange, reduce redundant operations, and improve cooperation between departments.
Reports and Analytics
Making data-driven decisions is important in the modern business landscape. Therefore, a transport management solution should have the functionality that will enable you to generate reports in an appealing and easy-to-understand format. Usually, this software condenses data into charts, graphs, dashboards, maps, and more. Visualized information allows you to process data easier so you can make smarter, faster, data-driven business decisions.
Data Import/Export
When you work with third-party apps or would like to move data from spreadsheets to a modern TMS app, you will love the import/export feature. It will enable you to exchange information across multiple software or spreadsheets to reduce manual work and improve staff performance.
How Transport Management Systems Leverage Technology
Ever-changing global trade regulations and rising customer expectations push companies to invest in a transportation management system in supply chain to keep pace with a highly-digital world. At the same time, TMSs should become more sophisticated, feature-rich, and robust to provide businesses with innovative instruments for better workflow management, more accurate predictions, and faster responses to consumers. Therefore, transportation management system companies integrate emerging technologies into their digital products to improve visibility and enable users to deliver better customer service. We will go over some of the latest technologies that are paving their way to TMS software.
Artificial Intelligence (AI)
Without hesitation, artificial intelligence can bring many game-changing innovations to transportation-related workflows. This technology allows machines to learn through gathering and analyzing data. Thus, it helps automate learning and data collection to make smarter, safer, and faster decisions.
Internet of Things (IoT)
The Internet of Things can be a great solution in transportation that will help companies handle their day-to-day operations with less effort. This technology makes a network of devices connected via the Internet. These devices use sensors and are controlled by software. In logistics, IoT can be used for real-time fleet monitoring, enabling to get a remote 360-degree view of driving conditions, routes, and assets. Due to this, companies can quickly see if there are maintenance issues or delays with the truck.
Chatbots
Chatbots, also known as digital assistants, have become a common technology in transportation management systems. They enable streamline order processing by helping give immediate responses to customers on shipment information, process order amendments, book the place for shipment, and more.
Blockchain
Blockchain is a recent technology in TMS that helps companies address numerous issues. For example, blockchain allows easier coordination of documentation on a shared distributed ledger, reducing the need for physical paperwork and speeding up the documentation processing time. With the use of smart contracts, you eliminate the need for third-party processors, so you can send payments, record the shipment from origin to destination, and more.
Exploring the Market and Types of TMS Systems
When you would like to leverage technology to streamline transportation processes, you may wonder what solutions are available on the market today. So, we’ll ponder upon the TMS market to give you a better idea of what you can expect to get.
TMS system Deployment Options
Deployment of the TMS system is the process that involves making it available for the users. It usually includes provisioning the environment where the app will run, installing, and testing it. However, the steps required to deploy the software may vary depending on the deployment type.
For example, companies may offer multi-tenant TMS deployment, which means that you will share the environment with other tenants. This is a common practice for SaaS transportation management system providers, which allows you to significantly cut deployment and maintenance costs. You may also encounter private TMS deployment dedicated to a single organization. It will deliver the same benefits as the cloud based transport management system, but will give you the advantage of a private environment.
Also, there is an option of progressive delivery. This may involve deploying an MVP system, and then releasing new versions with richer functionality and fixed bugs over time. In contrast to it, there is basic deployment, when the service provider deploys an application or a new version on all the computers simultaneously when it is fully ready.
Comparing Custom and Off-the-Shelf TMS Transportation Management System
When you strive to embrace digital transformation and adopt a TMS app, you may follow two ways: to use off-the-shelf software or build a custom-tailored product. The thing is that there is no one-fits-all route, so you’ve got to consider several critical factors before you decide which solution will work better for your organization.
Off-the-shelf, also known as ready-made, transportation management systems are available for the general public. They are usually built to cover the needs of a wide range of companies, so contain basic functionality. Some ready-made TMSs enable you to customize features and integrate add-ons to extend your user experience. There is no way for you to control what features are added or removed, when new versions roll out, or when bugs are fixed. While these apps usually have integrations with common ERPs, CRMs, WMSs, or other tools, they may lack the syncing with your tech stack, especially if your staff uses custom-made applications. Usually, this is a cloud transportation management system, which can be accessed in a browser from any device. Your company is billed monthly, quarterly, or annually according to the package that covers your needs better.
As an alternative to off-the-rack TMSs, custom software is a unique solution built to satisfy the unique needs of a single organization. It includes as few or as many modules or features your staff requires to ensure smooth delivery of goods. The upfront payment for the development of a custom transportation management solution can be hefty, but your company will be spared from paying regular fees. Also, the TMS maintenance is totally on you, so your developers will release updates or add new features when you think it is relevant for your organization.
To make up your mind about what option will work better for your business, you’ve got to carefully estimate your project. Outline the characteristics of transportation management system you want to see in the app, which will cover the full spectrum of your organization’s needs. When your business is at its outset or you want to establish a small store, an off-the-shelf TMS will be a winning solution. When you want to scale your business and desperately need an application with a unique set of features, you should turn your attention to a custom transportation management system.
What Is the Best Transportation Management System? Top 5 Off-the-Shelf Solutions
MercuryGate
MercuryGate is a global powerful TMS delivering transportation management solutions for all modes of delivery. This is cloud-based software, meaning that users get remote control of the system from any device and any location with the Internet. It is equally effective for domestic and international transportation management since this is a global app. In addition, MercuryGate offers customization capabilities to let you adjust the system to meet your needs. You can also streamline interactions, set up workflows, and more. With this platform, you will review all rates, carriers, and logistics service providers (LSPs) to secure the best possible rate for each shipment.
The downside of this software is the lack of a free trial, which usually gives you an idea of whether the app is suitable for your needs. Also, the design is somewhat clunky, so it may be hard to use at first.
Target audience: shippers, 3PLs, freight forwarders, brokers, and carriers from small, medium, and large business segments.
Deployment options: cloud and desktop solutions.
Pricing: not provided by a vendor – paid per feature.
Pros:
- Supports global transportation management
- There are both cloud-based and desktop deployment options
- Great customization capabilities
Cons:
- The design is outdated and clunky, so may be hard to use
- No free plan
Oracle Transportation Management
Oracle TMS is a part of the Oracle suite built to manage the whole range of all transportation activities throughout your global supply chain. This system will provide you with the capabilities to proactively control and automate the lifecycle of orders and shipments. Moreover, you will get the tools for automating freight billing and payment from multiple sources, which will let you eliminate redundant activities. On top of that, this app will provide insights into internal operations and trading partner performance to let you measure performance and track trends.
Oracle delivers complex solutions, so this TMS may be hard to quickly adopt, considering the lack of free training materials and tutorials. You will also probably need to hire developers to configure this platform and fit it into your tech environment.
Target audience: a TMS is designed for small, medium, and large businesses.
Deployment options: cloud and desktop solutions.
Pricing: not provided by a vendor.
Pros:
- Easily integrates with other Oracle suite tools
- Offers powerful automation features
- Gives advanced analytics
Cons:
- May require hiring experts for configuration
- The lack of free tutorials and manuals
JDA TMS
With the JDA TMS platform, you will automate and synchronize all the processes inside a supply chain, which will let you minimize your expenses. With the control tower approach of managing daily processes related to shipping and distribution, this app allows you to transform every operation into a transparent chain. Use the JDA TMS to simplify communication between drivers, streamline supplier and carrier collaboration, create the most efficient routes, optimize loads, and more.
What you may not like about JDA is the lack of supply chain monitoring functionality. It also doesn’t boast integrations with WMS, CRM, and SRM tools, which may be critical for covering the whole range of transportation management processes.
Target audience: a TMS is designed for small, medium, and large businesses.
Deployment options: cloud and desktop solutions.
Pricing: not provided by a vendor.
Pros:
- Provides tools for routing, predictive analytics, load management, and more
- Enables simplifying communication between drivers, suppliers, and carriers
- Has a control tower functionality
Cons:
- Does not let monitor supply chain
- Lacks integrations with WMS, CRM, and SRM
Kuebix
With the multi-modal carrier network of the Kuebix TMS platform, you can manage national and international carriers, and all modes of transportation, including truck, air, rail, and ocean. This app provides limitless opportunities for your deliveries by leveraging visibility, control, and predictive analytics. It has a free trial and a free plan to let you test all its capabilities in action. Harness the power of shipment tracking, inventory management, billing and invoicing, container shipping management, 3PL management, and much more.
This platform is good to use for shipping, freight quotes, and invoicing. However, the response time from the support team leaves much to be desired. The carrier’s setup may get too complicated and you may see some deviations in shipment tracking time from to time.
Target audience: a TMS is designed for medium, and large businesses, being less effective for small companies.
Deployment options: cloud and desktop solutions.
Pricing: there is a free plan, but you should contact the vendor for pricing.
Pros:
- Has a rich functionality that covers a wide range of transportation management processes
- Boasts a multi-modal carrier network for a wide range of delivery management
- Has a free trial and a free plan
Cons:
- It may take time for a support team to give you a response
- The carrier’s setup can be complicated
- The shipping tracking can be inaccurate
Manhattan TMS
A TMS platform from Manhattan Associates is a part of a complex solution that gets easily extended on your demand. This cloud-based platform never needs upgrading and it is built exclusively from microservices. Thus, you can assemble a tool that has nearly everything you may need to manage your transportation activities more effectively. It has functionality for warehouse management, labor management, and slotting management, along with the capabilities of transportation management. You can fulfill orders, control logistics activities with an option to take immediate actions, manage dedicated and private fleets, model situations to be ready for any unpredictable event, manage equipment utilization, fluctuating fuel prices, increasing federal regulations, and changing customer demand, all from a single app.
The vendor doesn’t provide a free trial or a free plan. You may have issues generating reports that capture the right data with this tool. Also, customization and mods can get too expensive.
Target audience: a TMS is designed for small, medium, and large businesses
Deployment options: cloud and desktop solutions.
Pricing: you should contact the vendor for pricing information. You will be charged per feature, so the more functionality you get, the more expensive the cost will be.
Pros:
- Allows you to assemble the tool with the right functionality
- Covers a wide range of transportation needs
- Enables to model situations and predict possible fluctuations
Cons:
- Can be too expensive when you use many features
- It’s sometimes hard to generate reports containing specific data
- There is no free trial and a free plan
What Are the Benefits of a Transportation Management System?
Numerous reasons may urge you to consider building a robust transportation management system TMS. From meeting the evolving needs of your organization to assisting you in resolving your transportation-related issues, this app has a lot to offer. So, here are the benefits of transportation management system you can expect to have for your business.
Cut Expenses – Gain More Revenue
With the adoption of the transportation management system, your company will cut expenditures associated with executing goods transportation. For instance, this app will help you calculate the most cost-effective cargo transit route saving on fuel or driver overtime. In addition, it cuts administrative costs associated with managing all contracts with carriers and enables you to select the best carrier within your budget. By automating the workflows and reducing the risk of human errors, you can also save up to 1-5% of the annual freight cost.
Save Time – Focus on Growth
The use of technology makes the transportation process implementation less cumbersome and more time-saving. With automated operations, accurate predictions, and real-time monitoring, you can keep track of all the processes without the need to manage spreadsheets or navigate between different applications. One of the transportation management system benefits is that it syncs all business-critical data into one dashboard and enables you to easily access it. So, you can avoid the need for manual data collection and processing by allocating more time for value-added tasks that let your business grow.
Simple Interface – Easy for Staff to Adopt
When adopting off-the-rack TMS solutions, companies may struggle with integrating new technology. Staff may find the solution too complicated or may dislike the interface. Luckily, there is custom application development that enables you to build a solution your team will love.
In addition to that, your employees will enjoy the simplified data presentation as one of the advantages of transportation management system. This software collects data from different sources and makes it available on a centralized dashboard. This makes finding, managing, analyzing, and processing information more straightforward.
Get Data-Driven Business Insights – Make Smarter Decisions
The thing that users probably like most about the TMS app is the ability to make smarter decisions based on precise and consolidated data. With this software, you can access big chunks of real-time data from multiple resources to make business-critical decisions faster. Many transportation management systems also offer advanced reporting capabilities that allow generating reports for quick access to a vast information pool.
Make Your Customers Happy – Generate Stable Income
Many companies struggle to meet high customer expectations regarding goods shipment these days. Buyers expect to be provided with same-day or next-day delivery, and real-time tracking of their orders, all at a reasonable cost. A transportation system management is meant to help organizations ensure faster goods delivery, assist pick the most advantageous carrier, provide real-time tracking information, and more. All these things will seemingly contribute to keeping your customers satisfied and retaining their attention, which will let you generate stable income and grow your business.
How Much Does a Transportation Management System Cost?
Expenses you may expect to spend on the implementation of a transportation management system may vary a lot depending on numerous factors. The most critical one is whether you decide to adopt an off-the-rack or custom application.
When you settle on using a ready-made TMS tool, you’ve got to pay a fee according to the plan that covers your needs or purchase the license (between $10,000 to $250,000). Then, it’s important to consider whether the software vendor implements the solution. If not, you’ve got to find a third-party service provider that will configure and maintain a licensed TMS application. The service cost is typically a certain percentage of the initial license price and should be checked with a vendor.
If you take the route of implementing a custom transportation management system, this may be way pricier than adopting an off-the-rack application. Transportation management system requirements, timeframes, the team size, the country of origin of developers, and other factors are all should be taken into account. The average price range for the custom application is $100,000 – $300,000. But the more sophisticated and feature-rich the software goes, the more it will cost.
Wrapping It Up
Digitalization is inevitable if you want your business to thrive. When your company has to deal with the delivery of goods, it will benefit from a transport management system. It will help you transfer transportation-related flows into digital space to improve the quality of working processes, cut shipping expenditures, ensure faster and optimized delivery, and more.
We would like to be a part of the conversation when your company will be looking for a team to develop a custom TMS solution. At HebronSoft, we have deep domain expertise and profound app development experience to bring even the most complicated software to life. Let’s discuss your project to see how we can help your organization become more digitally friendly