From the growth of e-commerce to major disruptions requiring faster, more agile responses, the logistics industry keeps growing in complexity. And with that complexity comes an even bigger need to optimize supply chain management activities to keep up with constantly shifting priorities.
Many businesses throughout the supply chain recognize that manual logistics management just doesn’t work in today’s environment. The push to optimize and improve efficiency of supply chain operations has led to a dramatic rise in transportation management solution (TMS) adoption. One report placed the global TMS market size at $13.61 billion as of 2023, with a projected compound annual growth rate of 17.4% through 2030.
What Are the Benefits of a TMS?
The benefits of a transportation management system make it a compelling choice, especially for reasons such as:
- Cost reduction: By optimizing loads, routes, carrier choice and more, a TMS gives you lots of opportunity to minimize your transportation costs.
- Increased efficiency: A modern transportation management system often comes with powerful automation tools to reduce manual labor and free up your team for other tasks. Your TMS can take care of things like building loads, choosing the right carrier based on capacity and destination and optimizing your routes to minimize fuel costs and meet demanding customer deadlines.
- Improved accuracy: Those same automated tools that keep your operation running efficiently can help catch errors before they affect shipments. Using real-time data, your TMS can ensure correct inventory levels and tracking so the right items make it to the right place at the right time.
- Customer satisfaction: Thanks to the above benefits, the end result is customers who receive more of their shipments on time, helping your business build stronger relationships.
The critical capabilities of a quality TMS that make it possible to deliver all of those benefits include features such as:
1. Integrations with Carriers and Systems
In order to be an effective tool for your logistics operation, your TMS must feature two types of integrations: carriers and your internal systems.
Carrier integrations allow you to see capacity, rates, delivery speed and other information in one central place. This makes it far easier to choose the right carrier for each load. And with automation tools built into your TMS, the software can take the extra step of choosing and scheduling the carrier for you – further improving your efficiency.
Equally important is that your TMS integrates fully with your other critical systems, particularly your warehouse management system. This integration allows you to sync your transportation management tasks with your inventory levels, order status, dock availability and more. Combining these two components allows you to get the greatest benefit from your TMS.
2. Load Planning and Freight Consolidation
One of the core components of a modern transportation management system, load planning analyzes available capacity, comparing it to the loads that need to go out and choosing the right combination of vehicles to get everything out on time.
One major benefit of this planning capability is that the software can combine smaller loads with the same or similar destinations into a single load. This reduces the total number of trips, which reduces costs, fuel consumption and emissions.
3. Carrier Management
Good transportation management solutions don’t just have to go by available capacity to select a carrier for each load. You can set other metrics like speed and pricing, ensuring you’re getting the best carrier for your specific goals.
The software can also help you analyze carrier performance by showing you which carriers met their on-time promises, allowing you to choose the most reliable carriers to partner with.
4. Route Optimization
Aside from filling available load capacity in the most efficient way possible, choosing the best route is one of the most important things you can do to both reduce shipping costs and improve your environmental footprint.
By analyzing the destination and available space of every load, your TMS can offer the most efficient routes that minimize travel time and the number of vehicles going to each destination. Optimizing both your loads and routes ensures your business is prioritizing resource efficiency and cutting down on fuel emissions.
5. Real-Time Tracking
No longer just a nice-to-have, real-time tracking has become the expected norm for many customers. Whether you’re shipping directly to a consumer or to a retail location, those customers want to know where their shipment is at every step in the process and when the shipment is set to be delivered. A TMS can give you, and your customers, real-time updates for peace of mind.
6. Document Management
Bills of lading, proof of delivery, customs forms – the documentation surrounding every load quickly adds up to an almost unmanageable mountain as your business gets more complex. Digitizing all of these documents and storing them in your transportation management system makes them searchable and trackable, giving you a much easier way to meet compliance requirements.
7. Freight Audit and Payment
Errors aren’t only an issue before a load goes out. They can also happen during billing, resulting in overcharges. Your transportation management solution, however, can automate your processes, taking care of bill pay and freight audits using already imported data.
8. Analytics
Running a data-driven logistics operation means tracking a lot of information. Everything from transportation costs and route efficiency to carrier performance and costs per customer (or product) has an effect on your overall efficiency and the health of your business. Using a modern TMS with built-in reporting and analytics helps you stay organized and maintain your ability to make informed decisions.
9. Experience and Support
While the technology itself is important, transportation management solutions are only as good as the team behind them. A provider with supply chain experience and responsive support makes a dramatic difference in your level of success with any solution.