Strengthening your supply chain one link at a time. 

Benefits of a Transportation Management System

A Transportation Management System (TMS) is a powerful tool that enables businesses to gain control over transport costs and create better visibility of internal logistics processes, resulting in higher customer satisfaction. This will make a company more competitive, and boost sales thus helping businesses grow. Considering the ever-evolving global trade environment, it is important for businesses to have a system that will allow them to successfully navigate complex transportation processes, collect available data and analyze them accordingly.

Benefits of a Transportation Management System

• Freight Cost Savings – benchmarking and being able to track year-over-year spending is one of the most important benefits of a TMS, the ability to show ROI on the product and justify the cost of the program is a common expectation from any shipper.
• Data visibility and Control – the data that comes from a TMS can be anything from carrier KPIs such as on-time delivery / pickup, primary tender acceptance and shipment updates to load processing and network cost. The control comes from control of the SOP creation and system process flows (routing guides, mode selection and carrier pricing).
• Process standardization – many times each desk at a business follows their own processes, they will share many high-level rules, but each desk will be independent of the others. A TMS would standardize all desk level activities into standard flow, with reporting to show any deviation.
• Automation – the processing of orders along with automated carrier assignment, tendering updates and payment, put that with reporting and analytics for decision support, the automation can save time and increase productivity while adding the ability to scale as the companies grow.
• Shared company resources – using a single database for company data like approved carriers helps share that data across multiple contacts. This value will allow single users to see resources that they would not normally know are available.
• Scalability – one of the primary reason companies look at add a TMS is for future growth, many organizations are confident that they are holding their ground today but not sure how they would adjust and handle the next 5 years. The TMS through automation, standardization of process flow and data visibility allow for one system to consume massive growth without adding resources to manage that growth.
• Access to 3PL assets – one of the more overlooked aspects of the 3PL and TMS relationship is the access to their assets. These assets are their people, processes and technology. Many 3PLs have hundreds of people with 20 plus years of experience managing some of the most complex supply chains in the world. They have experts in load consolidation, mode selection, carrier managers (and the carrier relationships), engineers, Lean Six Sigma and freight audit and payment. These assets should be viewed and added to the evaluation of any TMS provider.
• Reporting and Analytics – the data a TMS provider has access to is larger today than it has even been, several TMS providers have a spend over $20B as well as the access to other industrial databases. This amount of freight data helps TMS providers add supporting information to shippers to help them make decisions to better guide their transportation spend.
• Carrier management support – TMS carrier teams have the process and experience to help any shipper create / maintain their own carrier team or completely outsource this function. Their data can show target rates as well as carriers that can support execution functions. This can help identify and add new carriers as well as add structure to help support carrier management activities.
• Increase Efficiency and Reduce Operational Cost – the efficiency that a TMS provides is based on standardized processes and ensuring that the preferred carrier is assigned and executes the freight.
• Improved Customer Experience – customers are demanding increased visibility and interaction, mostly without them asking for it. Increased data visibility to where the order is in the cycle allows a better experience with customers. TMS’s are built for that data sharing, being able to view data points on where the order is along with who the carrier is and better ETAs can help drive this process.
• Environmental Impact – the ability to not only impact the environment but also track that impact can be a critical part of any TMS. There are many ways that a TMS can help track the impact; mode switching (Truckload to Intermodal), consolidation (increased units per load), and reduce empty miles (use private fleet or underutilized fleet power) are just a few. Being able to calculate that impact is something TMS providers will provide as part of their overall support strategy.
• Simplification of supply chain processes across geographies, modes, and carriers – TMS providers have standardized processed that can be interchangeable depending on several factors. By setting these processes it will streamline both the process of order management but also around carrier execution and reporting and analytics.
• Improvement in visibility and security, especially in transit – freight is at its most venerable while in-transit. Providing visibility to the location and activity around the freight will add confidence while in-transit. There are many data points that can be shared with in-transit, this can be anything from current location to the temperature of the trailer and fuel levels.
• The ability to track freight, both locally and globally, on a single platform – many TMS providers can not only track domestic freight but also international orders as well. This allows visibility across the entire network through a single login.
• New business insights as better reporting leads to faster action and process improvement – reporting is a cornerstone of any TMS, using that data is a different story. TMS providers can collect many data points during the order execution process. This data can help drive all types of behavior like; carrier management, procurement, customer satisfaction and decision making. Using this data to learn from the history will allow processes to be adjusted for future shipments and can help build a dynamic environment moving forward.

While each company will select a TMS vendor based on their own needs it is important to find a provider that checks as many boxes as possible. Many times, the best provider may not have all the required functionality, but it is a better cultural fit and both companies are aligned on the strategic direction. Selecting a TMS is akin to selecting most software vendors, there are many different value streams, it is best to document, use weighted averages and make the best selection supported by data.

 
—Brandon Hamilton, St. Onge Company
 
 

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