Transportation itself doesn’t generate revenue. But we can learn how to optimize it. For example, a common problem is underutilized freight capacity when trucks or shipping containers travel partly empty. Although there are several reasons for that, generally it stems from a lack of efficiency and automation: not using digital bills of lading, not having information about the vehicle’s load factor, or creating separate shipping orders for every product rather than consolidating them. Add to that having no idea where your product is and when it will be delivered or not knowing how well your carrier does their job. Basically, shippers, retailers, and logistics service providers may have only a very vague idea about their transportation process. It’s time to fix that.
What a Transportation Management System (TMS) is
A transportation management system or TMS is a category of software that helps in planning and executing the physical movement of goods. It can be used by all members of the supply chain from manufacturers to distributors and third-party logistics providers (3PLs) — virtually any party that wants to coordinate shipments.
The sought-after feature of TMS is its control tower capabilities, illustrated below. Overlooking the whole shipment process, a TMS control tower captures data about goods in real-time using API or EDI technology and thus provides its users with valuable data from manufacturers to distribution centers, through delivery, and to customers. This data can in turn be transformed into analytics on your supply chain performance, financial situation, and customer service issues. Which is where you start your optimization journey.
There are two main user groups of TMS:
- shippers, manufacturers, and distributors
- third-party logistics providers (3PLs).
Vendors usually offer the same platform for both with some feature exceptions.
Essentially, a TMS allows you to plan and execute your shipment processes and have visibility over them. Such software is often modular, meaning that you can get different functions separately depending on your needs. Besides, your ecosystem of tools may consist of different modules of logistics management systems (LMSs), warehouse management systems (WMSs), and of course, TMS. Some features will interconnect with fleet management software as well.
Vendors usually offer a wide collection of possible integrations to make sure you can freely connect to your WMS or ERP of choice. We will talk about those capabilities later. Now, what functions can you expect a TMS to cover?
Transportation planning features
In a TMS, information about the orders is accessed by all related parties from planners to drivers and customers. It’s a consolidated space in which to view and manage your transport requests that includes these features.
Entering a transport order. Manual or automatic, order entering includes filling in all order details like weight and setting up current location and destination. A system often automatically assigns a route from preset routes, including which type of transport, vehicle, and even driver should collect it, and where and when to deliver. If you have an integrated WMS, this order automatically goes to its scheduled transport.
Order overview. Created orders with their routes and assigned transports are available to order planners and drivers on a dashboard that allows them to see their workload for the day. All documents are also automatically linked to their corresponding orders so the driver can keep them on their smartphone or tablet without using any paper. As drivers update the status of orders en route, planners have an overview of all scheduling changes and truck locations to apply changes to the schedule and expected time of arrival.
Most TMSs tender shipments for you automatically. The list of carriers is organized so you can always access the vendor according to your specified parameters or allow the system to choose a carrier for you. Most systems have broadcast, waterfall, and status tendering methods. For example, IntelliTrans has the following tendering strategies:
- least-cost, when it chooses the lowest rate and expands this offer to other carriers,
- auto-award when shipments are always assigned to specific carriers,
- allocations when using contractual percentages or by the load numbers (4 numbers to Carrier A and 3 numbers to Carrier B),
- service-based when picking the best-performing carrier,
- customer-based when picking the carrier that a customer prefers, etc.
Shipment rate management
One of the most important tools within a TMS is a rate engine. A rate engine calculates transportation rates for the parcel, LTL, truckload, and intermodal shipping based on rules: base rates, discounts, and contract agreements. A TMS should be able to create custom pricing rules to accommodate the most complex tariffs and automatically send a quote to a client as they make the request.
You can plan the loading space of trucks, trailers, and containers and receive a calculation of the available loading space, considering the maximum loads and weight. For example, you can enter information about your vehicle measurements and save it for future reference, which is known as master data. Data about the item dimensions come from the freight order. Some TMSs have the 3D load plan feature where you can see and change the load distribution and space utilization.
Transportation execution features
Whether you have a private fleet or use a common carrier network, in TMS, you can see and utilize your assets on a single platform. Although not all TMS providers have advanced fleet management features, you can assign drivers and equipment, and manage dispatch and financial settlement for drivers. If you’re using dedicated fleet management software, you can go as far as managing fuel consumption and environmental impact, keeping track of vehicle checkups, and controlling the truck remotely.
Dock scheduling and yard operations
Shippers spend most of their time scheduling dock appointments and truck drivers waste time waiting at warehouse docks for their turn. Integrating with a Warehouse Management System allows a TMS to include dock scheduling and load sequencing in the transportation plan. Here, you have an overview of all warehouse and transportation constraints and can make more accurate schedules (automatically or manually), apply your business rules and rules of every location, and always have a load status available to you or customers.
Transportation visibility features
A TMS usually allows for connecting to partners and customers via email, but some vendors offer connectivity via self-service portals, where customers can create and view the status of their orders while partners can send tender offers and review and submit invoices.
Although planning is the core function of a TMS, routing is not its strong suit. To schedule and solve routing problems, many businesses use route optimization software that, unlike TMS, have all types of algorithms to calculate the best routes. So, you’ll most likely have to use a combination of these tools: routing tools will pull tons of data from TMS, which in turn can analyze route performance.
Tracking, tracing, and event management
Track and trace technology allows you to record the movement of items during transportations in real time. Meaning that you don’t have to contact the driver to learn the truck’s location but can view it continuously. This is often used to give customers information about their parcel location and for theft and scheduling purposes. A Personal Digital Assistant device in a truck or a driver’s smartphone is linked to the TMS via such telecommunication systems as GSM, GPRS, or UMTS. Consignments, pallets or crates can also be traced via barcode or RFID tag: Each time it’s scanned, a TMS receives an update on its location.
Business intelligence and analytics
Business Intelligence is the practice of improving business results using data. Some TMSs come with an integrated BI infrastructure, running data extraction, transformation, and data warehouse on their end-to-end platform. The biggest pluses of BI over regular spreadsheets are real-time reporting and an array of custom reports that anyone from the transportation management team can generate for their needs.
For example, you can get a performance analysis based on each carrier, product, or route, and then make informed decisions and optimize the underperforming route. Get the analysis of your costs filtered by transport mode, see what customers bring the largest volume, monitor the margin data, and improve the operational workflow.
Overview of the main TMS vendors
Before we go into specifics, here’s what you can expect from most major TMSs:
- all transport modes coverage: land, air, sea, sometimes rail, and intermodal;
- capabilities for different use cases from shippers to 3PLs;
- subscription-based payment model;
- cloud deployment;
- a mobile app.
Now, what are the leaders and what do they offer?
Oracle Transportation Management (OTM) — complex and comprehensive
Oracle provides a large network of supply chain management products, and OTM is one of them. It’s created for shippers and 3PLs, and both can freely communicate using different formats including XML. Apart from standard order management and visibility, OTM has:
- Business process automation capabilities
- Optimization engine that finds you better rates and partners
- Analytical dashboard with forecasts and milestone alerts
- Fleet management and financial performance of your fleet
- Automated payment and billing both for shippers and 3PLs
- Optimized bid execution
- A mobile app with interfaces for two different cases: private fleet drivers and third-party carriers
If you’re up to the challenge, have the budget, and don’t want to be overwhelmed by choice, get the Oracle Transportation Management Cloud — an ecosystem of tools that will serve all your needs from complex routing to forwarding and brokering.
SAP Transportation Management (SAP TM) — undisputed choice for SAP users
Oracle’s biggest competitor SAP also has an ecosystem of tools, including an ERP and a WMS, so it makes sense to use SAP if you have their other products. Apart from standard features, SAP TM covers the following:
- Generating routing proposals
- Synchronize sales and order scheduling
- Managing driver resources in an interactive Gantt chart
- Ensuring the safe transportation of dangerous goods
- Automatically update freight documents
- Advanced analytical dashboards running on SAP HANA.
MercuryGate — modular and beginner-friendly approach
MercuryGate promises fast deployment — within days — and allows for complex configuration. It standardly adapts to all major ERPs and WMSs. You can mix and match tools in five product areas:
Transportation Management — a classic TMS with customizable workflows, carrier compliance and contract management, EDI messaging, and global trade capabilities.
Transportation Planning — an optimization solution that integrates with carrier APIs or EDI to receive actual rate information, forecasting load, with robotic process automation capabilities, and custom logic and routing for advanced scenarios.
Visibility and collaboration — your Control Tower tool with supplier, customer, and carrier portals and agent delegation.
Freight settlement — powering accounting, integrates with any financial system and performs complex claim documentation.
Business Intelligence — a complex analytics tool with embedded data warehouse that uses both internal and external data for insights and provides unlimited report customization.
On its website, MercuryGate offers an extensive knowledge base and training opportunities. You can also book a custom demo and use an ROI calculator to make sure their tools fit your needs best.
BluJay — easy to configure tools for the whole supply chain
BluJay’s distinctive feature is its Global Trade Network of 50,000 shippers, carriers, suppliers, brokers, and forwards you can amplify your own network with. Connectivity happens via EDI integration, which manages contacts, exchanges and converts files, and creates a data flow between partner systems.
BluJay has two TMS solutions:
Transportation Management for Shippers — a tool for managing your own freight that has a supplier portal and yard management capability, which is enough to provide visibility to you and your partners.
Transportation Management for Forwarders — software that automates the workflow and provides control over financial processes with standard integration with Sage ERP and an API ready to be integrated with any tool.
Besides, there are additional tools that can be purchased separately and freely integrated with one another:
LSP Platform — a combination of tools for logistics service providers that includes Transportation Management, Warehouse Management, the MobileSTAR app for drivers, Yard Management, and Customs Management.
Parcel solution — a complex multi-carrier tool that generates packing slips and labels, calculates shipping quotes, and provides carrier compliance.
MobileSTAR — a driver app that captures progress in real time.
DropShip — a tool for retailers for automated drop shipping.
Kuebix TMS — free option and many more
Kuebix’s biggest advantage is its tiered options: Free Shipper, Business Pro, and Enterprise. The free SaaS version is a full-fledged TM solution that allows you to:
- Track shipments
- Compare rates
- Book shipments online
- Create shipping documents
The Business Pro version has all that plus:
- Company-wide collaboration
- Multiple users
- CRM for carriers
- Financial management
When getting an Enterprise package, you get an integrated modular solution, which allows configuring your ideal TMS. Some of Kuebix modules include:
- Dock scheduler
- Yard manager
- Order and route optimizer
- Collaboration portals
- Container tracking and so on.
Kuebix also has a long lineup of available integrations starting with Oracle, SAP, and Microsoft Dynamics and ending with QuickBooks, Sage, and WooCommerce.
The custom way
The nature of the transportation industry and the pace at which it’s digitizing makes it impossible to purchase and run a TMS solution out of the box — it will most likely require customization. Most vendors provide APIs and web service architecture so you can apply some engineering efforts to connect them to your existing systems. Yet, this process becomes increasingly complex if you pick several tools from different vendors, need to move from a legacy system, and write some custom code.
Another option is developing a custom TMS from the ground up. If you don’t have a reliable ERP or warehouse system to connect a TMS to, it makes sense to build exactly what you need instead of trying to combine different products on the market.
The road so far and ahead
Freight volume keeps growing every year, impacting our demand for the transportation market and each company involved in it. While the industry is evolving to meet more governance regulations, sustainability demands and changing consumer behavior, brands’ needs change as well. They strive for more automation, transparency, analytics, and first and foremost — digitization.
Shippers, suppliers, and 3PLs must abandon paper-based processes not only to compete but to survive. And it’s not that hard when the technology is here:
Machine-to-Machine Communication — when logistics companies are connected, we get improved visibility, better performance and lower costs.
Localisation technology and RFID — vehicle and parcel tracking allows us to react to disruptions faster and generate greater efficiency.
Mobile access to customers — customer satisfaction depends on how much information they have about their goods.
We must consistently deliver on these expectations so we can integrate real innovation: robotics, driverless transport, and AI.
Originally published at AltexSoft tech blog “What is a Transportation Management System: Benefits, Features, and Main Providers”