TMS Explained

A Guide to Transportation Management Systems


What is a Transportation Management System?

A Transportation Management System (TMS) is the core software that companies use to manage their logistics and transport. It is used to streamline transport management processes, from bookings right through to payments, improving operational efficiency and reducing process duplication and errors. This provides companies with end-to-end visibility of transport flows, enabling faster, data-driven decisions and real-time communication of transport requirements to key stakeholders across the supply chain.

A TMS is used by both enterprises and trucking companies:

  • Trucking companies commonly use a TMS as the primary software system to run their business. A TMS is normally used to manage the entire process across dispatch, drivers in-cab, pricing and billing for transport and can also be used to work digitally with some key customers. This often integrates with their telematics and accounting packages.
  • Large enterprises that either manage a dedicated fleet or contract trucking companies for their transport needs tend to use a specialised TMS that integrates into their core ERP-system. This enables their transport operation to use purpose-built software whilst being fully integrated with their overall business and supply chain functions.

Overall, a TMS makes it easier for a company to manage its transport processes, reduce its administrative burden and improve the efficiency of its transport operation.

The importance of having a TMS

A TMS ensures that transport is streamlined and efficient. It saves administration time, prevents errors and helps ensure everyone is on the same page, viewing the same information.

In recent times, through the pandemic, there has been an uptake of TMSs in small and medium-sized US companies. As supply chains have been challenged and many people forced to work remotely, the importance of having information digitized and visible from anywhere has become paramount.

Without a TMS, companies generally rely on spreadsheets, emails and phone calls to manage their transport operations, which may lead to mistakes, inefficiencies and difficulty communicating routing and scheduling changes to the drivers.

Key functions of a TMS

Centralize and organize transport data in one place

This lets all users see all the same information in one place and in real-time - including drivers, logistics managers, dispatchers, plant staff and more.

Systematize processes like bookings, payments and scheduling

Transport bookings can be received digitally, while drivers can receive their day’s work on their mobile devices and account staff can automate payments – work is streamlined and paperless.

Tracking of shipments and communication of transport information

Customers can receive event notifications to keep up-to-date with the status of product movement and drivers can communicate with customers using prompts e.g. “I’m on my way". Electronic dockets ensure events are time-stamped and digital records are stored.

Specialized TMSs may also have features such as

Network (or fleet) and route optimisation

Significant gains in transport efficiency can be made through smart optimisation by helping to remove unnecessary transport movements and automate difficult scheduling workflows.

Industry-specialized functionality

Many industries require specialized functionality to truly bring real-world efficiency. For example, in rural and primary industry transport, the movement of livestock considering animal welfare, the consideration of heavy vehicle routing networks and the dynamic nature of farm milk collection volumes are all vital to consider.

Specialized transport insights dashboards and reporting

Data available in the TMS helps companies gain insights into their transport.

tms software dashboard displayed on a tablet

Benefits of using a TMS

The benefits of using a TMS will vary depending on the platform as not all TMS systems are the same. Some of the key benefits of leading TMS solutions may include:

Increased visibility

Dispatchers have live visibility of their fleet and can easily plan their fleet’s work, make real-time route corrections, and track orders in real-time. Enterprises that transport goods can get enhanced visibility of where their goods are in the network and an overview of their transport workflows.

Reduced administration

Systematized and automated processes reduce time-consuming paperwork, phone-calls, manual data entry, and process duplication while allowing for real-time, digital communications with drivers and other stakeholders about schedule changes.

Reduced errors

Fewer manual workflows and automation of processes reduce errors. Automated pricing of routes improves accuracy. Electronic dockets lessen the need for paper.

Reduced congestion

Visibility of transport flows and booking-slot functionality enables pickup and delivery congestion to be better managed in some TMS systems – truck drivers know when is the best time to avoid delays.

Reduced mileage

Sharing jobs and routes directly to a driver’s device or tablet reduces unplanned driving distances from drivers taking less optimal routes and not following the dispatcher’s schedule. Fewer errors also result in reduced mileage driven.

Improved Health and Safety

Some Transportation Management Systems display hazards in real-time to the driver before they enter a location.

Some specialized TMSs, such as M2X, focus on real-world optimisation of fleets and routes. In this case, billions of scenarios are analysed to provide the most efficient way to schedule the work across the fleet or transport network whilst adhering to industry-specific constraints. Benefits include:

  • Reduced distance travelled
  • Reduced travel time for products
  • Reduced carbon footprint

Who needs a TMS?

All businesses that ship and receive goods regularly will benefit from using a TMS, whether they are a transport provider (road, rail or shipping) or an enterprise moving their products to market or between locations. Both small operations, for example, with one or two trucks, or large companies operating large fleets will benefit from using a TMS to improve efficiency.

Why do carriers need a TMS?

Many TMS software features are crucial to the daily operations of transport companies. Carriers need a TMS to book, schedule and dispatch transport jobs to drivers. A TMS gives management and dispatchers an overview of the transport tasks requiring completion while enabling drivers to view their daily transportation tasks. A TMS can also digitize and streamline the pricing, invoicing and payments processes for carriers.

A TMS can help carriers communicate better with both drivers and enterprise customers. In addition, with increased fuel prices and a focus on carbon emissions, carriers use a TMS to reduce travel distance due to driver error or poor directions. Some TMS systems - like M2X - also enable the optimization of routes and fleets to improve transport efficiency and sustainability further and provide accurate information about fleet analytics and carbon emissions.

map of global logistics featuring shipping containers

Why do Enterprises need a TMS?

Enterprises use a Transport Management System to improve efficiency, reduce costs and increase the visibility of their transport.  Increasingly, enterprises use a TMS to help meet their emissions reduction goals by efficiently using their carrier network.  

Many enterprises have complex transport tasks, outsourcing jobs to multiple carriers and third parties; having access to a live view of work being undertaken gives greater visibility and efficiency.

In the current environment, finding transport capacity to undertake jobs is becoming increasingly difficult. A digital TMS may allow enterprises to reach out digitally to their carrier network to source the capacity required.

A TMS allows for better decision-making and carrier relationship management, including DIFOT (delivery in full, on time) reporting.

A TMS may also ensure that all stakeholders view the same information displayed digitally.

Cloud TMS

In a traditional on-premise TMS Platform, a company needs to host everything in-house, while in a cloud environment, a third-party stores the information.

The move to a cloud-based TMS allows a greater number of small and medium companies to access a TMS, as it requires less investment and system support than hosting the platform in-house. It also allows easy access from any location with an internet connection. This is crucial with the current hybrid working arrangements and for staff that travel off-site.

Users can rely on more live and real-time information when using a cloud-based TMS. They can also benefit from regular feature releases and continuous improvements from their TMS provider.

global logistics and truck transport operations

What are the future trends of TMS?

Shift to adopting a purpose-built TMS that integrates easily with other internal systems

A best-in-class TMS will have deep specialized transport management functionality and therefore may sit outside the traditional ERP software. This removes the requirement for expensive customisation in the ERP and the wait for necessary upgrades. It also enables industry customisation – for example, in the livestock industry animal welfare is of paramount importance so the TMS takes into account many factors related to this, such as pen loading density on trucks and time in transit.

Trend toward adopting a digital eco-system approach

This is being increasingly adopted where all partners in the supply chain, from enterprises and carriers to final customers, all share the same live data.

Focus on future-proofing of supply chains for workforce challenges, resource shortages and sustainability objectives

Users of Transportation Management Systems will increasingly require their technology to be leading edge regarding improving supply chain efficiency and sustainability through transport optimization. These TMSs will increasingly use AI and other tools to continually improve the optimization of transport. These improvements will provide increasing benefits in CO2 emission reduction, lower transport costs, more efficient use of transport assets and reduced travel mileage.

How to choose the right TMS

  • Ensure data flow is transparent, easy and secure between stakeholders
  • Check that the system can adapt and grow alongside your business
  • Verify that there is a history of strong ROI (Return on Investment) for users
  • Find out if there are dedicated maps and functions for your country of operations
  • Understand how the TMS will integrate with any existing technology you may have
  • Book a demo and see if there is a friendly user interface (this will save you time)
  • Ensure the company has after-sales support (ideally locally)

Is the M2X TMS right for you?

M2X is a TMS solution that has been purpose-built from the ground up to suit the needs of the agricultural sector. M2X has industry-specific functionality which enables digitization and optimization of transportation for meat processors, feed yards, livestock buyers, milk processors, fuel delivery, stockfeed and fertilizer distribution and more.

M2X is a dedicated TMS platform that allows you to upgrade your existing systems or processes without being held back by specialized customization requirements just to suit the needs of your transportation flows.

Furthermore, the M2X platform has not only been built to undertake your transportation requirements but also to integrate into your back-office solutions to ensure your whole team is operationally efficient and has the information needed to make great decisions.  

M2X has several case studies that clearly show how using a TMS with the specifics of agriculture in mind can help enterprises and carriers save time, money and carbon emissions. Make sure you book a demo with one of our team today.

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