What is a Transportation Management System (TMS) and How It Works?

Being competitive in the trucking industry, especially if you are well-known and hold direct shippers’ contracts, can be challenging without the use of technology. One of the industry’s most important and commonly used features is the Transportation Management System (TMS). If you are a beginner in this business or trying to learn more, this guide will explain what a TMS is and its significance in the market. So, what is a transportation management system?

A transportation management system is like the brain of your shipping operation. A TMS is software that helps in scheduling and controlling the logistics functions so that the execution and optimization of the entire process are technology-driven. Everything from planning and buying to delivering the package, is tracked within the platform. It gives insights into the operations on a day-to-day basis, controls compliance documents, and is responsible for the shipment's timely delivery at a reasonable price. A TMS further automates the entire process of shipments for land, air, and sea delivery.

What is a Transportation Management System? A Deeper Dive

The heart of logistics is the amalgamation of a variety of processes, which is made easy with the help of a Transportation Management System. TMS is more than just software; it is a tool that connects the shipping works, including planning, procurement, delivery, and lifecycle management. The software's enhanced visibility gives organizations the power to optimize transportation planning and execution, increasing satisfaction and sales. Compliance with complex trade policies has become increasingly difficult in today’s economy. Having a system that can manage all of that is vital.

But who exactly uses a TMS?

TMS isn’t just for massive corporations. It's a valuable tool for any business that regularly ships, moves, and receives goods. This includes:

• Manufacturers: needing to move raw materials and finished products.
• Distributors: managing complex distribution networks.
• E-commerce companies: dealing with high volumes of individual shipments.
• Retail Businesses: replenishing store inventory efficiently.
• Logistics Service Providers (3PLs and 4PLs): Managing transportation for multiple clients.

Actually, almost all industries use a TMS, from life sciences to construction. While cloud-based TMS solutions are now being used by smaller businesses, they were previously preferred by those who spent more than $100 million a year on freight.

Transportation Management System Software: The Basics

Now, let’s see what comprises transportation management system software. TMS logistics software has a complex set of features aimed at achieving simplicity and maximizing efficiency:

• Transportation Planning & Execution: It automates carrier rate comparison along with booking. With it, you can decide on the best mode of shipment (air, sea, truck, or rail) and the best possible route. Also important are load optimization along with track and trace functions in real time.
• Freight Management: Efficiently manages everything from quoting to contracting; freight costing; order management; rate determination; and freight billing and settlement for multimodal and intermodal transportation. Multimodal transportation is the transportation by one or several means of transport such as air, ocean, rail, and truck all under one contract. Intermodal transportation is where a single shipment is handled by different companies.
• TMS Dashboards, Reporting, & Analytics enable real-time monitoring of every facet of transport operations, allowing for intelligent decision-making. It comes with features such as predicting transportation needs, analyzing profitability over rates, and swift adaptation to emergencies. Here, every piece of information transforms into actionable insight that helps you improve continuously.
• Compliance Management: A powerful feature of TMS is ensuring that all of your operations are in line with the current legislation on hazardous materials, driver hours, and international trade.

These features address real-world problems. As a trucking company, HMD Trucking understands that keeping freight moving smoothly depends on smart planning and execution. That's TMS meaning for us – optimization.

How does a TMS work exactly?

A transport management system (TMS) links to different carrier systems to fetch, save, and pool carrier-specific data, including estimates, contracts, and invoices. It then streamlines combinations of routes and modes of transport and follows the progress of deliveries. Often, a TMS integrates with other software within a larger supply chain management system, where it becomes part of the ERP-enabled system. The selection of proper TMS software will increase throughput of operations. Along with integrated functions with accounting, order processing, and billing, integration with a Warehouse Management System (WMS) takes care of warehouse operations such as palletization, order picking, shipping and receiving, and stock inventory control.

Key Advantages of a TMS

Let's take a look at why companies are increasingly utilizing TMS solutions:

1. Cost Savings: A TMS significantly reduces costs in several ways, lowering administrative overhead through automated carrier rate comparison and booking. It also helps reduce shipping costs by identifying the most cost-effective options. Finally, load optimization helps to reduce transportation expenses. This means building pallets and maximizing the trailer space carriers use every day.
2. Real-Time Visibility: With a TMS, work and outcomes related to the movement of containers over land, air, or sea are easily monitored. You can evaluate how effective operations are and whether the objectives are being met (KPIs) from the TMS dashboard. Modern TMS solutions also flexibly propose optimal routes based on real-time unplanned happenings.
3. Improved Customer Satisfaction: Meeting customer commitments is vital. A TMS helps identify and address issues that could cause delays, improving the overall customer experience. This also provides value by allowing customers to track delivery progress. Modern TMS solutions also have to address the growing customers’ demand to provide them with flexible options of “last mile” deliveries, allowing them for smooth pick-ups from stores or specific points or parcel lockers in the city (if the local legislation does not prohibit it).
4. Reduced Lead Times: Processes such as rate shopping, booking, and shipment tracking can be automated so that the best option is found and goods are shipped speedily. This shifts more orders to customers sooner, shortening the sales cycle.
5. Better Import & Export Compliance: Avoid expensive customs and compliance penalties by following and abiding with laws and procedures in global trade. This is especially useful for businesses that ship internationally.

What are the Features of the Top TMS?

Consider the following features while screening for a TMS to purchase:

• Considering the Cloud: Like other cloud solutions, the cloud-based TMS enables businesses to enjoy greater flexibility to reduce overall cost of ownership, eliminates upgrade fees, and provides a better ROI. The cloud supports remote access, which makes an organization more agile and lowers the physical infrastructure needed. Utilizing the correct tool, such as a logistics transport management system, is a first and solid step in succeeding in the business endeavor.
• Integration Capabilities: Interacts with your existing ERP, WMS, and other essential business systems effortlessly.
• Scalability: Capable of adjusting to your increasing business requirements and changes in the sector.
• Customization: Lets you modify the system according to your specific needs.
• Straightforward Backend: Simple to comprehend and utilize for all employees.
• Accessibility: Permits you to obtain important data and oversee crucial tasks from any location.
• Advanced Reporting and Analytics: Dispenses useful information to enhance overall effectiveness.

For IT departments, migrating to a cloud-based TMS provides increased efficiency, evidenced by accelerated deployment processes, reduced resource allocation for training and implementation, seamless access to the latest features through automated updates, and strengthened security protocols.

TMS for Trucking and Future Trends

Here at HMD Trucking, we believe that technology like this provides the keys to staying ahead of the competition, but how does that apply in practical terms?

• Full Truck Load: As a full truckload (FTL) freight carrier, we are always aiming to cut back on emissions and drive up our savings. A modern TMS offers optimization to improve results, cutting emissions and driving up savings.
• Less Than Truckload: For less than truckload carriers, managing pricing on LTL rates can make all the difference. It is important to ensure that the technology behind those services runs to the finest degree of accuracy.
• Predictive Trucking: In an effort to create proactive TMS solutions, the system should be built in such a way to identify factors that commonly cause delays, errors, and issues across shipping networks. That means not just collecting historic data to evaluate trucking history but working with the machine to assess shipping variables to come to a solution.

We believe our company's commitment to reliable service and strong relationships with shippers makes us well-positioned to thrive in this evolving landscape.

What's Next with TMS?

As customer expectations grow and international trade policies shift, supply chains are forced to invest in more advanced systems.

The emergence of Machine Learning (ML), Internet of Things (IoT), and Blockchain technologies is making TMS systems smarter. TMS intelligently predicts and recommends improved actions through the use of machine learning.

Ready to optimize your transportation needs? Visit the "Transportation Services" tab on our website to get a quote, or reach out to HMD Trucking today to find the best solution for your business. We are here to help you navigate the roads to efficiency!