Benefits of Transportation Management System
One of the major factors that impact your customer experience is order fulfillment speed. Regular shipment delays are a recipe for disaster, and businesses that miss delivery dates on a regular basis are at a high risk of losing customers. Slow order fulfillment can also hit where it hurts the most, causing it to lose face.
A significant reason why shipments get delayed is ineffective transportation management. Manual transportation management processes are highly error-prone. Because they use paper documents (that can easily get damaged or lost) and rely heavily on human operators who tend to mess up, these systems are not reliable.
Modern businesses realize the drawbacks of these systems and have started replacing them with state-of-the-art transport management systems.
What is a TMS?
A transportation management system facilitates communication between an order management system and distribution center and assists with finding the best transportation mode and rate for shipments.
A TMS automates a number of tasks, such as creating shipments, scheduling pickups and deliveries, and optimizing shipments and routes. In organizations that use an ERP system, the TMS serves as a subset of the system.
Transport management systems handle four critical functions of transport management:
A TMS suggests the best transportation strategies based on different parameters. The system also ranks suggested strategies taking into account the number of stops and shorter lead-times.
A TMS can help teams perform various tasks related to transportation plan execution. This may include carrier dispatching, electronic data interchange (or EDI), and carrier rate acceptance.
TMS is designed to help teams follow-up different administrative and physical operations related to transportation. Such operations include receipt editing, invoicing and booking documents, and sending alerts and notifications related to delays and accidents.
Efficient systems have a logistics KPI report functionality related to transportation.
Providers offering TMS solutions follow one of these licensing arrangements:
- Hosted licensing (the provider uses their infrastructure to provide services. Clients are required to purchase a license)
- On-premises licensing (the business purchases and operates the system)
- On-premises hosted licensing (a cross of the above two licensing arrangements)
- Hosted-TMS free of licensing
A TMS has different modules for delivery, freight audit and payment, load optimization, carrier administration, yard administration, and order visibility.
Transport management system benefits
Reduced invoicing errors
Your TMS automates your freight payment and audit processes. Integrated with ERP, it helps reduce manual entries. Information such as pallet weights, destinations, and PRO numbers are automatically populated, which brings down human errors. Additionally, your team members do not have to take notes on paper as every information they need sits in one place.
Improved customer experience
Because manual system relies too much on humans, they are vulnerable to blunders. Transportation management systems, on the other hand, are automated, which avoids delays caused due to human errors. This speeds up order fulfillment.
Additionally, a TMS provides complete visibility and tracks shipments. Customers get regular updates related to their orders, which promotes transparency. An advanced TMS even bridges the gap between order management and warehouse management systems, helping the business react to last-minute order changes and delivery preferences and reduce order fulfillment time and costs.
Transport management systems are capable of generating a wealth of information that provides visibility into different trends. This data can be used to identify discrepancies and opportunities to cut costs and improve service delivery. A TMS can also help create reports that managers can use to make informed decisions.
Better supply chain visibility
An advanced transportation management system provides a bird’s-eye view of the entire supply chain. Users are able to track the lifecycle of shipments in real-time and take corrective actions to address discrepancies promptly.
Improved cash flow
Transport management systems are designed to help teams analyze the financial aspects of every route under consideration. These systems analyze data to provide suggestions to keep expenses to a minimum.
How to make the most of TMS benefits
Acquiring a TMS alone will not help you achieve your transportation plan goals. To get the most out of your system, you need to come up with a strategy for maximizing TMS benefits. Here are a few tips to get started.
1. Choose the right system
When it comes to maximizing TMS benefits, the importance of choosing the right system cannot be emphasized enough. Before starting to look for an appropriate tool, define your implementation goals and objectives.
Look for a system that generates precise reports and can be accessed remotely. It should be both flexible and scalable and capable of supporting operations during periods of high demand.
2. Train your teams
Train teams that will be operating the system. Adequate training will not only help your staff avoid errors while operating the system, but will also help counter resistance to change. Explain to your employees why the business needs the solution and how it will make their lives easier.
3. Work with your provider to configure the system
To ensure the system is able to meet all your unique business needs and generate a workflow that ticks all the right boxes, work with your provider to configure it accordingly. To achieve maximum economic efficiency, use the solution to manage your entire transport business. Come up with a strategy to leverage vendor and customer collaborations and control tower visibility.
4. Analyze results
To analyze the effectiveness of your TMS, develop different KPIs related to cost savings and order delivery. At the end of a predetermined period, compare actual results with estimates. The exercise will help you identify loopholes and fix them.
Do you know about The Future of TMS – What To Expect?