A TMS, also known as a Transport Management System, benefits an organization with regards to its supply chain and distribution system in many ways. Transportation is a significant cost to the company, which means the company needs to put in extra effort towards maximizing returns.
A Transport Management System makes this possible by optimizing the functional activities related to transportation, which, in turn, expands the range of operations and boosts the supply chain value.
But what makes a TMS solution useful?
Well, here are six key elements to make a note of.
A proper TMS solution aids route optimization and consolidation. What this means is that the system can determine the optimal route for carriers. It can manage and even plan the route for a wide number of shipments through pooling or consolidation. It can do this for multiple modes of transportation.
Consolidating shipments this way cuts down certain costs and reduces unnecessary shipments which minimize carbon emission and fuel consumption.
Transport Management Systems also provide mode and carrier selection. From this you can choose the ideal mode or carrier based on the service requirements, such as distance, efficiency, and cost. The system is programmed to identify & select the best carrier and it does this by accessing data that is contained within a central pool. Such data is typically related to the mode or carrier’s past performance, the company’s business requirements, and the price.
A wholesome TMS solution comes with an integrated Warehouse Management System or WMS. The integrated WMS module within a TMS solution offers material tracking, real-time tracking of inventory movement, and various other KPIs (Key Performance Indicators). All this real-time data enables informed decision making – thereby, improving the accuracy of the decision itself.
Then there is the integrated EDI module. The EDI-enabled format of information sharing and exchange establishes a benchmark for superiority. Companies acquire more visibility in their functions and immediately notice a minimization in paperwork.
The EDI integration also offers increased accuracy in data and improves the speed at which information exchange occurs between organizations. At the same time, it helps establish a green supply chain.
Track & Manage Carrier Contracts
A well-packaged TMS solution can also track carrier agreements and the terms of each contract while offering information about carrier charges. The system makes the information easily accessible and simplifies the carrier selection process.
A robust transport management system can track all terms, track all carrier agreements, provide alerts for contract renewals, highlight total costs (including extra fees) for better carrier selection, and calculate the delivery cost, which leads to accurate charges for the client.
A capable TMS solution also simplifies how hazardous material is shipped. The transportation of hazardous materials is a matter of public safety, which means you undertake a risk every time you transport such materials. It is also a matter of regulatory compliance. Failing to adhere to the rules puts you at risk of governmental actions.
There are several examples of this taking place in history and the affected organizations have had to pay dearly. For instance, in the UK, one organization was fined by the UK’s Civil Aviation Authority for failing to place warning labels and provide proper paperwork.
A proper Transport Management System prevents such risks and penalties by managing your health and safety compliance paperwork. This includes everything from adequate labeling to paperwork and packaging.
This system is also designed to prevent the risks that come with international shipping by generating reports, automating, audited processes, and ensuring due-diligence within the concerned jurisdiction.
International Logistics Functionality
A Transport Management System should facilitate global expansion and operations by offering foreign currency support, ocean, and air carrier selection, multi-lingual interfaces. It should also manage NAFTA paperwork, SEDs, commercial invoices, and various other paper-based documentation.
Such is able to help calculate freight charges, forwarding charges, cross-border fees, and value-added taxes as well.
A robust TMS solution stays on top of changing agreements related to trade and embargoes. It performs system checks, assigns export control classification numbers, and carries out several other functions to facilitate trade management.
It also helps companies avoid the violation of export control regulations by performing restricted party screening and an embargoed country check.
Lastly, good TMS solutions present track and trace capabilities. This makes it possible for shipment information to be exchanged between distributors, customers, and carriers in real time. When shipment information is shared regularly across the organization, it increases the accuracy of tracking/monitoring, boosts visibility, and improves the efficiency of management and reporting.
Furthermore, Transport Management Systems offer business intelligence and analytics. This enables the proper use of dashboard functionality, data warehousing, and report generation in both standard and custom formats. The goal of the module is to collect, analyze, and summarize supply chain data. The insights gained from analyzing the data aid in the process of making informed decisions.
Apart from that, the insights also help an organization identify specific needs and critical areas of functional enhancement. The evaluation of current strategies for efficacy become possible too.