Customers are the lifeblood of any business. As they get more demanding, customer delight, and not customer satisfaction, is the new standard in customer service. When it comes to delighting consumers, the need for ensuring on-time deliveries cannot be emphasized enough. The modern consumer is impatient and does not think twice before switching loyalty to get better service. Businesses understand this and are opting for transport management systems equipped with a range of features that can help ensure on-time delivery.
TMS: An introduction
One of the major reasons for delivery delays is inefficient transport management. Traditional systems are unable to optimize routes and generate regular updates. When drivers do not have any information regarding the best route for delivery, they are more likely to get stuck in traffic and face other transportation-related problems resulting in delivery delays.
Equipped with a range of features, transport management system solutions help address these problems. A transport management system is often offered as a subset of supply chain management. TMS, as the name suggests, concerns operations related to transportation. In many cases, a TMS is a part of the ERP system used by the business.
TMS helps plan, optimize and execute the physical movement of goods. A transport management system includes various tools to help the business with a range of tasks such as route planning and optimization, load building, inbound and outbound shipment evaluation, freight audit and payment, order visibility, yard management and carrier management.
Once the system evaluates inbound and outbound shipping orders, it generates routing solutions that are passed on to the user. Based on their analysis, the user selects the best mode and the most affordable service provider. When the system is informed about the user’s final decision, it generates electronic load tendering to support freight auditing.
Types of licensing agreements
Following are the three types of TMS licensing agreements:
- On-premises licensing: In this arrangement, the business purchases the license from their vendor and also maintains the infrastructure at its location.
- Hosted licensing: Businesses opting for this arrangement offer a subscription fee to their service provider (third-party vendor or software manufacturer) to lease their servers. From infrastructure maintenance to publishing updates, the vendor is responsible for everything. The business does not own the infrastructure.
- Hosted-TMS free of licensing: The arrangement is similar to hosted licensing with the only exception that businesses opting for this arrangement do not have to get a license from their vendor.
Some substantial benefits of TMS are:
- Helps save resources by determining the most affordable carrier and most efficient mode.
- Enables real-time tracking of orders and shipments.
- Generates accurate data which helps supply chain teams avoid errors when forecasting inventory.
- Automates the freight payment and audit processes, helping reduce errors and resultant delays and confusions.
- Data generated by TMS can be used by supply chain teams to identify and plug loopholes.
Elements of an effective TMS
1. Simplified carrier contract management
An effective TMS is designed to help users track the business’ relationship with different carriers. Best transport management systems allow administrators to digitize contracts, enabling users from different teams compare costs. When looking for a TMS, make sure that it can:
- Update contract details in real time.
- Generate alerts whenever a contract is due for renewal.
- Display total costs, helping you chose the most affordable carrier.
- Calculate the exact cost of delivery, helping your teams save time.
2. Simplified risk management
If you deal in hazardous materials, you cannot afford to go wrong while preparing shipping documents. Any violation of regulatory compliance can result in government penalties. To address this problem, look for a TMS that helps manage hazmat paperwork. From proper packaging to labelling, the solution must be able to help you with everything.
Make sure the system helps lower the risks related to international shipping by automating audit processes, helping with due diligence and generating reports.
3. Improved item visibility
Do you often find yourself in a situation where tracing a shipment becomes an uphill task? If yes, you need a TMS which provides full visibility down to the item level. Look for a system that helps track information related to shipment status through different stages of delivery. To have better item visibility, look for a TMS that has the following features:
- Can generate exception alerts and notifications.
- Can help with auto pick up.
- Facilitates integration via EDI.
Improved item visibility helps avoid confusion, reduce costs and build an environment of trust.
4. Support for international operations
Whether you are already operating in different countries or plan to expand in the near future, your TMS must be equipped with features to support international shipping. Look for a system that has multi-language interface screens, can calculate exchange rates, different taxes, fees and freight forwarding charges. The system must also help manage commercial invoices and paperwork related to shipping.
5. Report generation capabilities
Your TMS must be able to capture data and use it to generate different reports that can help your managers find avenues for reducing logistical expenses and shipment delivery times. The system must also be capable of generating reports that can help develop KPIs and predict future shipping issues.
6. Integration capabilities
No system can operate in isolation. An ideal TMS comes with superior integration features that enable it to exchange information with other systems. To ensure seamless flow of data, look for a system that can integrate with your ERP and WMS.
7. Freight settlement capabilities
Your TMS must help with different freight settlement activities such as cost allocation, assigning billing codes, auditing freight invoices and creating vouchers.