Transport Management Software (TMS) plays a vital role in the success of logistics companies. It is able to improve their operations as well as the services offered to their customers. There are many benefits to experience after implementing the software, but how do companies also choose the right TMS?
What is Transport Management Software?
Transport Management Software is a logistics platform that uses technology to join the internal and external processes of logistics. TMS forms part of the supply chain management system and it manages the movement of freight throughout all modes of transportation. It can be owned by the company or by an outside service provider. TMS offers services like order visibility, route planning, load optimization, invoicing, track and trace and it measures KPIs.
How do I choose the right TMS for my company?
Selecting the right TMS for your company can be a daunting task, regardless of whether you are a first-time buyer or a long-time buyer looking to upgrade. Instead of choosing to randomly select a TMS system, you can choose to follow the steps below to help you find the right TMS for your company.
Step One: Understand Your Business
Before you start searching for TMS systems, you need to understand how your company operates. This will assist you in selecting the most efficient transport management system that will work around your needs. It will further help in understanding the manner your company runs its logistics operations and will give you guidance on what you will work from.
Some of the things you will need to understand include:
- The modes of transportation you use to make shipments.
- The number of shipments you make per month.
- The number of locations you operate from.
- The number of invoices you audit every month.
Step Two: Understand Your Goals
Once you understand what you need from the TMS system, you will be able to choose the right one for your company. The following questions will help you prepare for this phase of the process.
- How much ROI do you need from the TMS?
- Does it need to be user-friendly or is it for technical users?
- How much are you willing to spend on it?
- Do you want to gain full visibility on all your shipments?
Step Three: Understand Your Market
Now that you have an understanding of your company’s operational functionality, it becomes easier to eliminate unsuitable transport management systems that won’t work for your company.
For example, if you want TMS that conducts logistics operations, then you would stay away from rate aggregators which brand themselves as complete TMS solutions when this is not what they do.
Eliminate TMS solutions that offer extra features that your business might not necessarily use. This will give you a clear direction of which options are viable for your company.
Research should be conducted before purchasing any TMS solutions. This might be through word-of-mouth or review sites. Alternatively, you could use research from 3rd party consultancies.
Step Four: Understand a Specific Transportation Management System
Once you have conducted your research on different review sites, you should compile a list of the best TMS solutions you would like to research specifically. There are questions which will help you narrow down the best TMS solution for you such as:
- What is their current rank on TMS review sites?
- What is the implementation process like and what is the expected turn-around time?
- Do they have an excellent track record for creating ROI for their users?
- Do they offer management of all transportation modes?
What Are The Benefits Of TMS?
1.Reduce freight expenses
TMS is able to reduce freight spend because it provides savings through analytics and optimization. The system is able to offer different suggestions of how expenses can be reduced through data that consists of valuable information.
2.Track deliveries in real-time
TMS can track where drivers and shipments are located in real-time. It also offers the average time a route takes and which routes are quickest to use. This creates an efficient route schedule from the information offered.
3.Increase customer service
TMS monitors on-time performance which allows businesses to locate where shipments are in real-time and also the distance from the destination. They can inform their customers of this information about their shipments. This ability to access shipment and freight information when needed improves customer service levels.
4. Improve warehouse efficiency and productivity
An essential factor in the logistics process is having constant flow of incoming and outgoing inventory. It is important for a well-organized warehouse. TMS is able to create a record of orders and locate them in the warehouse. Users can review processes and ensure efficiency.
5. Increase supply chain efficiency
The fact that TMS allows you to track drivers, inventory and processes in the supply chain increases productivity as you can eliminate inefficient processes. TMS improves the supply chain through full visibility in the shipping process.
6. New Delivery Capabilities
TMS assists in creating efficient methods of shipping which optimize overall efficiency and saves costs. Users are able to create a master bill of lading. These master bills allow individual logins with multiple locations, which can be handled by one person.
7. Inventory Reductions
With TMS you are able to keep track of customer shipments, and when they are receiving them. This gives you an advantage as you can plan better for inventory you have. You can create a realistic and accurate forecast for future shipments.
8. Cash Flow Improvements
When users employ transportation accounting, through freight payment, auditing and consolidation services with TMS solutions, they can reduce freight invoice payment by 5 to 10%. When users employ outsourced providers of freight accounting, they can save up to 2 to 5% of their total freight bill.
Here are the 6 Considerations When Deciding To Outsource TMS!