Transportation is one of the most important aspects of supply chain management in any industrial companies or large retailers. The cost and challenges involved in transportation require attention. Many companies are now turning to software-based transport management to make the process easier, faster, and less costly. If you are running a business that depends largely on logistics, it is imperative to use a transport management system (TMS) for strategic planning and handling of your transportation operations.
What is a transport management system?
A transport management system or TMS is usually a cloud-based software system that helps businesses streamline their supply chain and help them ship freight in the most efficient and cost-effective way. In this competitive world where everyone is trying their best to improve customer satisfaction, and customers are demanding better services, depending on spreadsheets and emails or phone calls to run shipping operations is a huge step backward for a company. A TMS can help a business manage everything from routing, carrier selection to load optimization, digitally, leaving no scope for human errors.
Benefits of using a TMS
The benefits of a transport management system are numerous, but the one most important benefit for which most businesses are opting for TMS is the freight cost reduction achieved using TMS. Using a good TMS software can help you keep track of everything from driver overtime to the routes followed to the fuel spent, and this information can help optimize the process to reduce costs. Apart from cost cutting, some other TMS benefits are listed below:
Improved customer service
One of the biggest assets for any business is the goodwill of its customers. Being able to deliver your products to customers on time, without any hassles, will ensure greater customer satisfaction. Being able to track your shipments allows you to attend to your customers’ queries faster. Also, data from the TMS can help you find out weak links in the shipping process and eliminate them to provide better service.
Efficient and productive operations
Using a TMS can improve the productivity of a company by centralizing the logistics process so that all other processes can be synchronized with it. Any bottlenecks detected in the organization, and not just in the transportation process, that hampers the timely delivery of products can thus be eliminated, ensuring efficient services.
A TMS provides end-to-end supply chain visibility. This means that supply chain managers can access real-time data to make quicker decisions, better forecast inventory, and streamline the entire process. This makes the company more responsive and active.
Real-time tracking of routes
The TMS provides accurate information on the time taken by different routes, depending on which a more time-efficient schedule can be prepared.
Since most of the process becomes automated with the help of a TMS, the amount of paperwork is substantially reduced, also saving a lot of time.
Through TMS, all the partners of a business who have some influence on the supply chain can stay connected. This helps manage the supply chain better as the supply chain partners can identify drawbacks and opportunities for improvement, and not just in their own business but in the entire process.
Cutting costs with TMS
By now, you already have a clear idea of how beneficial a transport management system can be to your business. But how can you cut costs with TMS practically? How does TMS help with cash flow improvements?
Since freight cost reduction is the primary goal behind using TMS, let’s see how it helps save.
Contract management – It reduces nearly 10% of the administrative costs associated with managing all contracts with your transportation service providers. With TMS, you have a central database for all contracts, which helps in accurately calculating shipment charges and managing other payables.
Best carrier selection – A TMS can automate the process of carrier selection for your logistics based on historical data on various carriers’ performance and your service requirements. Choosing the right least-cost carrier can reduce the freight cost by nearly 2-7% annually.
Optimizing load and route – The TMS can help you optimize the load of each shipment and choose the best route for a cost-effective shipping process. This reduces the manual building of loads and frees valuable resources associated with building and adjusting loads. This optimization reduces freight costs by 5-17% annually.
Execution of shipment – The TMS eliminates any chance of human error in the information received by carrier partners on the tendered shipments. It automates all the repetitive tasks in the shipment execution process and saves up to 1-5% on the annual freight cost.
Improved performance – Using a good TMS can help you monitor the performance of all resources involved internally and externally. This gives a better view of the entire process, and early action can be taken wherever necessary. This itself reduces 1-3% of the annual freight spend.
Effective use of warehouse space – The warehouse space can be effectively used by ensuring optimum inflow and outflow of shipments. A TMS allows you to keeps track of, and manage, the flow of products in and out of the warehouse, thereby making effective use of the limited warehouse space while saving time and money.
Get up to date with the 7 Elements a Transport Management System Should Offer!