For the past three decades, ERP Or Enterprise Resource Planning Systems have been evolving into large scale systems upon which most modern enterprises operate. Without an ERP system, these enterprises would practically cease to exist.
ERP systems are ubiquitous, leveraged by several organizations towards functions such as information management and enhancement of performance visibility/company activity.
However, ERP systems are mainly equipped for handling core business functions. That excludes many of the external operations. In this case, we’re specifically referring to transportation requirements. Most ERP systems aren’t designed to manage an enterprise’s transportation needs.
This means that organizations need to seriously consider integrating their ERP system with a TMS or Transport Management System. ERP falls short when it comes to transportation management software capabilities, thereby, failing to address the complexities involves in logistics, shipping, and the movement of goods in general.
But, when the powers of both these systems are combined, it results in the creation of a reliable technology infrastructure that is more than capable of handling business requirements in a more wholesome manner.
The combination of ERP and TMS helps enterprises make the most of data from both systems, make quicker decisions, keep up with changing commerce trends, and acquire clearer visibility.
Let’s explore some of the advantages that come with ERP-TMS integration. But, before that, let’s take a look at why
Why ERP Isn’t Enough
There are many reasons why an ERP system isn’t enough.
For starters, you don’t have enough supply chain management (SCM) capabilities. ERP’s lack of prowess in the area of the supply chain isn’t something we’re learning about now. It’s been a matter of concern for ages. However, we now have data to prove it.
In a 2016 report from Ohio State University, around 86% of respondents agreed that ERP systems lacked the necessary components for supporting supply chain management. Though this doesn’t automatically point to the need for transportation management software, we can deduce that there needs to be a third-party system that can be integrated with ERP.
In another survey, 92% of surveyed groups and individuals stated that transportation management was necessary for improved SCM. It was the most cited feature, apart from warehouse management, e-commerce, and supply chain visibility.
Transportation management is a core part of the supply chain and the main component missing from ERP solutions.
The same study also found that TMS solutions were the fastest when it came to offering proper ROI. The benefits gained were worth implementing the system. Though the “break-even point” varied for each respondent, the general agreement was that integrating a TMS solution with the current ERP system lead to returns in less than a year.
In comparison, most other systems took more than a year or even two years to generate the same kind of ROI. This proves that a TMS solution is the most financially viable option.
Advantages of TMS-ERP Integration
One of the first things you’ll notice with a TMS-ERP integration is the increase in the level of automation. TMS solutions offer features such as carrier selection, where users can access an interface that allows interaction with shippers and provide timely data. This leads to increased accuracy and visibility.
When a bid analysis is carried out, a TMS solution will offer forecasts, allowing users to know how a carrier will impact them on a financial level, which provides for better carrier selection.
Then, you have automatic order processing. By leveraging EDI and a host of other technologies, TMS eliminates the need for entering information manually. The processing occurs without human involvement, which also reduces the problem of human error.
Improved planning is another major benefit of TMS-ERP integration. TMS solutions allow users to consolidate shipping after factoring in route and capacity optimization. This cuts down the overall cost of shipping and boosts profit.
TMS solutions also support multimodal shipments. This means organizations can choose the best mode of transportation based on how cost-effective it is. This can be done at any time during the transportation process.
ERP-TMS integration also increases the visibility of operations across the organization. This includes detailed information about the entire transportation chain. One of the features exclusive to TMS is fleet management.
With fleet management, managers can supervise workers concerning in-transit communication, dispatch, and schedules. Driver assignment can be automated to a certain extent while factoring in skill level and availability. Managers can also identify the location and ensure that shipments are on track.
Apart from tracking drivers, TMS allows users to track individual shipments. Information is entered into the TMS program’s transportation intelligence feature, which then processes the data to publish reports concerning your supply chain.
Transportation intelligence offers a greater understanding of operations compared to what you can expect from ERP intelligence. TMS solutions help keep track of metrics accurately and in line with industry standards and expectations. This can include everything from transit times to fuel trends.
So, it’s pretty clear that ERP-TMS integration is an asset to your organization. Each system offers its own set of benefits, allowing your organization to achieve peak capability.