Today’s transportation management systems: Your mileage may vary!

  • May 11, 2022
Container terminal with trucks with freight forwarding manager, worker

Let’s explore the advantages of today’s transportation management system (TMS) applications. Though intended for the same job, no two implementations are alike. And one system won’t always address all needs.

So, what’s a TMS and what’s the scope of its capabilities?

Transportation management systems are applications that help you plan and execute transportation functions. They’re operational tools that deal with the day-to-day management of the processes that move goods across your distribution network.

A TMS can include — and most users seek out — a variety of functions that usually address the processes of a typical shipper’s workflow. Among these functions are order entry and consolidation, optimization, mode and carrier selection, execution and tendering, tracking and visibility, freight settlement and analytics. A successful TMS implementation will help you automate and integrate these processes.

What’s the ideal core functionality of a TMS solution?

Despite some variations depending on industries, markets, delivery modalities and so on, an “ideal” set of activities within core TMS functions could include:

  • Build loads
  • Select mode of transport
  • Select carrier
  • Tender load to transport providers
  • Manage exceptions
  • Manage load events
  • Communicate with transport providers
  • Report on cost and performance
  • Facilitate freight payment
  • Store and management rates
  • Ingest shipment orders from enterprise resource planning or other systems

In each case, the ideal core functionality for your application covers the entire cycle of your operational process.

Your TMS application should evaluate speed and service trade-offs

A TMS should give you the capability to readily make sense of speed and service challenges you’ll face. As you manage your network against the ebb and flow of demand and available capacity, it should always allow you to evaluate workable alternatives.

  • Mode and service level optimization. Take advantage of the capability to select from multiple modes and service levels to meet expected lead times.
  • Automated execution. Electronically book/tender through electronic data interchange (EDI) and check the tendering process to tender to secondary carriers automatically if the primary carrier rejects a booking or tender.
  • Visibility. You can tie all legs together to achieve an optimized level of service and provide end-to-end visibility by working with real-time transit visibility platforms (RTTVP).
  • Risk evaluation and reduction. Reduce risk by having more carriers available to plan and execute against — and not putting all your eggs in one basket.

A TMS should lead cost-savings and cost-avoidance efforts

Your TMS should always be your best source of increased cost-effectiveness across your network. It makes fast comparisons possible — of alternative routes, modes and rates — across your carrier base and the spot market.

  • Carrier optimization and diversification. Be able to select from multiple carriers on a specific lane while also considering allocations and commitments that can meet expected service levels. Look across different segments of a trip to evaluate and consider the lowest overall trip cost.
  • Spot market avoidance and cost reduction. By having more carriers on a lane available with contracted rates, you can cover more loads with carriers in the routing guide. Additional spot bid functionality allows for a competitive auction when you need spot capacity.
  • Order consolidation/load building optimization. Take advantage of the ability to:
    • Merge orders
    • Build more efficient loads that reduce the total number of loads required
    • Make better use of the space in each container or trailer
  • Expedite reduction. When you can plan transit times and service levels at the load level, you can route each load based on delivery needs.

And as important, your TMS should help generate dynamic insights

Visibility into your network and all the variables involved brings unforeseen insights. It also unearths new potential improvements. It’ll also help you find innovative approaches to managing the most challenging aspects of your operation.

  • Carrier procurement. Aggregate historical data to effectively inform the tender process and identify opportunities across the network.
  • Key performance indicators. Measure carrier service, cost and sustainability performance throughout your network.
  • Carrier performance. Manage carrier performance with unified data across the company, including tender acceptance, on-time pickup, on-time delivery and performance to allocation. Make better evaluations based on all the information available.
  • Early warning and diagnosis. Spot and address issues before they become bottlenecks that affect speed, cost or — more than likely — both.

— By Kevin Zweier

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