TMS - Transport Management System
TMS (Transportation Management System) is specialized software for planning, executing and optimizing the shipment of goods. Users perform three main tasks on a TMS: 1) find and compare the rates (prices) and services of carriers available to ship a customer's order, 2) book the shipment, then - 3) track its movement to delivery. The broader goals of using a TMS are to improve shipping efficiency, reduce costs, gain real-time supply chain visibility and ensure customer satisfaction.
TMSes are one of the core technologies used in supply chain management (SCM), a discipline sometimes divided into supply chain execution (SCE) and supply chain planning (SCP). They are available as stand-alone software or as modules within enterprise resource planning (ERP) and SCM suites. Typically, a transportation management solutions serves both shippers, carriers and other logistics providers. Manufacturers, distributors, e-commerce organizations, wholesalers, retailers and third-party logistics providers (3PLs) are major users of TMS software.
While some TMS, transport management solutions, focus on a single mode of transportation, most support multimodal (where at least two of the various modes of transportation -- truck, rail, air and sea -- are used in a single contract) and intermodal (in which a cargo container is carried by at least two modes of transportation).
Like most enterprise software systems, TMSes started as on-premises systems but have increasingly been deployed in the cloud either hosted or as SaaS. There are also TMS managed services. Cloud transportation management system has obvious advantages in easing connectivity between TMS users, carriers, customers and supply chain partners. Some TMS vendors try to differentiate themselves by offering single-instance multi-tenant SaaS, which they say has cost and integration advantages over single-tenant SaaS and private-cloud options.
In fact, according to Gartner, most of the growth in the TMS market comes from cloud offerings that companies bought to replace on-premises TMS, a trend that is likely to persist. Meanwhile, TMS vendors continue to migrate their products to SaaS, in large part to fend off competition from fast-growing "cloud native" vendors who started with SaaS transportation management system.
Vendors of TMS software fall into four categories: ERP suites, SCM suites, niche TMS and TMS services. Microsoft, Oracle and SAP are prominent TMS ERP system vendors. Most other ERP vendors rely on TMS vendors with which they have integration. Smaller ERP vendors also have distribution modules that handle some TMS tasks but aren't true TMSes.
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F.A.Q. about TMS - Transport Management System
Functions of TMS
Planning. A transportation data management system helps the business select the optimal mode of shipment and the best carrier, based on cost, efficiency, and distance, including optimizing multi-leg carrier routes. A strong transport manager system can provide visibility into every stage of the supply chain, and together with global trade management functionality, it can also provide information on trade and tariffs, and if there are any potential delays that may happen because of customs and other trade regulations.
Execution. The execution features of TMSes vary widely but can include matching loads and communicating with carriers, documenting and tracking shipments, and assisting with freight billing and settlement. Some advanced TMS supply chain management solutions also provide track and trace services—enabling real-time information exchange among carriers, distributors, warehouses, and customers. Such advanced systems may also have the functionality to handle complex international logistics, including providing proper import and export documentation making sure shipments are trade compliant.
Optimization. TMS optimization capacities usually include the ability to measure and track performance with reports, dashboards, analytics, and transportation intelligence.
The Benefits of a TMS
A TMS—and modern integrated transportation management in general—provides many benefits to businesses. Some of the top benefits are:
- Reduced costs for the business and the end customer
- Simplification of supply chain processes across geographies, modes, and carriers
- Automation of business operations for faster and more accurate billing and documentation
- Improvement in visibility and security, especially in transit
- Time savings—fewer manual steps result in fewer delays and faster delivery times
- The ability to track freight, both locally and globally, on a single platform
- Better import and export compliance minimizing penalties and shipment delays
- New business insights as better reporting leads to faster action and process improvement
- Improvements in customer service and customer satisfaction with real-time updates and fewer shipment delays
- The ability to scale the business by meeting and exceeding customer demands for fast, on-time shipments