Transportation, along with manufacturing and warehousing, is one of the main supply chain processes. It comprises a whole lot of activities -- from delivery planning to carrier management to shipment tracking -- that have to be properly handled.
Small businesses with few shipments can manage these operations with the help of spreadsheets and phone calls. However, once your turnover grows, it becomes obvious that Excel is not enough and you need something more robust to control your transportation processes. That’s where specialized technology comes into play.
What is a Transportation Management System (TMS)?
A transportation management system or TMS is a category of software that helps in planning and executing the physical movement of goods. It can be used by all members of the supply chain from manufacturers to distributors and third-party logistics providers (3PLs) - virtually any party that wants to coordinate shipments.
The sought-after feature of TMS is its control tower capabilities, illustrated below. Overlooking the whole shipment process, a TMS control tower captures data about goods in real-time using API or EDI technology and thus provides its users with valuable data from manufacturers to distribution centers, through delivery, and to customers. You can read more about API and EDI in our detailed overviews.
This data can in turn be transformed into analytics on your supply chain performance, financial situation, and customer service issues. Which is where you start your optimization journey.
TMS receives data about the status of transported goods via API or EDI channels
There are two main user groups of TMS:
- shippers, manufacturers, and distributors; and
- third-party logistics providers (3PLs).
Vendors usually offer the same platform for both groups with some feature exceptions.
Essentially, a TMS allows you to plan and execute your shipment processes and have visibility over them. Such software is often modular, meaning that you can get different functions separately depending on your needs. Besides, your ecosystem of tools may consist of different modules of ERP, logistics management systems (LMSs), warehouse management systems (WMSs), and of course, TMS. Some features will interconnect with fleet management software as well.
Main TMS functions (planning, execution, and visibility) and corresponding processes within them
Vendors usually offer a wide collection of possible integrations to make sure you can freely connect to your WMS or ERP. We will talk about those capabilities later. Now, what functions can you expect a TMS to cover?
Transportation planning features
So, the transportation process starts with creating a transport request with the quote and details about the shipment. Shippers tender loads to carriers who, in turn, have to plan the capacity and cargo distribution.
In a TMS, order information is accessed by all related parties from planners to drivers and customers. Here are the features that help users to view and manage transport requests.
Order entry. Manual or automatic, order entering includes filling in all essential details like commodity or weight and setting up current location and destination. A system often automatically generates a route, assigns transport and driver, and calculates ETA. If you have an integrated WMS, this order automatically goes to its scheduled transport.
Order overview. Created orders with their routes and assigned transports are available to order planners and drivers on a dashboard that allows them to see their workload for the day. All documents are also automatically linked to their corresponding orders so the driver can keep them on their smartphone or tablet. As drivers update the status of orders en route, planners have an overview of all scheduling changes and truck locations.
If you want to learn about order management in more detail, please refer to our dedicated post.
Most TMSs tender shipments for you automatically. The list of carriers is organized so you can always access the vendor according to your specified parameters or allow the system to choose a carrier for you. Most systems have broadcast, waterfall, and status tendering methods. For example, IntelliTrans has the following tendering strategies:
- least-cost, when it chooses the lowest rate and expands this offer to other carriers,
- auto-award when shipments are always assigned to specific carriers,
- allocations when using contractual percentages or by the load numbers (4 numbers to Carrier A and 3 numbers to Carrier B),
- service-based when picking the best-performing carrier,
- customer-based when picking the carrier that a customer prefers, etc.
Shipment rate management
One of the most important tools within a TMS is a rate engine. A rate engine calculates transportation rates for the parcel, LTL, truckload, and intermodal shipping based on rules: base rates, discounts, and contract agreements. A TMS should be able to create custom pricing rules to accommodate the most complex tariffs and automatically send a quote to a client as they make the request.
You can plan the loading space of trucks, trailers, and containers and receive a calculation of the available loading space, considering the maximum loads and weight. For example, you can enter information about your vehicle measurements and save it for future reference, which is known as master data. Data about the item dimensions come from the freight order. Some TMSs have the 3D load plan feature where you can see and change the cargo distribution and space utilization.
In SAP Load Planner, you can set up the load plan hierarchy and quickly relate to the items by color. Source: SAP
Transportation execution features
Now that the shipper and carrier got to the agreement, the load has to actually be transported. There’s not much a TMS can do to deliver freight, but it can help with fleet management, dock scheduling, and settlement processes to ease the burden.
If you operate your own fleet, a TMS will let you see and utilize your assets on a single platform. Although not all TMS providers have advanced fleet management features, you can assign drivers and equipment, plus manage dispatch and financial settlement for drivers.
If you’re using dedicated fleet management software, you can go as far as managing fuel consumption and environmental impact, keeping track of vehicle checkups and maintenance activities, and controlling the truck remotely.
Oracle Fleet Management has end-to-end support for fleet and asset management with driver education, CRM, and dispute management capabilities. Source: Oracle
Dock scheduling and yard operations
Shippers spend most of their time scheduling dock appointments and truck drivers waste time waiting in line for their turn. Integrating with a WMS or a yard management system allows a TMS to include dock scheduling and load sequencing in the transportation plan. Here, you have an overview of all warehouse and transportation constraints and can make more accurate schedules (automatically or manually), apply your business rules and rules of every location, and always have a load status available to you or customers.
IntelliTrans TMS provides Dock Scheduling both as a part of their solution and as a stand-alone module
Documentation management and settlement
Transportation, especially the settlement part, is a complex and documentation-heavy process. However, there is certain progress towards automation. Today, TMSs can generate digital bills of lading, create invoices, and conduct freight auditing. You’ll be able to streamline your billing and invoicing activities, set up automatic payments, and enhance claims management.
Transportation visibility features
Okay, you’ve got your shipment delivered. But that’s still not the end. How would you connect to your partners to support your business relationships? Or are you going to analyze your operations to make effective decisions about future operations? A TMS can help you with that as well.
A TMS usually supports connecting to partners and customers via email, but some vendors provide customizable self-service portals. That’s where customers can create and view the status of their orders, while partners can send tender offers as well as review and submit invoices.
Customer portal by MercuryGate TMS gives access to order details and shipping KPIs Source: MercuryGate
Although planning is the core function of a TMS, routing is not its strong suit. To optimize their routing activities, many businesses use specialized software that, unlike TMS, have all types of algorithms to calculate the best routes. So, if the routing capabilities of your TMS are not enough for your needs, you might have to use a combination of these tools.
Tracking, tracing, and event management with telematics and RFID
Track and trace technology allows you to record the movement of items during transportations in real time. Meaning that you don’t have to contact the driver to learn the truck’s location but can view it continuously.
This is often used to give customers information about their shipment location, as well as for security and scheduling purposes.
A telematics device in a truck or a driver’s smartphone is linked to the TMS via such telecommunication systems as GSM, GPRS, or UMTS. You can visit our article about telematics systems to know more about how it works.
Shipments can also be traced via barcode or RFID tag: Each time it’s scanned, say, at a distribution center, a TMS receives an update on its location.
Business intelligence and analytics
Business Intelligence is the practice of improving business results using data. The biggest advantages of BI over regular spreadsheets are real-time analytics and an array of custom reports that anyone from the transportation management team can generate for their needs.
For example, you can review a performance analysis based on each carrier, product, or route and then make informed decisions (e.g., optimize the route or break up with an underperforming carrier). Or, you can get the analysis of your costs filtered by transport mode, see which customers bring the largest volume, monitor the margin data -- and improve the operational workflow.
As we mentioned, a TMS is usually a part of a company’s IT ecosystem. For smooth and efficient functioning, it has to be seamlessly connected to other systems (both internal and external) so that accurate data exchange is established. Let’s look at what other software you might need to integrate with – and why.
ERP. An ERP is usually the core of a company’s IT infrastructure, controlling all business processes (manufacturing, transportation, sales, finance, marketing, etc.). If you have a separate ERP platform, integrating it with a TMS is crucial to exchange order details and accurately plan transportation activities.
Warehouse management system (WMS). If you utilize a specialized WMS, connecting it to a TMS will let you properly coordinate your warehousing and shipping operations. Once you set up the data exchange, you’ll be able to share shipment information and schedule loading/unloading.
Order management/inventory management/retail/eCommerce solution. If you’re a distributor, you most likely have focused software to connect the dots in your sourcing and sales operations. If you integrate it with a TMS, it will be easier to manage your shipments.
Accounting/settlement tool. Even though you can run your settlement processes within a TMS, its functionality might not be enough for your specific needs. So, if you have a standalone accounting solution, connect it to a TMS to ensure accurate billing, invoicing, claims management, and so on.
Business intelligence. A specialized BI tool would most likely be more powerful and have stronger analytical capabilities than a BI module in a TMS. Integrating your TMS with a separate BI platform will let transportation-related data flow smoothly so that you can get a holistic analysis of your performance.
External carrier or 3PL system. Shippers can communicate with their partners (carriers, 3PLs, or freight forwarders) with the help of the self-service portal or build an integration of their systems (it might also be a TMS, often a custom-made one) to easily exchange transportation data.
Thus, carriers will be able to receive load details (commodity type, dimensions, pickup and delivery locations, rate, etc.) and shippers will be able to track shipments (see the route, current location, who’s delivering, ETA, and so on.). Besides, it will be possible to share the related documentation.
Freight marketplaces. If you are a 3PL or owner-operator, you might be using load boards and freight marketplaces to keep your trucks busy. Integrating your TMS with such platforms will allow you to make use of their capabilities – all within your interface.
Transportation management software: overview of the main TMS vendors
Before we go into specifics, here’s what you can expect from most major TMSs:
- all transport modes coverage: land, air, sea, sometimes rail, and intermodal;
- capabilities for different use cases from shippers to 3PLs;
- subscription-based payment model;
- cloud deployment;
- a mobile app.
Now, what are the leaders and what do they offer?
Oracle Transportation Management (OTM) - complex and comprehensive
Oracle provides a large network of supply chain management products, and OTM is one of them. It’s created for shippers and 3PLs, and both can freely communicate using different formats including XML. Apart from standard order management and visibility, OTM has:
- Business process automation capabilities
- Optimization engine that finds you better rates and partners
- Analytical dashboard with forecasts and milestone alerts
- Fleet management and financial performance of your fleet
- Automated payment and billing both for shippers and 3PLs
- Optimized bid execution
- A mobile app with interfaces for two different cases: private fleet drivers and third-party carriers
Watch a tour through the interface and features of OTM
If you’re up to the challenge, have the budget, and don’t want to be overwhelmed by choice, get the Oracle Transportation Management Cloud - an ecosystem of tools that will serve all your needs from complex routing to forwarding and brokering.
SAP Transportation Management (SAP TM) - undisputed choice for SAP users
Oracle’s biggest competitor SAP also has an ecosystem of tools, including an ERP and a WMS, so it makes sense to use SAP if you have their other products. Apart from standard features, SAP TM covers the following:
- Generating routing proposals
- Synchronizing sales and order scheduling
- Managing driver resources in an interactive Gantt chart
- Ensuring the safe transportation of dangerous goods
- Automatically updating freight documents
- Advanced analytical dashboards running on SAP HANA.
MercuryGate - modular and beginner-friendly approach
MercuryGate promises fast deployment - within days - and allows for complex configuration. It standardly adapts to all major ERPs and WMSs. You can mix and match tools in six product areas:
Transportation Management - a classic TMS with customizable workflows, carrier compliance and contract management, EDI messaging, and global trade capabilities.
Transportation Planning - an optimization solution that integrates with carrier APIs or EDI to receive actual rate information, forecasting load, with robotic process automation capabilities, and custom logic and routing for advanced scenarios.
Visibility - your Control Tower tool with supplier, customer, and carrier portals and agent delegation.
MercuryGate customer portal. Source: Business Wire
Delivery – a suite of tools to optimize delivery operations, including dynamic rerouting, last-mile and drone delivery, reverse logistics, courier management, etc.
Freight settlement - powering accounting, integrates with any financial system and performs complex claim documentation.
Business Intelligence - a complex analytics tool with embedded data warehouse that uses both internal and external data for insights and provides unlimited report customization.
On its website, MercuryGate offers an extensive knowledge base and training opportunities. You can also book a custom demo and use an ROI calculator to make sure their tools fit your needs best.
BluJay - easy to configure tools for the whole supply chain
BluJay’s distinctive feature is its Global Trade Network of 50,000 shippers, carriers, suppliers, brokers, and forwarders you can amplify your own network with. Connectivity happens via EDI integration, which manages contacts, exchanges and converts files, and creates a data flow between partner systems.
BluJay has two TMS solutions:
Transportation Management for Shippers - a tool for managing your own freight that has a supplier portal and yard management capability, which is enough to provide visibility to you and your partners.
Transportation Management for Forwarders - software that automates the workflow and provides control over financial processes with standard integration with Sage ERP and an API ready to be integrated with any tool.
Watch BluJay’s Transportation Management demo
Besides, there are additional tools that can be purchased separately and freely integrated with one another.
LSP Platform – a comprehensive multi-module solution for logistics service providers (LSPs) that includes Transportation Management, Warehouse Management, the MobileSTAR app for drivers, Yard Management, and Customs Management.
Parcel – a complex multi-carrier shipping management system that generates packing slips and labels, calculates shipping quotes, and provides carrier compliance.
Procurement – a solution that helps streamline sourcing operations.
DropShip – a tool for retailers for automated drop shipping.
Final mile, mobile, and yard solutions – a robust suite of purpose-built applications for different needs.
Kuebix TMS - free option and many more
Kuebix’s biggest advantage is its tiered options: Free Shipper, Business Pro, and Enterprise. The free SaaS version is a full-fledged TM solution that allows you to:
- Track shipments
- Compare rates
- Book shipments online
- Create shipping documents
The Business Pro version has all that plus:
- Company-wide collaboration
- Multiple users
- CRM for carriers
- Financial management
Kuebix reports and analytics dashboard
When getting an Enterprise package, you get an integrated modular solution, which allows configuring your ideal TMS. Some of Kuebix modules include:
- Dock scheduler
- Yard manager
- Order and route optimizer
- Collaboration portals
- Container tracking and so on.
Kuebix also has a long lineup of available integrations starting with Oracle, SAP, and Microsoft Dynamics and ending with QuickBooks, Sage, and WooCommerce.
The custom way
The nature of the transportation industry and the pace at which it’s digitizing makes it impossible to purchase and run a TMS solution out of the box - it will most likely require customization. Most vendors provide APIs and web service architecture so you can apply some engineering efforts to connect them to your existing systems. Yet, this process becomes increasingly complex if you pick several tools from different vendors, need to move from a legacy system, and write some custom code.
Another option is developing a custom TMS from the ground up. If you don’t have a reliable ERP or warehouse system to connect a TMS to, it makes sense to build exactly what you need instead of trying to combine different products on the market.
What does the future hold?
Freight volume keeps growing every year, increasing the complexity and pressure on the transportation market. While the industry is evolving to satisfy demand, adapt to customer requirements, and comply with regulations and sustainability goals, brands’ needs change as well. They strive for more automation, transparency, analytics, and first and foremost – digitization.
Shippers and carriers alike must abandon paper-based processes not only to compete but to survive. And it’s not that hard when the technology is here, offering efficient machine-to-machine communication, accurate routing algorithms, immediate mobile access, and a lot of other handy perks. As incredible as it may seem, there’s still a lot of innovations available today that you can enhance your TMS with.
Predictive analytics powered by machine learning can support your strategic decision-making by generating accurate predictions and evaluating scenarios. You can apply it to evaluating carriers, defining high-risk loads, optimizing routes, planning capacity and operations, and much more.
IoT devices hold a lot of potential to enhance numerous supply chain processes and provide unprecedented visibility. Smart connected sensors can play a tremendous role in shipment tracking, fleet maintenance, storage monitoring, and so on.
Blockchain technology, in spite of its novelty and related challenges, is being implemented to improve traceability and security of logistics operations. Read more about how blockchain is used in the supply chain in our dedicated post.
Technologies are evolving together with the transportation industry. So now, knowing the opportunities software provides, you can implement the right solutions to automate your business operations, offer better service to your customers, and gain competitive advantage.