Transportation and logistics are critical parts of supply chain management regardless of the company size. Automating the process can streamline your logistics operations, leading to higher customer satisfaction and opening up new horizons for growth. Read on to learn more about the role of a transportation management system in mid-size businesses.
A TMS (Transportation Management System) is a software package that enables you to control and manage your shipment. Whether you’re a manufacturer, vendor, distributor, or logistics provider, you can use a TMS to streamline your transportation operations.
It enables you to plan and execute the entire product delivery process by automating every stage. A transportation management system can have all or some of the following features, depending on the company’s goals and requirements:
If you’re a vendor, the first step of delivering products to your customers is processing orders. A good transportation management system has a dedicated section for processing orders or allows you to integrate other software for better management. In addition, it generates information like the estimated arrival time, the best route for transportation and delivery, and the driver assigned to the task.
The software also saves data about the packages to be delivered, such as the weight and destination address. It calculates the prices you can send your customers based on information like parcel weight, destination, and carrier. The shipment information is also available to the drivers through their dashboards to inform them of their daily assignments.
One of the biggest challenges of managing and shipping orders is finding the right path to send the orders. After the packages are ready to be shipped, the software finds the best routes and carriers.
First, it decides whether the shipment will arrive faster by land, sea, or air. It has a directory of available carriers and finds the best one for specific orders based on the track records. Some TMS platforms allow you to select the carrier based on different criteria, such as cost, performance, or customer preference.
Whether your shipment is outgoing or incoming, the software ensures it complies with trade policies and rules. It prepares all the documentation the laws require, helping you navigate the complexities of such regulations and policies.
The software gets into finer detail by deciding how vehicles organize cargo by keeping track of the containers’ free space and allocating load to each truck accordingly. This way, you can optimize space allocation and send as much cargo as possible in a single shipment.
After assigning carriers and drivers to specific shipments, it’s time to keep track of the transportations. The drivers can also have a smartphone application of the TMS platform to see their schedules and assignments.
Managers can also monitor if drivers act according to the schedules and how long they take to deliver the cargo. Depending on the TMS capabilities, distributors may be able to share real-time data about the location and status of the shipment with the customers, warehouses, and carriers.
After delivering the cargo, businesses are far from done. They must analyze the entire process, from packaging to delivery, to analyze their performance and look for strengths and weaknesses.
You can evaluate the carrier’s performance and decide to continue working with them. The software saves information about each trip to use in future projects. The business intelligence team can use this data to devise business plans and find less costly routes or carriers.
A TMS is part of the IT department that allows vendors and distributors to automate their delivery processes. It can eliminate the guesswork from the process and make everything more manageable.
Additionally, TMS software isn’t merely a luxury that you can use as a gimmick to attract customers. It’s a necessity in today’s world where technology plays a significant role. Large and small businesses use this technology equally. As a result, you should adopt this technology to stay competitive.
Your business can significantly benefit from a TMS platform in the following ways:
Customer satisfaction is the first and foremost benefit of a TMS platform for business. By optimizing shipment and delivery processes, you not only reduce costs but also ensure you have the fastest and safest route to ship your products. As a result, your customers can get their shipment faster and at lower costs, giving you a competitive advantage and increasing customer satisfaction.
You can also track trends in customer requirements using business intelligence and respond to them more effectively.
Another great benefit of using TMS platforms is increased efficiency. Businesses can automate their transportation and shipping processes. In addition, they can control the entire process in a centralized way, eliminating errors by making everything visible and trackable.
Freight management and shipping cargo can be highly complicated, involving many roles and functions that are difficult to manage. Even deciding on the best shipment type can be challenging and time-consuming. For example, if you have different shipment modes, such as parcels, LTL, or FTL, you may have trouble finding the best route and carrier to send them. TMS software allows you to simplify the process and monitor all these parts on a single dashboard.
As a mid-sized business, you may prefer to stick with one carrier to avoid confusion and further hassles. Even if you have several options, you may not be able to compare all of them effectively, missing some great opportunities. However, this can deprive you of the chance to work with better services at lower costs.
A TMS platform can help you get the best prices among the available options. Using a transportation management system also helps you eliminate all the unnecessary steps in the transportation process, cut off extra paperwork, and automate every step of the process.
You can also save a lot by ensuring all your processes comply with regulatory standards and avoid further financial consequences. The optimization in all these steps equals lower workload, human error, and costs.
If you run a mid-size business, you may think that a TMS isn’t a critical tool for your business's success. However, small and mid-sized businesses can benefit from such a system if they make the right choice. Choosing the right TMS for your mid-size business can be challenging if you don’t know what to expect from the tool.
Here are the primary factors you should consider:
Knowing what you need to optimize and automate in the transportation sector is the first step in choosing the best TMS. There’s a variety of TMS programs that offer a host of different features. Not all of them may be necessary for your business needs.
Make a list of your current and future business goals and needs and prioritize them. Then go through your TMS options and their features. For example, if you’re a distributor, you’ll have different needs from a vendor or shipping company.
Make sure they’re in line with your organizational strategies and current systems. That’s an essential feature that you should look for in a transportation management system.
If you already use other programs in your IT department, ensure the TMS software can integrate other related tools. Warehouse Management systems (WMS), your IT department’s ERP, accounting software, and business intelligence tools are among the crucial programs you can integrate into your TMS software.
The ultimate goal of any business, including yours, is to satisfy and retain its customers. As a result, you should know what your customers want and how the TMS platform will help them.
You can use the data from the business intelligence department to identify your customer needs. There are also some universal things that customers want, such as the fastest and safest way to receive their orders, having a reliable tracking system, booking and ordering online, and the ability to communicate with the company easily.
Another essential consideration is how much you can invest. Using a TMS platform will help you reduce your costs significantly, which can be a good long-term investment. However, you should consult the financial department and review your available options.
Your budget can determine the software’s features and the company you can work with. In addition, be realistic about what percentage of the transportation costs the software will help you reduce.
If the TMS software isn’t crucial in your business operations, you may be fine with a simple tool from a less reputable company. However, if transportation is integral to your business, you shouldn’t skimp on the budget. The entire investment will fail if your TMS tool doesn’t work the way you want.
You can use different types of TMS software depending on their features. One of the most important features is their customizability. Customizable tools may be more expensive but can target your specific needs more effectively. For example, if you have an intermodal shipment, you need all these modes on your platform. Otherwise, you should eliminate others for simplicity.
While a custom solution can give you a competitive edge by addressing things your rivals overlook, you may miss out on points shared in the entire industry. In addition, a custom TMS program may not be a viable option for a mid-size business in terms of costs. You’ll need a dedicated support team to update the software according to your needs.
Like any software package, TMS solutions can have different licensing options. On-premise is the traditional software licensing that involves purchasing the physical software and installing it on your IT department servers. You can still customize your software based on your preferences and needs as long as the software vendor allows.
Another licensing option is the cloud-based system, which doesn’t require purchasing the license. You pay a subscription to get the vendor-hosted software.
Since it’s not hosted on your IT platforms, it doesn’t have customization options. However, you can benefit from everything that cloud-based programs offer. You can get software updates automatically and access the best practices in your industry.
That said, a mid-size business can benefit from a cloud solution more than an on-premise platform. Cloud software is faster to implement and doesn’t need support from your IT department. As a result, if your IT team doesn’t have enough expertise, you can rely on the vendor’s support.
After getting a general idea of what type of TMS can benefit your business most, it’s time to search for the available options. Talk to the software vendor’s representatives and review their features.
You can also ask them to give you actual use cases and their outcomes. You should be able to get tangible information about how the software works for mid-size businesses operating in the same industry as yours. They should give you information about the following:
Most TMS programs have free trials to give you a better idea of what they do. You can use them to familiarize yourself with how they work and what they offer. Pay special attention to the software’s user interface and make sure it’s easy to navigate.
Finally, look for software that allows you to improve your processes by integrating and measuring business intelligence parameters.
With the overwhelming number of TMs programs, you can get a wide range of prices. Different factors determine these prices, so you should take your time, compare multiple options, and talk to several vendors. Finally, choose the TMS software that perfectly matches your goals and needs over one at a lower price. Pricing can vary based on the following factors:
As mentioned, TMS programs can be on-premise and cloud if not customized, which has the highest pricing if your IT team doesn’t develop the software.
On-premise software is a one-time cost that you pay upon the software purchase. Depending on the vendor’s policy, you may need to pay extra for occasional maintenance, further customizations, or user training. In addition, you should consider how much it costs to implement the TMS after purchasing it.
On the other hand, cloud solutions are subscription-based. These programs may have different pricing plans, including per-user, monthly, or annual fees.
Some vendors may charge you extra for features in addition to the price you pay for the licensing. These plans may take on the form of different pricing models. For example, a per-feature model gives different prices for each feature. In contrast, a flat-rate pricing model can provide you with various plans, such as basic, premium, etc., each offering additional features.
Companies charge you differently depending on their size, reputation, and other customers. If they have high-profile customers, dominate the market with a significant reputation, or operate internationally, they tend to charge higher than small, local companies.
As technology grows by the day, TMS developers try to integrate new technologies into their software. As a result, you may see software using AI or blockchain offering unique features. In addition, you may need to integrate other software, such as CRM or WMS, into your transportation management system. You may get these features for free or need to pay for each tool.
Based on the above criteria, the vendors may charge you from $10 to $500 per month. If the company charges you per customer, you may need to pay $4 to $10 per customer per month. One-time purchases may cost $10k to $500k, although it can reach $1m over the years as you get software support and your customers increase.
Implementing a TMS program may take several weeks to several months, depending on a few factors.
The system’s complexity and the platform type are the most important factors. For example, cloud-based programs generally take less than on-premise software because they’re less customizable and have the same features for all customers.
The complexity of the software is a major determining factor; the more complex it is, the longer it can take to implement. You need to take a host of details into account, and they get more complicated as time passes. Your customers increase during implementation, your business grows, and prices change. As a result, you’ll have to adjust, lengthening the process.
Integrating other tools, such as accounting software or warehouse management tools, can take longer if they belong to legacy platforms.
Finally, it depends on your IT department and implementation team, how much they collaborate, and how they plan the project. All in all, you can expect your TMS implementation to take between 3 to 6 months. That said, some projects may take up to a year.