A transportation management system commonly referred to as TMS is a supply chain application that automates functions such as selection of carrier, mode of freight, routing, inbound and outbound freight transportation – both national and international, along with advanced analytics and reports. By far, transportation management system is considered the most effective and value-for-money application in the supply chain sector. A transport management system allows you to perform tasks in-house that you might have outsourced it to a third-party logistics provider. The benefits of the transport management system have led to a renewed interest even among logistics providers to implement the application in their supply chain process. There are many benefits of transportation management system such as companies can benefit from reduced shipping and labour costs alongside getting an overhaul for holistic growth of their business resulting in maximum returns on investment.
It has been observed that shippers who have implemented transport management system in their supply chain network are more efficient, have better service levels, and reduced freight cost, as compared to those who follow the traditional method of transportation management. Here are some benefits of transport management system:
I. Warehouse efficiency – TMS efficiently takes care of error-free entries of data thereby giving you accurate reports. It provides end-to-end visibility of the entire supply chain aiding you in making strategic business decisions to cut cost and increase efficiency. This automated system decreases your time in freight management leaving you with ample time for other warehouse duties.
II. Inventory planning – TMS enables on-time delivery of goods to customers, and happy customers mean more orders. This will help you to accurately forecast your inventory so that you can accordingly plan to refill your stock. This kind of forecasting can be especially beneficial for e-commerce business.
III. Optimised shipping – TMS helps in optimising the way you ship with its reporting and analysis module. It can analyse whether or not a particular carrier is performing well in terms of delivery and based on the reports can negate or choose another carrier. This helps to save money and also improve the level of service.
IV. Freight accounting and audit – By automating freight payment, auditing, and consolidation services within a TMS, a shipper can identify inaccurate charges and duplicate payments. This aspect of TMS can result in substantial cost saving on freight bills.
V. Enhanced customer service – TMS streamlines the entire process of supply chain network. You can generate performance reports and analytics of various carriers, based on which you can decide which carrier to choose for timely delivery of goods to customers. This information is valuable to sustain customer happiness by ensuring that they have a good experience by receiving their products on time, every time, thus enhancing customer service.
Until recent years, the biggest concern in implementing a TMS had been its cost of purchase and installation of the software in the company’s server. However, in current times, acknowledging the effectiveness of the system, TMS software is available from multiple vendors and can be leased as a cloud-based program. This arrangement has brought down the expense of implementing a TMS alongside increasing efficiency and profitability of shippers.