Transportation Management

What is a Transportation Management System?

What Is a Transportation Management System?

Transportation Management Systems Help You:

  • Improve shipping efficiency
  • Cut operational costs
  • Automate tasks through connected workflows
  • Enhance customer service practices
  • Gain valuable data visibility
  • Select the best carrier

What is a transportation management system, and how can TMS software boost operational efficiency?

Transportation management is the logistical arm of supply chain management that automates and oversees the physical movement of goods.

A transportation management system’s core tasks are finding rates for orders, optimizing delivery routes, booking them for delivery and tracking products as they go.

What’s the usability of a transportation management system across industries? Let’s look at some of the top TMS users:

  • Logistics companies(3PL/4PL)
  • Manufacturers
  • Retailers
  • Government organizations
  • Small businesses

Here are some other ways a transport management system can make life easier.

Improve shipping efficiency

Transportation management systems (TMS) are all about improving the efficiency of moving products. These solutions give shippers the tools to make routing decisions and select carriers based on efficiency, budget and fuel consumption.

By automating manual processes and speeding up quoting and booking, employees can spend time on more valuable tasks. Integrating ERP features allows a TMS to tackle tedious, resource-intensive tasks like booking accuracy and accounting.

Data flows from the ERP system directly into the transportation management system and populates the necessary fields. This direct flow reduces manual errors and further speeds up daily processes.

Some premium transportation management solutions can include track and trace services, facilitating real-time data sharing between carriers, dealers, warehouses and consumers.

They may also handle intricate international logistics, such as providing necessary import and export papers and ensuring shipments meet trade compliance.

When looking for a system, keep these inclusions in mind:

  • Route optimization
  • Integrations with ERP modules
  • Automatic scheduling
  • Multi-modal shipping options
  • Cross-docking

Cut operational costs

What’s the role of a transportation management system in cost cutting?

Lowering resource usage in one area allows valuable funds to funnel into suffering areas of the supply chain.

By integrating a TMS, users can reduce costs associated with transportation and focus on areas that need improvement.

Automatically consolidate shipments into their most optimized forms to save space and reduce truck usage. Consolidation helps arrange shipments by weight and which palettes the shipment is grouped with.

Simplifying billing processes can also reduce resource waste. Manually entering accounting data is prone to costly human errors. A transportation management system streamlines these tasks by speeding them up and improving accuracy.

Depending on the operation, a TMS can handle cost-plus and door-to-door billing models. Instead of taking up valuable employee time calculating carrier costs, allow a transportation management system to handle the heavy lifting.

These systems can cut costs in many ways. Make sure these features are included in your final choice:

  • Invoice management
  • Carrier cost calculation
  • Load optimization
  • Shipment consolidation
  • Claim management
  • Cost-plus and door-to-door models

Enhance customer service practices

Every component of the supply chain affects customer happiness. Customers appreciate when TMS processes offer robust visibility into order creation, delivery and feedback.

Although a TMS typically offers email communication with partners and clients, several providers support scalable self-service connectivity portals. Customers can create orders there and check the status of orders, while suppliers can send offers, verify invoices and submit them.

Fleet management modules allow users to get the most out of their drivers and trucks. Quickly look up qualifications and experience to assign the right driver to the right shipment. Pairing the perfect driver with an optimized route and real-time shipment tracking is a guaranteed way for customers to feel supported. Ensure that these features are available when picking out a transportation management system:

  • Fleet management
  • Real-time tracking
  • Advance shipment planning
  • Customer management
  • Dispute management

Gain valuable data visibility

If you’re looking to improve transportation management, good data visibility is the key. Leveraging business intelligence and analytics tools gives users actionable insight into valuable metrics. Intelligence tools can also identify recurring discrepancies and allow users to correct them before they get out of hand.

The main advantages of BI over traditional spreadsheets are real-time analytics and customized reports.

A TMS can store shipment info that helps compare rates against final invoices to ensure there are no irregularities.

Identifying weak points is one of the quickest ways to get a supply chain up to speed. A management system can track vital KPIs that can illuminate problem areas in need of change.

Most systems include customizable dashboards and reports that fit a variety of unique requirements.

Intelligence tools are some of the most valuable features transportation management systems can contain, so be sure to identify some of these key inclusions when choosing a system:

  • Reporting tools
  • Business intelligence
  • Analytics tools
  • KPI management
  • Performance management

Selecting the best carrier

Partnering with the right carrier is critical to the health of transport management systems. Not only will they ensure the safety of your goods, they know to handle and transport them quickly.

Manually searching through the flooded carrier market is time-consuming and resource-intensive.

A transportation management system can streamline the carrier selection process by evaluating merchandise ready for shipment and matching it to a carrier via the network.

Some TMS solutions include access to supplier networks, giving users another avenue to look for a partnership.

These systems also allow users to go back and revisit their older shipments to match similar ones to carriers that can handle the job. After narrowing down the field of prospective carriers, calling up each one for a quote can take a while. A TMS can solicit quotes automatically while employees focus on more important tasks.

When searching for the perfect carrier, make sure your transportation management system includes these helpful features:

  • Past orders
  • Carrier performance management
  • Auto carrier selection
  • Network inclusions


How Do I Create a TMS RFP?

Assembling a strong transportation management RFP is a daunting task. While we can’t go into the full process here, we can go over the major steps involved in putting one together:

  1. Gather your TMS requirements.
  2. Put together your transportation management system RFP.
  3. Identify which vendors to send your RFP.
  4. Review proposals and send your responses.
  5. Follow up and make a choice.

It sounds easy on paper, but a lot of time and thought goes into creating a TMS RFP.

There are a few special considerations to keep in mind during this process that are TMS-specific, however. For example, do not focus on what the solution you are looking at does, but on how it does it.

Check out in-person demos to see exactly how a management system can solve your problems.

Dig deep into vendor reviews to see if they will make a good partner. You want a stronger relationship than just client and supplier-based communication.

Do I Choose an On-premise or Cloud-based System?

It’s no secret that cloud-based management systems are the future. On-premise tools cost more money to set up, take up huge chunks of time to update and are much more expensive than their cloud-based peers.

Cloud-based systems are becoming more popular by the day as they confer multiple benefits to users that adopt them:

  • No need for lengthy setups
  • Lower cost of entry
  • Secure data storage
  • Mobile access via internet-enabled smart devices
  • Easy document exchange and file recall

Cloud-based systems come with too many benefits to ignore. As time goes on, more businesses adopt this deployment strategy. If you haven’t considered adopting the cloud, now is the time.

How Do I Select a Transportation Management System?

Tracking down a transport management system that perfectly fits your operation is an overwhelming task. The market can be difficult to peruse with so many vendors out there.

To narrow down the expansive field of vendors, try asking a few questions to get started:

How big is your business? How much room in the budget is there for a new management system? What type of deployment strategy would work best?

By answering a few of these, you’ll have a better idea of which vendors suit your unique requirements.

If you’re unsure of how to start, or just need a little guidance to get going, take a look at our transportation management requirements checklist or our list of transportation management features.

Have a question about which software vendor is right for you? We’d love to help! Reach out to our team for individualized recommendations by messaging or via phone at 855-850-3850.

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Transportation management system articles are written and edited by:

Zachary Totah

Zachary Totah

Content Manager

As SelectHub’s Content Manager, Zachary Totah leads a team of more than 35 writers and editors in their quest to provide content that helps software buyers find the right system for their company.

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Hunter Lowe

Hunter Lowe

Content Editor and Senior Market Analyst

Hunter Lowe is a Content Editor and Senior Market Analyst at SelectHub. He writes content for Construction, Inventory, Warehouse, and Supply Chain Management.

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Aditi Parihar

Aditi Parihar

Market Analyst

Aditi Parihar is a Market Analyst at SelectHub. She writes content for human resources, inventory management, transportation management and procurement.

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Mahima Baghel

Mahima Baghel

Technical Writer

Mahima is a Technical Writer at SelectHub. She writes for the fields of transportation management, fleet management and compensation management.

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