What is a Transport Management System (TMS)
This is a simple guide for hauliers wanting to know what a transport management system is and does.
This article is a more in-depth follow-up on the “what is a TMS” topic from our main piece, where we discuss several questions about TMS software that people have asked on Google.
A Transport Management System (TMS) is a cloud-based application that provides businesses with an integrated platform for managing their logistics processes from end-to-end.
It helps you plan, track and execute your shipments in an efficient manner as it lets you manage your transportation operations and reduce costs, while also providing real-time information.
The benefits of a TMS software are many, but these would be some of the most important:
1. Allows companies to run their business more efficiently by automating manual processes and streamlining many different functions.
2. Automation and minimizing human error help in reducing the costs of your operation.
3. Provides real-time visibility across all shipment activities to keep you informed at all times.
4. Reduces paperwork as all information is stored digitally instead of on paper documents.
5. Ensures compliance with legislation by providing an audit trail for all activities within the company.
As a first conclusion, a TMS enables transport companies to improve efficiencies by streamlining processes such as data management, job execution, driver’s activity and billing. And it reduces costs, and increases revenue via automation of repetitive tasks such as data entry, expense reporting, PODs, invoice generation, customer communication and others.
Why is it important to have a TMS? A Transport Management System (TMS) is an important part of a business as it affects every part of the process, leading to better overall efficiency, clear visibility, improved customer satisfaction and lower operational costs.
The main goal of a TMS is to give you a single source of truth to manage your tasks more efficiently, and provide visibility into your operation so that you can make informed decisions.
In today’s competitive market, it is important to be able to provide the best possible service to your customers. In order to do this, you need to make sure that all your resources are working in tandem as efficiently as possible.
A good analogy would be to compare it to a combined arms effect – better overall management, more efficient logistics, more informed customers, at reduced costs and hustle.
Types of TMS There are 2 types of TMS – one is outdated, and we’d do you a favor to not even mention it; while the other is what people expect nowadays.
The first one is called “On-Premise TMS”. Here are the downsides:
You have to buy servers that you physically keep at your office. But besides the fact that you pay for them, they need to be maintained.
The costs for maintaining servers are not to be overlooked. There’s a large upfront cost, and then you have to keep paying to keep them running.
Then there are security and privacy matters which you have to take into account. Hackers are the least of your worries and really, it should stay like that. But what do you do if the servers go down? You’re quickly back to pen and paper.
Lastly, it’s difficult to integrate them with other software because everything else “is on the cloud”. Not to say that, again, it costs you to do it, and it costs you to maintain it.
Hopefully this is enough to make you stay away from last decade tech.
The second option is a “Cloud-based TMS“. These are the standard ones, and what anyone expects from a software to behave like. This means:
No need to purchase any servers or maintain them, as the company that provides the TMS has taken care of that. It’s the most basic necessity.
It’s secure and private. Any respectable TMS provider will take on the responsibility to ensure this. And when it’s time for an update, it’s delivered seamlessly over the internet.
Since it’s in the cloud, it works anywhere as long as there is an internet connection. This enables a suite of features for drivers to fulfill their jobs with.
Streamlines collaboration between operators, drivers and your customers, so that everyone has real-time data to work with.
Future-proofs your business, as everything connects through the cloud nowadays. Any future updates, or integrations that come up, will be pushed to your TMS seamlessly.
Benefits of a TMS This section is the most important, so we’ll provide a clear list with some of the top benefits to take advantage of by using a TMS:
Time saved through automation as opposed to manual tasks – resulting in faster response time, fewer delays and quicker delivery. This also means less paperwork is involved.
Reduced administrative costs for your business through better fleet management, and coordination between transportation and fulfillment functions.
Automation of business operations – which enables your employees to do their work faster and easier.
Simplification of working with data and supply chain processes across all integrated software – which means faster billing and documentation, and more accurate data.
Real-time visibility on the movement of shipment throughout the lifecycle of a job – which your customers also have access to.
Actionable reporting which offers performance insights to assist future planning.
Better customer service with real-time updates, easy communication and no delays – resulting in higher customer satisfaction.
Few to no invoicing and human errors – resulting in faster time-to-cash gains.
A way to scale up your business using tech to improve the efficiency of your operation.
For more information I highly recommend having a look at our modules pages where we detailed the key advantages that each one brings to the table.
Integrations We briefly touched upon those earlier, so here’s the quick version of what each one of those does:
ERP (Enterprise Resource Planning) – is a piece of software by itself but features from it are largely found into any standard TMS in the UK. It’s concerned with shipment details, delivery status and performance data. By comparison, a TMS is specifically designed for transportation management, providing more features in this respect, while an ERP is broader in scope.
For a more detailed analysis between ERP and TMS please check this article where we look at these two pieces of software in comparison.
WMS (Warehouse Management System) – connecting this to your TMS lets you coordinate your warehousing and shipping operations. It helps you schedule loading/unloading, and coordinate with the warehouse staff to work together more easily.
Job and Inventory Management – these types of integrations help to streamline the job order with all necessary details, and manage your inventory.
Accounting a TMS should have the necessary features for accounting, but if you’re using a standalone piece of software already, it can be integrated with the TMS to ensure accurate billing, invoicing and so on.
Business Intelligence Tools – as in the case above, a TMS should have analytical capabilities, but probably they don’t compare with specialized software. If you’re using anything as such, it can be integrated with the TMS to provide you with data for an overview on your business.
3PL – many carriers use third party logistics tools which can be integrated with a TMS to easily exchange information like commodity type, dimensions, pickup, delivery locations etc.
Freight Marketplace – more predominantly used by 3PL or owner-operators, these platforms can be integrated in the TMS so that ultimately everyone keeps their trucks busy.
Implementation of a TMS The implementation process depends on the TMS and the company behind it.
It boils down to how complex the TMS is, and we’ll be honest – if it’s an old TMS (double edged sword, as it can mean it’s either good (theoretically) or outdated) your employees need training until it’s fully usable.
That can take from 1 or 2 weeks, up to 1 or 2 months. For which you’ll have to pay extra.
Because if it’s “old” it means it has a lot of integrations, a lot of features, a lot of “benefits” …let’s say.
The problem here is that many of its features have been developed over time – and if the TMS wasn’t built to be modular from the start, then your employees will have to use several different apps to do their job. Not the end of the Earth though, but not classy-live-in-2023 kind of tech either.
Or worse, if its architecture is not modular – and the company has kept adding features over time, then most probably those features are a huge entangled mess, resulting in higher complexity.
Yes, the company behind can claim it “does so many things” – but honestly, it’s much more important what are your needs and priorities, and that the functionality of your chosen TMS matches them.
Otherwise, you end up using its core features and overlooking the rest (which you still pay for).
Ideally, a good TMS matches your needs, and is intuitive to work with.
That means the “training” is more of an onboarding and you’re good to go. No extra payments needed.
For this, the company behind it really has to know what they’re doing. And they have to be good enough people to overlook business practices – because the training part is a great source of income.
And since we’re here… DriverUp has in-app training materials and free on-site training. Just saying 🙂
Conclusion Well, hopefully you have a better idea about Transport Management Systems now. We tried to aggregate pieces of information to give you a simple guide that makes light on what the hell this thing called a TMS is – why it’s important, how it works, key features and benefits, integrations, main vendors and what’s coming in the future.
If you want to do some further reading we highly recommend checking our more comprehensive piece which covers other important aspects of understanding what a TMS is – TMS vs ERP, TMS in SAP, what are its functions and elements, what are the risks and disadvantages, and how they can be mitigated.
Otherwise, drive safe! o7