What is a Transportation Management System and how does it work?
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By: Krypt Team - April 30th, 2021




Authored by: Vijendra Kargudri

The pandemic has had and continues to have the deepest and longest impact on every aspect contributing to the global economy. There has been no other time in our lifetime than this period, we all have realized how timely goods distribution & delivery are critical to the mankind. Having a system that drives it to be efficient and effective every time is key to this. Yes, it is the Transportation Management System, and we get to know more about it in this blog.

What is a Transportation Management System?

Briefly, Transportation Management System (TMS) is a logistics platform integrating technologies to help businesses ─ plan, execute, and optimize the physical movement of goods, both incoming & outgoing. TMS platform helps the shipment to be compliant through proper documentation and often is part of a larger supply chain management (SCM) system.

TMS system helps in streamlining the shipping/logistics process and make it easier for businesses to manage & optimize their transportation operations, irrespective of the mode opted for ─ land, air, or sea. Using TMS platform helps achieve this. It provides visibility into day-to-day transportation operations through track & trace functionality, trade compliance information, and documentation, while ensuring timely delivery of freight and goods to the customer.

Supply Chain Management System (SCM)

A typical SCM system includes transportation management along with other components as procurement, product lifecycle management, manufacturing, inventory, warehouse management supply chain planning, and order management.

The need to have a Transportation Management System

TMS plays a pivotal role in global supply chains. It contributes to every facet of the process—from planning and procurement to logistics and product lifecycle management. The wide & deep visibility afforded by TMS leads to more efficient transportation planning and execution, thus resulting in higher customer satisfaction. This, in turn, leads to more sales, and helps global businesses to grow. With such a dynamic global trade environment that we are part of and transact in, it is important to have a system that helps to successfully navigate complicated processes around trade policies and compliance.

Changing Consumer Expectations

In today’s world, consumers decide to receive what they want and when they want it. To match such demands, traditional businesses experience unprecedented pressure, and this is being felt more keenly across the global supply chain than anywhere else. The physical movement of goods is a critical part of any supply chain, and more number of businesses are relying on TMS platform to help them manage same-day shipping and real-time tracking.

How does the Transportation Management System work?

Recent studies indicate that almost 35% of the global businesses use the TMS platform to manage their transportation network. The need for Transportation Management Systems can never be discounted as complexities of logistics & transportation increase mutually with the business growth.

Technically, TMS provides better transactional & communication system. It allows businesses to leverage enormous real-time data to make easier & timely – decisions, plans and strategies for optimal transportation solutions.

Transportation Management system is considered as one of the core disciplines of Supply Chain Management and creates a bridge between the Supply Chain Planning and Enterprise Resource Planning. It facilitates registering customer orders and integrates it with the warehouse management system and inventory management system, creating a loop in the network.

A business can leverage following key elements of an advanced Transportation Management Systems:

Planning & decision-making

With all the real-time data & business insights, TMS platform facilitates the most relevant reports and presents them under a single dashboard for better visibility. Business leaders &Transportation Management Companies now have a timely & effective decision-making process. Some of the major & beneficial attributes include fewer road stops and shorter routes, ultimately lowering the transportation cost & time.

Execution of transportation plans

TMS systems make it convenient for management to frame better strategy and transportation plans. The platform addresses the key activities like dispatching, carrier rate acceptance, and EDI by automating most of its activities with lesser human intervention. As the management can plan better, and successfully execute them.

Visibility

A TMS platform allows shippers to easily track & keep close visibility of the entire shipment process. This helps the Business Leaders to have freight visibility and include all the team members in the same loop. And Logistics Manager get real-time insights on invoicing, customs clearance and booking for freight or consignment delivery from point A to B.

Measurement

TMS system provides various reports on Key Performance Indicators (KPIs) for e-commerce logistics about every aspect occurring in the transit. This helps shippers and distribution units to measure and keep record of all major attributes and view final reports through a single dashboard.

Risk Management

A TMS platform simplifies how hazardous material is shipped. Transporting any hazardous material is a matter of public safety. Such businesses undertake a risk every time they transport such materials. It is also a matter of regulatory compliance. Failing to adhere to the rules puts a business at risk of regulatory actions including hefty penalties.

A proper TMS System prevents such risks & penalties by managing health & safety compliance paperwork. It includes everything from adequate labelling to paperwork and packaging.

The TMS system also prevents the risks that come with international shipping by generating reports, automating, audited processes, and ensuring due diligence across various jurisdiction along the transportation routes.

How can Krypt help?

Krypt is an SAP preferred integration & implementation partner and has assisted in the success of global businesses through implementation of SAP TM, GTS, IBP & EWM.

If you are a business looking for such a comprehensive solution and wish to avail out-of-the-box functionalities and more, then request a DEMO or do Contact Us to explore more about our products/services.

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