TMS is an acronym with multiple meanings
TMS is one of many acronyms with multiple meanings. It could signify anything from the name of a disease to a university course or product name. If you google the term, you will receive some 9 million hits, with Transportation Management System far down the list. However, Transportation Management System is what I mean with TMS in this context.
So what is a Transportation Management System (TMS)?
A TMS (transportation management system) is used to plan freight movements, do freight rating and shopping across all modes, select the appropriate route and carrier, and manage freight bills and payments.
This is the lowest common denominator for the TMS sector. Here, like in all sectors, you’ll find simple products and those that are somewhat more advanced. The simplest variety is usually referred to as a TA (transport administration) system and offers transport booking and tracking features.
If you want a more comprehensive product, these tend to support transport procurement, transport planning, consolidation, routing, choice of means of transport and choice of freight company, invoice checking and payment. A few suppliers are able to offer a global logistics function that also includes support for processes for strategic planning and strategic transport procurements.
“A few suppliers can offer a global logistics function that includes support for processes for strategic planning.”
Why should you invest in a TMS?
In many companies that do not use a TMS, the functionality provided by a TMS is handled manually, wholly or in part, often involving various excel sheets, spiced up with some adaptations to the ERP system. This makes it difficult to visualise and take control over the entire flow, and most importantly, it makes it difficult to trust the available data and make correct assessments of the current status. Most ERP systems have chosen not to develop support for the transportation flow, so for the ERP user, these processes are “unknown territory” that must be handled manually.
Gartner omits one thing in its definition of a TMS: a TMS often constitutes an integration hub. It connects freight companies, logistics suppliers and ERP systems. If you are looking at a global customer with major volumes that uses a TMS, a lot of transactions will need efficient validation and quality assurance in the system. These connections may consist of a traditional EDI, a web service call or a simple xls integration. Anything to remove the manual elements and visualize the entire logistics flow for the user.
“A TMS often constitutes an integration hub. It connects freight companies, logistics suppliers and ERP systems.”
You get the following values when you implement a TMS:
- Planning and optimisation of the logistics network
- Visualisation of end-to-end flows
- Support for consolidation and an increased filling ratio
- Automation of manual processes; transport booking, invoice checking, cost coding, payments
- Standardised processes
- Improved transport agreements, lower costs and a greater degree of loyalty
- Reduced costs through complete checking of transport invoices
- Better data on which to base decisions
- It’s all about rationalising, connecting systems and minimizing the manual elements and increasing the degree of visualisation.
Want to know more?
Please don’t hesitate to get in touch for a more in-depth discussion about the opportunities of implementing a true TMS solution, what the main benefits are and how you construct your business case.