Transportation management system (TMS)

When your business ships or receives large quantities of goods, managing your supply chain is especially important. Ecommerce companies and DTC brands alike have to manage many parts of the fulfillment process while finding the most efficient and cost-effective methods of getting their products to their destination. A transportation management system (TMS) can help your business manage shipping more effectively, saving time and money.

What is a transportation management system (TMS)?

A transportation management system (TMS), also called transport management software or a transportation management solution, is a type of logistics platform that helps ecommerce businesses plan and optimize the movement of their goods. (Side note: other types of companies use TMSs as well, but more on that later.) Whether your goods move by land, air, or sea, a TMS helps to ensure that your shipments comply with applicable laws, carry accurate documentation, and are properly prepared for shipping and receiving.

TMS software also provides greater transparency for daily transportation operations, documentation of compliance with applicable import/export regulations, and the location of freight at any given time. By using a TMS, businesses can manage and execute all of their transportation operations through one comprehensive system. A TMS can be a key part of your supply chain management efforts. It offers a higher level of control and efficiency in managing your goods as they enter your supply chain and as they reach your final destination with customers or retailers.


Who uses a TMS?

There are many types of businesses that leverage a TMS to improve their operations. Essentially, any businesses that need to ship and receive goods on a regular basis employ transportation management systems to automate and simplify their processes. 

Some primary roles that leverage a TMS include:

  • Operations managers
  • Logistics managers
  • Warehouse managers
  • Distributors
  • Founders and entrepreneurs

And of these different roles, they may work at different types of organizations:

  • Manufacturing companies
  • Ecommerce businesses
  • DTC brands
  • Retailers
  • Warehouses
  • 3PLs
  • Distribution companies

Businesses in almost all industries make use of a TMS in order to save time and money and gain a higher level of insight into their shipping operations. In the past, most companies that used a TMS had a budget in the hundreds of millions each year on freight management alone, but cloud-based TMS has made it possible for small and medium-sized companies to access and afford this type of software.


Why is a transportation management system important?

A TMS allows your business to manage all elements of transporting inventory and/or orders in just one system. With the information provided by a TMS, you can easily make decisions based on factors like carriers, quotes, and transit time.

A TMS is important because it acts as an all-in-one platform that provides:

  • A single interface to eliminate tech redundancies
  • Performance metrics and KPIs
  • Streamlined customer service
  • Delivery time and transportation costs optimization

Eliminate tech redundancies

Transportation management software allows you to avoid redundant or confusing systems. Whether you're shipping out orders to retail customers, receiving raw materials, or sending out wholesale goods to large purchasers, your TMS gives you a transparent eagle's eye view of your entire shipping operation. This can help you to negotiate with carriers and save when choosing a shipping option.

Performance metrics and KPIs

Your business may have key performance indicators (KPIs) related to shipping—from the percentage of funds spent on shipping to the speed of delivery. A TMS makes it easy to track your goods throughout the shipping process and ensure that you're meeting set KPIs. 

Streamlined customer service

Your TMS will ensure that customer service agents and others in your business always have access to accurate information about tracking and shipping. You can also easily determine how well different carriers meet your goals for shipping time.

Delivery time and transportation costs optimization

By comparing carriers' quotes, estimated delivery time, and potential costs, you can optimize each shipment for the right solution. A TMS can make it easier to balance different elements and find the right shipping choice for each transaction.


Key uses and benefits of a TMS

For ecommerce businesses, a TMS has some key uses that can provide significant benefits to daily operations. Shipping is key to your business, and a TMS provides an advanced level of supply chain management.

Some benefits of a TMS include:

  • Cost savings and planning efficiency
  • Greater tracking and visibility
  • Simplified payment and vendor management
  • Simplified reporting and greater business insights

Cost savings and planning efficiency

Since a TMS provides advanced algorithms to optimize each shipment, you won't need to individually compare the costs of each shipment. Instead, the system integrates and automates these processes. Some of the aspects the TMS can manage include:

  • Route optimization
  • Load optimization
  • Shipping costs
  • Load execution
  • Carrier selection

Greater tracking and visibility

A transportation management system is designed to maximize visibility throughout the system. You'll be able to accept and streamline incoming shipments, plan a manufacturing schedule, and ensure goods reach end customers in advance of key deadlines. You can also respond efficiently to customer questions while following up with vendors. Some tracking and visibility benefits include:

  • Freight status updates
  • Centralized tracking information
  • Shipping visibility to all parties that need it
  • Improved scheduling
  • Push notifications for customers

Simplified payment and vendor management

A TMS also allows you to automatically audit, respond to, pay, or query carrier invoices. You no longer have to manually handle these invoices, as the TMS can be instructed to handle each of these transactions without further input. Some aspects of financial management the TMS can handle include:

  • Booking shipments
  • Tendering
  • Settling carrier invoices
  • Auditing transactions and results
  • Billing to recipients after shipment

Simplified reporting and greater business insights

With the detailed and custom reporting provided by a TMS, you can easily analyze productivity and how your shipping decisions affect profit. Use the insights provided by a TMS to reduce expenses, improve service levels, and assess how well the business is meeting KPIs. The automated reporting functions of the software allow businesses to assess and respond to:

  • KPI data and tracking
  • Analytics
  • Cost management
  • Detailed reporting over time




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Ready to simplify your transportation management?

Transportation management systems can significantly improve how you track, monitor, and forecast costs of incoming and outgoing shipments—cutting costs and improving efficiency. Our all-in-one platform integrates with common TMS and WMS software so you can simplify your logistics. Schedule a call with our fulfillment experts to discover how Airhouse can help reduce your fulfillment costs.

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