Transportation Management System (TMS) is a digital platform that streamlines shipping processes by providing visibility into all transportation activities in one online interface. It deals with planning, execution, and optimisation of the physical movement of goods. TMS also provides insights into new ways that shipper can save time and money on future shipments. In a simpler term, TMS can be considered as a platform that enables users to manage and optimise the daily operations of transportation fleets.
Mark Nix, senior vice president of transportation and founder of Cloud Logistics, said that TMS is valuable to logistics and business operation as it can automate inventory exercises, saving several percentage points. Not only that, the most valuable TMS functions include reducing freight expenses, tracking deliveries in real-time, increasing customer service, improving efficiency and productivity, and increasing supply chain efficiency. Owing to these reasons, the right TMS offers both savings and process improvement.
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According to Nix, the best carriers of TMS system for every contracted move can save 2 percent up to 5 percent of freight spend. Automating the match-pay process can save an additional 2 percent while streamlining accounts payable and giving the chief financial officer real-time freight accruals. This concludes that “you can improve anything you can measure” which is available when using the right TMS platform.
To get the right TMS provider, you should at least consider the following 7 questions.
1. What are your current and future needs?
In order to select TMS that give a better return on investment, you should not invest in more features that you don’t need to use in the near future. The objective is to choose a system that lasts for the next five to ten years and provides a return on investment in less than 18 months. Therefore, find TMS that offers a building block or modular approach which enables you to scale and add functionalities when it makes sense.
2. Does your selected TMS work for carrier and broker?
You will never know when you should cooperate with a carrier or a broker. You will also likely need to work with both as well. Thusly, your TMS should be flexible enough to adapt to both situations. For instance, a carrier is paid to haul a load. A broker earns income from commissions on each load. Meanwhile, TMS should maximise efficiencies of both margins.
3. Does the selected TMS work best with supplementary tools?
From electronic data interchange to trailer tracking, you should look for a TMS that integrates with complementary tools and services that meet your unique business needs.
4. Is your selected TMS secured and reliable?
Every system will have a hidden cost when it is not calculated properly, including error system and equipment lost. In this case, avoid costly errors in areas such as maintenance, driver logs, and driver records with integrated tools to manage the department of transport compliance. You should also make sure that maintenance is closely available in the market. And remember that, the right TMS should save between 3 percent and 7 percent of transportation costs.
5. Does the selected TMS offer seamless payments?
Look for a TMS that offers gold-level integration with your existing system. This combination seamlessly automates billings.
6. What is the implementation like?
Another crucial consideration is to ask the provider regarding the implementation process of the selected TMS. Who handles implementation? Does she/he know the in and out of the process and the system? Are there educational resources available for your employees? How long does it take to make the robust process known to the public (employees and other stakeholders)? And how soon until it starts showing ROI? By asking these types of questions, you will get a good idea of what to expect from your TMS implementation.
7. Does the selected TMS provider have a record of success?
A TMS provider with proven success is more likely to be helpful to your business than a company with a spotty track record. Thus, ask for references to get a sense of what your experience will be like.
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