A reliable supply chain is essential to optimize logistics, increase sales, and further business development. These processes and procedures are managed through a transportation management system (TMS).
A Transportation Management System (TMS) is a subset of supply chain management (SCM) that deals with the planning, execution, control, and optimization of the physical movements of goods from point “A” to point “B”. In other words, a TMS solution is a logistics service platform that enables users, and personnel to manage, control, direct and optimize the operations of their transportation fleets and resources. Every single business requires a management system to improve success, and the transportation sector is no exception.
TMS aids logistics service managers with planning their operations. This type of logistics technology promotes easy analysis, storage, and retrieval of sensitive data. This data helps prepare transportation routes, fleet requirements, consumer shipping patterns & potential global outlook. A Transportation Management System (TMS) offers managers tools in the following areas:
Warehouse management as a part of the logistics service plan is an essential feature of transportation management. A warehouse management system (WMS) is software that supports and optimizes warehouse functions. A WMS consists of modules to aid in the receiving, organizing, storage, and distribution of goods. A WMS also helps management in the planning, coordination, staffing, directing, and real-time control of available resources. Assisting the manager to develop processes to move and store materials within and outside of the warehouse.
Features of warehouse management
A WMS uses a database specially configured to support warehouse operations. These include:
- Specific storage processes for the restriction and control of hazardous & flammable materials.
- Managing and tracking warehouse storage locations to improve supply chain visibility.
- Collecting, storing, and sorting individual stock keeping units (SKU’s).
- Measuring expected labor productivity rates by role or activity.
Examples of Warehouse Management Software
Infoplus, this WMS system is a suite offered primarily as a web-based solution. Infoplus helps businesses focus on making warehousing easier to manage.
DaVinci Supply Chain Business Suite
Da Vinci Business Suite is a cloud-based (or on-site) supply chain management (SCM) solution designed specifically for small and midsize wholesale businesses with demanding warehouse needs.
Fishbowl is a platform designed to ease manufacturing and warehouse management. Fishbowl Inventory is designed for small and medium-sized companies. Primary features include inventory, order management, and asset tracking.
Shipedge offers cloud-based warehouse management solutions for enterprises of all sizes. Focused on retailers and third-party logistics companies. This modular system helps with fulfillment, returns or exchanges, and order management.
Couriers & transportation service providers such as UPS, USPS, FedEx, and LTL truck & trailer carriers use transportation management systems (TMS). The service providers who use TMS solutions enjoy increased efficiency, reduced costs and can offer real-time visibility.
Supply Chain Management
Supply chain management (SCM) involves the control of the flow of goods and services. SCM can include the movement and storage of raw materials, the management of in house manufacturing inventory, and finished products from the point of origin to delivery.
Effective SCM is the planning, execution, and control of company logistics. SCM is accomplished by measuring and monitoring activities to create net value. Regular review of your SCM allows for ways to improve infrastructure, leverage logistics technology, and measure performance through Logistics KPI.
Functions of SCM
Supply-chain management provides techniques aimed at coordinating all parts of the supply chain by using supply chain KPI as a guide. SCM starts right from the supplying of raw materials for production to delivery and retrieval of products minimizing total operating costs among the partners in the transport chain.
Four of the most notable benefits of a strong SCM are:
- Improved trust and collaboration among supply chain partners.
- Higher customer satisfaction and reduced operating costs.
- Better management operations from sourcing and packaging to delivery.
- Maximize global supply chain operations by taking care of planning & logistical burdens.
Inventory Management System (IMS)
An Inventory Management System (IMS) keeps records and manages inventory levels to increase an organization’s ability to meet customer needs. Inventory management is a vital element of an effective supply chain management program as it includes aspects involved in the control, oversight, storage, and consolidation of stock on hand. An IMS also identifies slow-moving inventory, discrepancies, and stock on hand. Inventory management for maintaining accurate records is vital as it makes for proper checks, balances & payments in fiscal cycles.
Two of the most crucial tools utilized in inventory management are:
- EOQ(Economic Order Quantity).
- ROP(Reorder Point).
Economic Order Quantity
It is a formula used for calculating and assessing the correct number of units a business should be adding to their inventory. EOQ reduces the total cost of inventory management including factors such as order costs, holding costs, and shortage costs.
As a business, knowing your EOQ will aid in helping to set up the proper inventory levels to keep. For example, if a company’s existing inventory is running low, when is the best time to place a new order for stock reimbursement? Knowing this offers a way to approach out of stock scenarios.
When calculating your reorder point one needs to have the following pertinent details in mind;
- How long it takes to get your items picked
- How much time it takes to get your items sorted & packaged
- The time it takes to get your items shipped (lead time) & delivered
- Top Inventory management techniques
- First In First Out (FIFO)
- Contingency planning
- Regular Auditing (Cycle Counts)
- Prioritizing with ABC
- Dependable Forecasting
- Suppliers who dropship
- Manage relationships
- Setting Min/Max Levels
Inventory management software benefits
Integration of accounts
IMS is beneficial in the integration, linking, and managing of accounts to make it more efficient in the coordination and completion of tasks not included as a single package.
Recognition of shrinkage
This tool eases and fast tracks the time and effort invested into looking for lost or phantom stock inputs.
Reduce running costs
Most management tools are designed to grant broad access to a volume of stock or soon to be stocked commodities. With this in hand, strategic decisions can be executed with little or fewer delays and reduce costs.
IMS collects and organizes data in real-time for planning & forecasting stocking needs.
Streamlined clear cut inventory
IMS allows for the smooth and versatile tracking of inventory with the choice of using a wide range of devices, such as dedicated bar code scanners, smartphones, and tablets.
Better buying choices
IMS gives companies easy access to data like inventory levels, product performance, and profit margins. Access to the data makes it possible to make better purchasing decisions to increase sales and profit margins.
Transportation Management and Operations
The cost and challenges of transportation continue to rise. As a result, the need for efficient & effective transportation management operation is essential to secure success. The smooth running of logistics service operations no longer focuses on past practices given the level of global competitiveness.
Operations management is the management of resources, process inputs, workforce & staffing to produce a result large enough to meet customer demands. Operation management is concerned with managing the processes that convert input (in the form of raw materials, labor & energy) into output (in the form of goods and services).
Some Transport management systems offer enterprise resource planning (ERP) modules. These modules help build a supply chain management framework. ERP modules also help organizations to source products both domestically and globally.
Enterprise resource planning modules use tools related to freighting such as route planning and optimization. These tools allow for better load building, operations, execution, freight auditing, and payment. ERP modules also offer effective tools to manage resources, order visibility, and carriers.
Benefits of Transportation Management
Here is a look at the top five benefits of Transportation Management
TMS or Transportation Management Solution ensures that you understand the effects of cost control by ordering what you need when you need it, spending strictly on an allocated fiscal budget, and having your product delivered on time is crucial to meeting service expectations.
Enhanced customer service
Quality Customer service builds a satisfied clientele, and TMS ensures that shipments and returns are managed to meet your distribution requirements thus building up trust and credibility in the process.
Optimized transportation costs
TMS analyzes the best routes and offers the ability to choose the optimal transportation routes as a solution towards reducing transportation costs.
Improved inventory management
A good TMS solution or TMS implementation results in increased transaction visibility and helps to support an accurate inventory. Transactions are carried out in a manner based on predetermined variables. An inventory management system is based on a sustainable model ensuring consistent results. As a result, customers get prompt delivery, and it reduces the need for safety stock for the vendor.
Allows reallocation of resources
TMS refocuses time, effort & funds to where they are needed most. The organization’s core sectors drive growth, improve productivity, save costs & bolster the proper use of allocated resources.
TMS Software Providers
Most times transportation management is commonly offered as a module of an ERP or SCM package. Some providers also offer products that are exclusive stand-alone TMS services.
A TMS provider offers logistics management tools and services to both the shippers and carriers to run their transportation and logistics operations. By doing so, the shippers can communicate and integrate with their preferred carriers. Allowing the shippers to keep control over the critical relationships between carriers and customers is vital to meeting their fiscal target.
No doubt, TMS software or Transportation management system software is one of the best ways of capitalizing and utilizing the proper tools that ease business operations and drive return on investment.
The TMS tools allow those businesses in the transport industry to plan, execute, manage and direct their transportation operations & fleets. Transportation companies also use TMS to figure out the best quality transportation models based on specific market needs. These models and needs can be tested and measured using transportation KPI or key performance indicators for the shipping industry (KPIs).
TMS is best used to manage four critical processes of transportation management:
- In-depth planning, execution & scheduling
- Decision making
- Execution of the comprehensive plan
- Follow up and analysis of results
Challenges Faced in Full implementation of Transportation Management Tools
Despite the benefits of implementing the modes and tools of transportation management, there exist some challenges (both human & technical) that pose a hindrance towards its use and full implementation as the case may be. These may include:
Policy & trade regulations of different destinations contribute to the need for a TMS. About the manner of conducting business, some regions have more workable ease of doing business policy than others; hurting the availability of services to some areas.
Changing customer patterns & behavior
Despite the different models in the market today that predict and give an outlook into the spending habits/consumption pattern of consumers, one can never be too sure about what pattern a customer may choose to adopt and their behavioral tendencies.
Today we have tons of transport service providers in the business and as such this equates to an increased level of competitiveness on what brand dominates and stays at the top of the supply and distribution chain. This competition leads to aggressive marketing campaigns and the rampant acquisition of startups.
You should expect unforeseen factors. These range from changing political, social, and economic climates. Regulations in global trade and changing markets will need transportation management to be agile.
Starting a transportation management program offers some challenging decisions and choices to make. Deciding on which of the available logistics technology software applications to use is crucial to begin a successful program.
The best way to develop a successful transportation management plan requires testing and adjusting your processes. Continual improvement is a need in the growing and scaling of any business that relies on shipping goods.