TMS System: Why Consider TMS Transportation?

March 31, 2021

6 min read


What is transportation management system? Why use a transportation management system? Let’s talk about what a TMS is, what it can do and how you can get the most return on your technology investment.
TMS System outputs can help you quickly determine least cost carrier utilization.

“Transportation management system” means different things to different people. For some, it is an Excel routing guide. For others, their closed loop TMS system is a closely monitored technology solution essential to moving freight, controlling transportation costs and supporting strategic business goals.

Those benefits are driving modern organizations to TMS in support of their transportation management. Nearly two-thirds of respondents in a recent Peerless Research Group poll say they are currently using or implementing a TMS, or they are evaluating/planning to do so in the next 24 months. Some of the top drivers for TMS adoption are cost management (68 percent) and track and trace capabilities (61 percent).

The technology tools have merit on their own. When combined with the right supplemental tools, you assemble a comprehensive kit for the execution of your business strategy. Those supplemental tools should include external audit and compliance functions, as well as downstream analysis of landed cost data that can drive improvement in your business.

In today’s complicated transportation environment, shippers are facing a growing number of changes and variables that impact their ability to execute freight movements and ensure they are making cost-effective decisions. Beyond the benefits of a TMS, the complexity of the multi-modal transportation environment is forcing many companies to make improvements in transportation technology.

Let’s talk about what a TMS is, what it can do and how you can get the most return on your technology investment.

TMS: A System for Transportation Management

The TMS supports your ability to execute shipments systematically.

A Transportation Management System (TMS) is named specifically for the functions it is designed to support.

It is a systematic means to automate your business processes and manage all functions related to shipment execution and visibility. TMS is a platform that allows you to store and access all documents related to the transportation of your goods, communicate with carriers and view all tracking information to maintain awareness of your freight movements.

The goal of implementing a TMS: empower users to manage transportation by exception.

Instead of touching every shipment, only deal with those that demand attention. The rest you want to automate with a process or a rule. You can absolutely bypass a great deal of manual, painful processes with a tool like a TMS. Doing so, can achieve tremendous time savings during shipment execution, produce soft savings to the bottom line and allow labor hours to be invested in other tasks.

And with the right TMS technology system, you can support even the most complicated transportation scenario. We have seen hundreds of different systems, from homegrown to even the most sophisticated. Everyone has something that is unique. We have never encountered a complex process where we could not design a beneficial technology solution.

Imagine coordinating transportation for high-end aerospace components. You have an immediate on-site installation that requires three different schedules to align and execute at the exact specific time. You can get as detailed as you want. It all comes down to having defined business practices and your level of commitment to your customers. The challenge is, determining the activities you need to automate is not always easy, especially if your current processes are a problem. You do not want to automate a bad business process and keep making the same mistakes – faster! Unlocking the power of your TMS requires you to identify the right business strategies you want to implement into the execution of your transportation operations.

What is a TMS not going to do?

Depending on a TMS to complete audit and reporting needs can limit your ability to determine true landed cost.

When you expect your TMS to manage activity outside transportation execution and visibility, you are bleeding outside the tool’s intended scope of work. Watch our recent webinar to hear more of our thoughts about what you can expect from your TMS technology – and what you cannot.

Often we see shippers rely on their TMS to meet their needs for audit and business intelligence. Do that, and you limit your ability to perform a robust audit and develop true landed cost metrics.

Certainly, there are TMS applications that offer freight bill audit functionality. However, these are typically match-based audit programs that force you to loosen your approval thresholds, potentially leaving meaningful dollars on the table. The preferred method of audit is to re-rate against the actual carrier contracts. This gives you the most accurate, expected paid amount.

By managing this in your TMS, you bear the burden of resolving any errors yourself. Alternately, you shift that burden to your carrier partners to reconcile the discrepancies within a TMS dashboard or portal. While carriers will do this today, they will factor in additional costs for that labor within your contracted rates.

You can get ad hoc reporting as part of a TMS solution allowing you to measure and report on your operational activities in real time. In our experience, this is critical for teams driving the tactical arm of your business, which is relegated to carrier performance data, tracking information and forecasted cost.

In addition to operational reporting, you also need strategic, landed cost information for the purposes of trending and analysis. This allows you to develop a continuous improvement loop in order to measure your performance against your carrier procurement and business strategy. Using this methodology enables you to continue to refine your business rules and optimize the performance of your TMS.  

A Platform for TMS ROI

It is important to understand that every company is on their own supply chain journey. That journey is always evolving – for you, for your customers, for your vendors. The solutions you need today will not be the same solutions as those required in a later stage of your journey. That is why you need a transportation management solution that is nimble and can scale with your evolving business needs.

The TMS has a specific purpose, but when that tool and your transportation management solution is scalable, you will always have the right support system at any point in your journey. That system needs to include the right components leveraged in the right way alongside the TMS. With that, you can maximize the investment you put towards your technology – and you may avoid spending some of the dollars you think you have in front of you.

The components?

An audit and resolution function that operates outside the TMS enables you to establish and adjust your own rules around how you systematically audit every invoice against contracted pricing. However, selecting a partner who can truly perform a transportation knowledge based audit will allow you to build the right compliance mechanisms.

The other necessary component is using the authenticated data captured through your audit process to develop a meaningful business intelligence platform that measures how you are executing in the TMS tool, so you can continuously evolve your strategy to suit the current environment.

As you can see, a TMS is not an easy button, nor is it not a cure-all for everything. However, the right expertise behind your TMS, whether internal or external, can help you scale your solution with your growth, so you can address any challenge that emerges.

Putting the TI in your TMS System

With decades of experience in managing transportation across countless industries, we work with the Transportation Insight team to design transportation management solutions that include not only the development of TMS but also deploy the right supplemental tools to maximize its value.

We help our customers determine the best strategies for their business and then help make sure they are reflected in the transportation execution strategy. You might have a great strategy in place already, but without the right visibility, how do you know what percentage of that you are achieving and how can you continue to optimize?

Our platform is designed to help companies develop the right distribution strategy, the optimal execution of that strategy and continuous improvement of that strategy over time. With that understanding and ongoing awareness of the transportation environment, you have the power to achieve a nimble and scalable logistics management solution.

That is the kind of system that evolves as your business changes. Today, that might mean a TMS helps you execute daily shipments, but tomorrow you may need to take control of inbound freight and third-party vendors.

Do not forget, when you partner with someone who can help you scale growth and achieve positive change, you allow that company to bear the cost and expense to maintain market relevance. That’s important considering the speed at which technology advances. We bear the cost and expense to keep you on the bleeding edge without hemorrhaging your profit into technology pursuits.

Most importantly, at Transportation Insight, that is also a system that is fueled by expertise. Yes, we are able to bring the power of the TMS and the hybrid-digital system of components to your business. We also pair that technology with the generations of multi-modal transportation experience possessed by our colleagues. This truly positions you with the intellectual capital and hands-on experience required to architect solutions that achieve competitive advantage.

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Jason Green

With the help of: Aaron Arivett


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