A TMS (Transportation Management System) is an advanced logistics software which helps companies manage and coordinate all freight transport movements, from route planning to real-time tracking.
Throughout this article, we explore the core functionalities of a TMS, how it improves operational efficiency, and the financial impact of its adoption.
Main functionalities of a Transportation Management System (TMS)
A Transportation Management System (TMS) offers a wide range of functionalities:
Centralized control panel
The TMS dashboard consolidates all cargo information into a single view, providing full traceability on shipments. This overview allows users to have complete control of all company bookings and activities in a single window. Additionally, it provides quick access to key performance indicators (KPIs), helping to inform decision-making and drive continuous logistics improvement.
Rate and quote management
For companies that outsource part or all of their logistics, TMS includes a shipping calculator that determines prices and transit times of carriers and shipping methods in a single view. This tool makes it possible to optimize costs, as it allows you to compare and select the most appropriate supplier. In addition, the system facilitates the management of rates and contracts, helping companies negotiate better conditions and find the most profitable alternatives.
Reservation and tracking of shipments
This functionality allows Make reservations with multiple carriers directly from the TMS software. Thanks to integration with carriers’ systems through API connections, the process is automated and becomes more efficient. Shipment tracking provides an overview of the location of merchandise in real time, either through carrier tracking links or the GPS location of the shipment or vehicle.
Documentation generation
The TMS automates the generation and management of documents related to transportation. This includes the creation of shipping labels, e-Consignment Bills, Dangerous Goods Declaration, and other essential documents. Additionally, it allows you to upload and store additional documents relevant to both parties (shipper and carrier), such as packing lists, goods invoices, proofs of delivery and certificates of origin.
This automation not only streamlines administrative processes, but also ensures accuracy and regulatory compliance, reducing errors and improving efficiency in logistics document management.
How a TMS improves operational efficiency
A Transportation Management System (TMS) improves operational efficiency by optimizing transportation operations, resulting in greater productivity and profitability.
Reduces logistics process times
The implementation of a TMS has a direct impact on the reduction of time in logistics processes. By eliminating manual work, the time spent organizing the supply chain is significantly reduced and errors are minimized. This allows supply chain managers to spend more time analyzing and making improvements, rather than performing administrative tasks.
Optimize routes and loads
A TMS uses advanced algorithms to find the best rates, optimize routes and reduce empty loads, resulting in a significant cost reduction. In addition, it helps maximize the use of vehicle cargo space, taking into account the characteristics of the goods, weight and volume restrictions, and delivery priorities.
Improve communication with carriers
Implementing a TMS offers the ability to communicate with all parties involved on a single platform, with real-time updates and a more agile exchange of information, facilitating coordination between the different actors involved in the logistics process. And it allows for a much greater loading capacity in times of high demand.
Automate repetitive tasks
A TMS allows the automation of processes such as the generation of documentation, communications and other administrative procedures. It not only streamlines processes, but also ensures greater precision in logistics operations, which is essential to avoid inventory errors and ensure customer satisfaction.
Financial impact of implementing a Transportation Management System (TMS)
The implementation of a Transportation Management System (TMS) It has a significant financial impact for freight transport companies:
Reduces transportation costs
A TMS has a direct impact on the reduction of operating expenses. By optimizing routes, negotiating better rates with carriers, and eliminating costs associated with manual tasks, companies can achieve significant savings. A 14% decrease in the overall cost of transportation has been observed after the implementation of a TMS.
Improve asset utilization
The implementation of a TMS improves the efficiency in the use of resources. By providing real-time visibility into stock, The system helps avoid unnecessary inventory accumulation, reducing storage costs and the risk of product deterioration. Likewise, the optimization of loads and routes allows maximizing the use of vehicles, which results in greater productivity and profitability.
Reduces errors and possible fines
Automation of critical tasks and improvement in communication between departments increase efficiency and punctuality in deliveries. This not only reduces transit times and errors, but also facilitates compliance with rules and regulations. As a result, Companies can avoid fines and penalties associated with non-compliance, which represents additional savings.
ROI of implementing a Transportation Management System (TMS)
The return on investment (ROI) of a TMS is usually positive and significant. Although implementation involves an initial investment, the long-term benefits outweigh the costs. Studies indicate that many companies obtain an ROI of 10% or higher in the first year of use.
Featured Transportation Management System (TMS) Platforms
- Oracle Transportation Management (OTM)
It is Oracle’s comprehensive solution for managing all transportation activities within a global supply chain. Combining ease of use with industry-leading capabilities, this platform allows you to optimize logistics operations, reduce transportation costs and improve service levels.Its functions include operational planning, fleet management and modeling of logistics networks, supported by digital assistants and machine learning.
The platform easily connects to operators’ systems, integrating with other SAP modules, such as SAP EWM, for comprehensive supply chain management. This makes SAP TM particularly useful for sectors such as retail, automotive, manufacturing, and pharmaceutical industries, among others.
- SAP Transportation Management (TM)It is the right solution for companies that already work in SAP environments. This module specializes in comprehensive transportation management, by automating processes and comparing rates to find the best options.
In addition, it offers real-time visualization of operations, allowing you to quickly adapt to unforeseen events and optimize routes. This translates into greater customer satisfaction by ensuring on-time deliveries and improving loyalty.
The platform easily connects to operators’ systems, integrating with other SAP modules, such as SAP EWM, for comprehensive supply chain management. This makes SAP TM particularly useful for sectors such as retail, automotive, manufacturing, and pharmaceutical industries, among others.
- Shipsy
It is a leading platform for logistics orchestration and execution powered by artificial intelligence. Designed to help transportation and logistics companies, Shipsy helps reduce costs, optimize working capital, ensure operational resilience, and improve customer experience. Its modular, intuitive platform y adaptable integrates predictive and prescriptive technologies to plan and execute supply chain operations, including asset, transportation, warehousing and inventory management, with a focus on making every delivery faster, greener and more profitable. It offers solutions for both national and international logistics, used by more than 200 companies around the world. - TransEUThe platform brings together transporters, operators logistics, logistics hubs and shippers, allowing them to create synergies through digitalization. It not only makes its renowned freight exchange available to the sector, but also offers a series of end-to-end solutions to optimize business processes, reduce operating costs and maximize profits throughout all stages of transportation.
Frequently asked questions:
What role does a TMS play in business logistics?
A transportation management system (TMS) is a technological tool designed to assist companies in planning, executing and optimizing the transportation of goods, both inbound and outbound. This system ensures that shipments are made in accordance with current regulations and that the necessary documentation is correctly managed.
What are the advantages of implementing a TMS in a transportation company?
Implementing a TMS system in a transportation company provides significant improvements in customer service and satisfaction, thanks to real-time updates and reduced shipping delays. Additionally, it allows the company to expand by meeting and exceeding customer expectations for the speed and timeliness of shipments.
What types of businesses benefit from using a TMS?
Various entities such as e-commerce organizations, distribution companies, shippers and transporters benefit from the use of a TMS. These companies, which handle products and merchandise on a regular basis, find TMS a highly valuable tool to optimize their logistics operations.
What is a Transportation Management System (TMS)?
A TMS system is software specialized in managing logistics related to the physical movement of goods. This type of system facilitates the coordination and administration of the logistical processes necessary for the efficient transportation of goods.
