Many companies are leveraging technology to manage their transportation processes, as they strive to meet the ever-growing customer demand for faster, on-time, and reliable deliveries. The movement of orders is a crucial aspect of the supply chain, and more businesses are turning to a TMS or Transportation Management System to effectively manage this part. A report by ARC Advisory Group discovered that the implementation of TMS solutions can lead to an average freight savings of 8%, which equates to a substantial boost in profit for businesses. This incredible potential for savings, combined with the broader visibility that a robust TMS offers, leads to more efficient transportation planning and execution. Businesses looking to optimize their supply chain and increase their bottom line are increasingly opting for a TMS, as it promises not only to enhance operations and increase sales but also to improve customer service.
How Does a TMS Work?
A TMS is a technology solution that compliments your enterprise resource planning (ERP) to cost-effectively move freight from its origin to its destination. This includes freight of various sizes that is moved domestically or internationally. TMS includes shipment optimization, order visibility, carrier management, invoice and settlement automation, and analytics to drive new business insights.
Transportation management systems play an important role in supply chains, from planning to procurement to execution. The visibility that is provided by a TMS results in efficient transportation planning and cost-effective execution. This leads to higher customer satisfaction, sales growth, and increased profitability.
Three areas of automation to consider:
Planning: A TMS can improve the planning to select the best mode of shipment and carrier based on factors such as efficiency, cost, and distance. The visibility that is provided ensures that shipments are monitored at every stage along their journey from origination to destination.
Management: Accelerate visibility, collaboration and communications with carriers to tender and match loads, track shipments, and automate freight billing. Many advanced solutions also provide real-time visibility for each shipment.
Optimization: The ability to measure and track performance is an important feature of TMS solutions. The most innovative solutions include dashboards, reports, and advanced analytics for each shipment to help supply chain managers make better decisions, evaluate carrier performance, optimize complex compliance tracking and proactively communicate with customers.
Benefits of a TMS
All types of businesses can benefit from using a TMS. The availability of cloud based TMS solutions has made it more affordable for businesses to take advantage of the benefits of using a transportation management system to improve their supply chain.
Warehouse Efficiency: A TMS can help to improve warehouse operation by synchronizing and releaseing orders based on carrier pickup schedules. T. When a TMS is integrated with current systems, like an ERP and Warehouse Management System (WMS), data entry errors are reduced, and Information moves quickly and paper-based mistakes are a thing of the past. A TMS combined with a Warehouse Management System (WMS) will allow the visibility needed to make informed decisions about how the warehouse is run and how inefficiencies can be decreased.
Reduce Shipping Expenses: One of the tangible benefits of using a TMS is the cost savings gained through automation and optimization. A decrease in resource costs comes from automating tasks that are usually performed by employees. TMS can ensure all negotiated carrier rates are applied and compliance steps are completed to avoid delays or expensive penalties. It also helps shippers recognize disruptions in the supply chain as they arise and can help choose the best carrier and route for optimal savings.
Better Customer Service: The decision-making ability offered by a TMS allows shippers to choose the best and most cost-effective method of shipping every time. For example, in one month, a shipment could be sent 10 times to one carrier and five times to another carrier, based on lowest cost for the desired service and delivery window. The reporting capability of the TMS can predict that although the first carrier was the best choice based on cost 10 out of the 15 total shipments, it was not the best choice because the shipment was late half of the time. The second or alternative carrier, which was only used five times, was on time, every time. This carrier scorecard information can be used to rank carrier performance to ensure that the customer is receiving shipments when promised and in good condition.
Shipment Optimization: A TMS allows for shipment optimization with real-time tracking. Inbound programs between multiple locations are easy to set up and track using a TMS. The ability to identify service disruptions before they happen and being able to determine the amount of time a route takes creates efficiency. This system also enables the creation of a master bill of lading which has individual logins in different locations but can be managed centrally.
Automated Invoicing: A TMS allows for electronic invoicing and auditing. Once an invoice is received, the TMS is able to compare it to the original shipment rate and produce a customer bill. This makes for a simplified accounting process.
How Much Money is Saved?
Transportation management systems have always offered a strong ROI that can be measured in service performance, reduced costs, higher profits and better leverage of your transportation and warehouse personnel. Freight savings come from load consolidation, multi-stop optimization, and automated workflows. As freight costs rise from labor shortage and higher fuel costs, a TMS can help offset the amount spent and empower your team with greater efficiency and new insights.
By making the investment in a cloud-based TMS solution, you can quickly save a substantial amount of money on freight spend because they have a proven ROI. An ARC Advisory Group report found that TMS solutions save businesses an average of 8% on freight. Imagine delivering an addition 8% profit to your business’s bottom line.
Optimize Your Transportation Systems with Verizeal
Transportation management systems have become more technologically advanced, with more detailed information and services for businesses. Verizeal provides your company with an innovative cloud-based collaborative logistics platform to automate shardard shipments and simplify managing complex compliance requirements for import/export and hazmat shipments. You can also leverage built-in blockchain capabilities for audit quality change of custody tracking and the confidence to grow your business securely and safely.