What is a Transportation Management System?
A transportation management system (TMS) is a subset of supply chain management concerning transportation operations and may be part of an enterprise resource planning system.
A TMS usually “sits” between an ERP or legacy order processing and warehouse/distribution module. A typical scenario would include both inbound (procurement) and outbound (shipping) orders to be evaluated by the TMS Planning Module offering the user various suggested routing solutions. These solutions are evaluated by the user for reasonableness and are passed along to the transportation provider analysis module to select the best mode and least cost provider. Once the best provider is selected, the solution typically generates electronic load tendering and track/trace to execute the optimized shipment with the selected carrier, and later to support freight audit and payment (settlement process). Links back to ERP systems (after orders turned into optimal shipments), and sometimes secondarily to WMS programs also linked to ERP are also common.
Transportation management systems manage four key processes of transportation management:
- Planning and decision making – TMS will define the most efficient transport schemes according to given parameters, which have a lower or higher importance according to the user policy: transport cost, shorter lead-time, fewer stops possible to ensure quality, flows regrouping coefficient, etc.
- Transportation Execution – TMS will allow for the execution of the transportation plan such as carrier rate acceptance, carrier dispatching, EDI etc..
- Transport follow-up – TMS will allow following any physical or administrative operation regarding transportation: traceability of transport event by event (shipping from A, arrival at B, customs clearance, etc.), editing of reception, custom clearance, invoicing and booking documents, sending of transport alerts (delay, accident, non-forecast stops…)
- Measurement – TMS have or need to have a logistics key performance indicator (KPI) reporting function for transport.
Various functions of a TMS include but not limited to:
- Planning and optimizing of terrestrial transport rounds
- Inbound and outbound transportation mode and transportation provider selection
- Management of motor carrier, rail, air and maritime transport
- Real time transportation tracking
- Service quality control in the form of KPI’s (see below)
- Vehicle Load and Route optimization
- Transport costs and scheme simulation
- Shipment batching of orders
- Cost control, KPI (Key performance indicators) reporting and statistics
- Freight Audit
Source: Wikipedia Commons