Transportation management systems (TMS) are software solutions that facilitate the procurement of transportation services; the short-term planning and optimization of transportation activities, assets, and resources; and the execution of transportation plans. They address all modes of transportation, including ocean, air, rail, full truckload (TL), less-than-truckload (LTL), parcel, and private fleet. In addition to managing the physical flow of goods, they also manage the flow of transportation-related information, documents, and money.
TMS also include performance management and collaboration capabilities. There is more interest in TMS (Transportation Management Systems) today compared to the past because many companies offer the following: Emergence of more real-time, “streaming” optimization: Growing shift to more dynamic optimization models to better respond to supply chain change than traditional batch optimizers can handle Increase Focus on Performance Management: Score carding and sophisticating reporting systems are an increasingly important element of TMS implementations to leverage the rich trove of transportation-related data.
Enhanced Freight Payment Capabilities: This is a traditional functional area of TMS that many providers are starting to “beef up,” in part to become more carrier friendly in an era of tight capacity. More companies looking to move to “match and pay” processes for incoming freight bills. Linking Forecast Data into TMS: Companies can no longer treat transportation as an infinite resource; it must be treated as a constraint like manufacturing capacity. Leaders are linking demand forecast with transportation capacity plans.
Integration of Fleet Management Capabilities: Some merging of previously distinct solutions – those focused on traditional private fleet management (dealing with maintenance and dispatching) and traditional common carrier management. Better decisions about when to use private fleet, and using technology to look for backhaul opportunities. Extending Visibility to the Yard and Mobile Assets: With equipment constraints and higher velocity supply chains, more companies are looking for real-time asset management, and better optimization of yard and dock operations.
The latter capabilities are available from stand alone providers, WMS-based vendors, and TMS solutions. Addition of Multi-Mode Capabilities: With cost and capacity issues in trucking, and huge growth in off shoring, TMS solutions are starting to provide more robust support for rail and ocean shipping integrated with other modes, though there is still a way to go here. Increased Demand for Global Trade Capabilities: Off shoring also is driving interest in TMS more integrated with capabilities that ensure import compliance, calculated total landed cost, and handle import and export documentation.
Move Towards Service Oriented Architecture: Support for SOA by TMS vendors will ease integration with ERP and other systems and enable more process-based approaches. On-Demand Gains Acceptance: ARC research says 30% of TMS solutions today are on-demand, a percentage that it expects to continue to grow. Improvements in transportation process and technology-enablement provide the lowest hanging fruit available to most companies today to drive out supply chain costs and improve quality, consistency and customer satisfaction.
Even mid-sized companies can often drive millions of dollars to the bottom line through improved shipment optimization and execution effectiveness, while simultaneously improving customer service. The opportunity for larger companies, with annual freight budgets that may exceed $100 million dollars per year, is substantial. Companies across virtually every industry segment are striving to become supply chain management leaders.
SCM leaders achieve this status in their markets by significantly reducing cycle times and operating costs, increasing supply chain velocity, and enhancing top line revenue growth through improved customer satisfaction. TMS solutions can enable companies to take back control of their transportation processes and drive out transportation related costs. This is accomplished through a set of capabilities that enable companies to optimally plan and more effectively execute their transportation processes.
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