TMS Must-Haves for a Competitive Edge
A transportation management system (TMS)—a logistics platform that leverages technology to help businesses plan, manage, and optimize the physical movement of inbound and outbound goods—can help companies navigate uncertain business conditions and boost performance.
The list of challenges in the transportation market seems to grow longer almost daily: rising fuel costs, proliferating distribution channels, ongoing capacity and driver constraints, increasingly complex and global supply chains, and heightened customer expectations for faster delivery times and robust tracking information.
That’s prompting many organizations to look “for better ways to keep products moving reliably around the world, reduce fuel consumption, evaluate carrier rates and eliminate empty miles through options such as backhauls and pool distribution,” says Nick Wilson, vice president of product marketing with MercuryGate International, a provider of transportation management solutions.
A transportation management system (TMS) can help companies navigate these conditions and boost performance. A TMS is a logistics platform that leverages technology to help businesses plan, manage, and optimize the physical movement of incoming and outgoing goods. Like many technology solutions, today’s TMS solutions often provide greater functionality at lower cost than their predecessors, allowing a wider range of businesses to benefit from them.
The market changes underway have heightened demand for certain TMS capabilities.
Visibility. In the early years of the TMS market, the goal was a “glass pipe” to see inventory at all times, says Jordan Kass, president of managed services for TMC, a division of C.H. Robinson. Now, this capability is table stakes. Shippers expect to monitor inventory throughout its journey, including when it’s in transit.
Efficient, reliable connectivity has also become critical, as it makes it possible for shippers and carriers to obtain updates in close to real time, Kass says. They then can quickly act to, for instance, mitigate the impact of a delayed shipment.
The ability to automate business processes has also become more important, says Kenneth Sherman, president of IntelliTrans, which offers a SaaS-based TMS.
The increase in supply chain disruptions has driven up the number of exceptions among shipments. To effectively handle them, companies need to automate as many processes as possible, so they have the resources to easily identify and handle exceptions.
Inbound logistics. Shippers also are more interested in getting involved in the management of the inbound side of their supply chains. “If you don’t get the raw materials or empty containers, nothing will be going out,” Sherman says.
Today’s TMS Technology
TMS technology is changing to meet these demands. It’s becoming more real-time, more predictive, more automated, and more visible, Kass says.
One sign of this is the shift from the early- to mid-2000s, when many TMS solutions connected to customers’ enterprise resource planning (ERP) systems and to carriers via electronic data interchange (EDI). Shipment updates and other information might transmit hourly or daily.
Today, most TMS solutions connect through application programming interfaces, or APIs. Updates typically occur several times per hour. The speedier updates allow for more informed decisions. In addition, it becomes possible to layer in predictive analytics, and more accurately forecast delays.
The shift to cloud-based, software-as-a-service (SaaS) TMS solutions simplifies deployment and reduces upfront and ongoing maintenance costs, says Chris Martin, vice president, shipper solutions, with Trimble Transportation, a provider of transportation solutions. SaaS platforms also typically are easier to integrate with other IT systems.
Some systems have been developed just for the small-business market, Kass says. Not only are they less expensive, but they often can be implemented without extensive IT support.
Companies that operate internationally can more easily find a unified technology platform that covers much of the globe. In the past, many organizations would have to “stitch together of patchwork of TMS solutions,” Kass says. That makes it difficult to reach one version of the truth.
Similarly, current TMS solutions are better able to manage today’s more complex supply chains, which often include multiple transportation modes, different geographies, and changing distribution channels. “A company should be able to leverage the TMS to solve evolving challenges and not limit business decision-making based on the functionality of the TMS,” Wilson says.
Smarter TMS Solutions
More TMS solutions incorporate tools that boost their intelligence. For instance, the TMS market is making greater use of artificial intelligence to increase efficiencies and reduce costs within shipper and 3PL operations, says Kate Leatherbury, director of domestic transportation solutions with Gebrüder Weiss.
By leveraging the Internet of Things (IoT) TMS solutions can monitor light, temperature, and location as goods are in transit. This helps ensure the integrity of each shipment. Say an IoT device detects light in the trailer after it has been sealed. That may indicate tampering or theft.
Companies also are looking for cost savings on freight management and ways to simplify their workflows, regardless of freight mode, Martin says. This is driving interest in TMS platforms that can provide options to source capacity, as well as control costs and service levels.
In another shift, more TMS systems design routes that allow drivers to return home at night more often, says James Peck, vice president and solutions advisor with Blue Yonder, a digital supply chain and omnichannel fulfillment company.
As part of this effort, the system might rework routes to minimize wait time, benefiting both drivers and the company. “A TMS can handle all sorts of business rules to help drive changes,” Peck says.
Given the continued growth in e-commerce, more shippers are looking to manage last- or final-mile and parcel logistics operations from within their TMS. Providers of TMS solutions might collaborate with last-mile specialists to provide visibility and optimize transportation plans across first, middle, and last miles.
Another result of the boom in e-commerce sales is increased interest in native parcel capabilities, Wilson says. These allow companies to evaluate parcel delivery options and identify ways to drive efficiencies and performance.
Many companies also are working to reduce their carbon dioxide emissions. Increasingly, TMS solutions will allow them to assess delivery modes against the emissions generated, Wilson says. They can choose the most environmentally-minded option, while also considering costs and meeting service agreements.
Dynamic price discovery (DPD) capabilities streamline the process of identifying a carrier for a specific load by providing real-time access to market rates. Rather than manually try to find the best rate, the solution reaches out to the carrier networks and marketplaces to access prices in real time, Peck says. Shippers then can make more informed load-tendering decisions.
The ways in which shippers are purchasing TMS solutions is changing as well. For instance, some shippers want just one or a few features from within a TMS, such as the ability to create three-dimensional models of loads, Peck says.
Some TMS vendors separately offer components of their larger TMS solution. These often can be deployed more quickly and at lower cost.
At the same time, many shippers also want to connect their TMS to other solutions, like a warehouse management system (WMS), so they can leverage a broader range of information. Unifying these logistics operations also means that organizations can handle exceptions further in advance, when more corrective options are possible.
Looking ahead, “the prevalence of ecosystems that provide a one-stop shop” is likely to grow, Kass says. Technologies like artificial intelligence, predictive analytics, and visibility will converge, he predicts. TMS solutions will converge with other technologies, such as autonomous vehicles (AVs). This should reduce the driver bottleneck and increase safety.
Leveraging machine-to-machine communication between a TMS and an AV could help reduce the carbon footprint, Kass says. Eventually, it’s likely that TMS solutions also will be used to manage drone deliveries.
Until recently, TMS solutions had been deployed primarily as an execution platform. While that’s still critical, companies today expect more. And, they’re finding it.
“Users will look to their TMS for long-term planning and procurement, network insights, supply chain optimization, and end to end visibility,” Martin says.
Jeff McDermott, Senior Vice President of Transportation Management, GEODIS in Americas