Large logistics companies have embraced digitisation and are now reaping the benefits.
However, these digital technologies are increasingly affordable for small and medium-sized operators, too. And pound for pound, one of the most effective is a transport management system (TMS).
What is a TMS?
With continued pressure on margins, a transport management system can help make your business more resilient, more profitable, and more sustainable. A TMS is a digital platform that enables logistics operators, hauliers and delivery companies to improve their operation. The aim of a TMS is to give you better oversight and control of key areas of your business, while also making your business more efficient. You can use a TMS to plan and track the transportation of goods, whether that is through your own fleet or use of third-party logistics (3PL) companies.
Ultimately, it’s a digital tool that makes transport management easier. The right transportation management system can transform your business by delivering flexible and scalable processes, from transport planning through to automated invoicing.
TMS as a concept has been around for decades, but there is a world of difference between the clunky old systems of yesteryear and the sleek, user-friendly TMS of today. Firstly, they are cloud-based, opening up much more versatility such as easy integration with your warehouse management system (WMS) or enterprise resource planning (ERP) software.
Secondly, many are modular systems meaning that you can tailor them to suit your specific needs. Key functionality can include:
- Load planning
- Real-time tracking
- Scheduling of deliveries and collections
- Route optimisation
- Integration with ePOD and other driver apps
- Automated invoicing
- Contract management
- 3PL supplier management
- Reporting, insights and business analytics
- Integration via API with other platforms
The best part is, a good TMS is easy to use. You can start reaping the benefits from the beginning of implementation. You don’t need to be a software expert to use these systems.
What benefits can a TMS bring?
By implementing a TMS you can improve delivery times, reduce haulage costs, and streamline both internal and external communications. Increased efficiencies all add up to better margins, faster invoicing, and higher customer satisfaction – all key metrics in a competitive marketplace.
Some of the key benefits of a transport management system include:
1. Cost savings
A TMS can reduce haulage costs by optimising delivery and collection schedules while still ensuring that you meet or exceed customer SLAs. You can find better ways to work such as combining different routes and loads as well as ensuring you’re using the right vehicles.
2. Customer communication
Your clients benefit from more transparency, as having the tracking information at your fingertips means you can be more accurate and more accountable, while always keeping your customers up to speed with each job.
3. Better visibility
If you’re using third parties, a TMS can help you track their performance giving you better visibility of your supply chain.
4. Improved efficiencies
Digitising and automating certain processes such as freight scheduling or invoicing reduces the human resources they require. They are also quicker, will greatly reduce administration and reduce risk of human error, such as lost or delayed paperwork.
6. Saved time & Improved cashflow
Automated invoicing means more accurate billing of clients and it can be considerably quicker, too. This all helps improve a company’s cash flow.
What businesses can benefit from a TMS?
It sounds obvious, but any business that transports goods on a regular basis can benefit from a TMS. Hauliers and logistics providers are clear winners as transport is their bread and butter, so a TMS has a huge impact.
Other industries or sectors which can benefit from a TMS include pallet & parcel, retail – particularly e-commerce – plus manufacturing, wholesale, pharmaceutical and healthcare. The rise of home food delivery also makes TMS a must-have for restaurants and other food service businesses.
In the old days, a TMS probably only made financial sense for larger companies, but today there are systems suitable for businesses of almost any size. The Software as a Service (SaaS) model of monthly subscription rather than upfront capital investment means you can make savings as you go.
Which TMS features will help my business to grow?
One of the joys of modern TMS platforms is that they can help in many different ways and can be specified to match your individual business needs.
However, in broad terms these are the key features that will help your business to grow:
Automated systems improve operational efficiency, cut transport costs and reduce office overheads. In a TMS they also enable faster and more accurate order fulfilment – two KPIs that drive and sustain consumer demand. In addition, automated invoicing and the ability to integrate with accounting software improves cash flow.
2. Transport planning
A good TMS will schedule routes by including multiple metrics in its calculations, ensuring you carry out collections and deliveries in the most efficient and cost-effective way possible. Factors can include vehicle capacity, distance, and even traffic conditions. This reduces fuel consumption and makes estimated times of arrival (ETAs) more accurate. In addition, a TMS can improve load utilisation and reduce ‘empty miles’, key factors in improving margins.
3. Better insights and oversights
Real-time tracking gives you full visibility of vehicles and their loads, which you can share with customers to improve communications and client satisfaction. ePODs (electronic proof of delivery) provide instant and irrefutable proof of delivery, too – with a driver and customer signature instantly captured and entered into the system. Overall, a TMS also provides insights into business performance, enabling you to identify areas for further improvement. The ability to make truly informed, data-based decisions is increasingly valuable.
4. Improved compliance
Safety and compliance are paramount in the transport industry. A good TMS can automate a lot of the compliance process, helping to keep you on the right side of the law and the good side of the Traffic Commissioner.
You can ensure that common problematic areas such as driver qualifications and vehicle maintenance are up to date and compliant.
5. Streamlined systems
There are lots of different digital tools available to transport operators – the last thing you want is to have multiple windows open or information trapped in silos due to stand-alone systems. The best TMS will integrate easily – often via API key – with other platforms such as WMS, ERP, accounting software, or even telematics and driver behaviour systems.
When is the right time to implement a TMS?
We are at a crucial point for businesses where they face this choice: ‘Digitise or die.’ Sticking to tried and tested methods of transport operation can be a recipe for business failure. It might be a slow decline, but it is inevitable as your competitors will race ahead in terms of client retention, new business wins, and better margins.
Haulage remains an incredibly competitive industry and margins are traditionally tight, while it is also one of the most regulated business sectors. Customers demand increasingly quicker and more accurate delivery times, while also wanting more transparency and accountability from their suppliers. If you don’t embrace digitisation now, you risk getting left behind. Having a TMS is no longer about gaining a competitive advantage; it’s about staying in the race.
The good news is, TMS is the perfect place to start this process as they offer a lot of flexibility. Modern TMS platforms are usually modular, meaning that your business can choose different functions to match your operational needs.
What should I look for in a TMS?
Write a list to prioritise what you want from a TMS and think about the following functionality:
- Transport planning
- Scheduling and route planning
- Tracking, alerts, and real-time reporting
- Integration with driver mobile apps
- Proof of delivery capture
- Automated or integrated invoicing
- Key metrics on haulage contractors
- Ability to integrate with your existing software systems
- Reports and data analytics
- Modular – so you can expand the system as your business grows
- Readily accessible digital data for auditing purposes
However, at top of any list should be a proven provider with a strong track record in customer service and support. Look for a TMS supplier who will deliver good training and an ongoing package of support.
What is the future of TMS?
A good TMS should help future-proof your business for years to come. However, technology never stands still and there will be even bigger benefits around the corner. Here are three more ways that TMS will continue to develop:
1. AI and machine learning
AI will ultimately enable more automation and better decision-making. For example, machine learning capabilities mean that a TMS will be able to use historical data to better calculate schedules and routes, and more accurately predict ETAs.
2. Blockchain integration
Blockchain already helps build better connections between every link in the freight chain, from freight brokers and forwarders to hauliers and their end customer. Incorporating it into a TMS will further improve “track n trace” capabilities, while overall it will increase availability and accuracy of information throughout the supply chain.
3. Internet of Things
IoT uses sensors to communicate data from devices. You may already be using it through telematics. A TMS relies on data to function. As IoT technology evolves, it will be able to feed much more data to the TMS. This can help make real-time fleet management much easier, helping to further lower fuel and maintenance costs while also enhancing driver safety, corporate compliance and overall business efficiency.