Transportation Management System: The Technology Every LTL Shipper Needs
Published on Oct 26, 2016
In the days of modern technology, it’s important to have the most up to date systems in order to keep a competitive advantage. An advanced transportation management system (TMS) can not only increase your efficiency and cut transportation costs but also offer comprehensive solutions to deal with the complexities of global shipping.
Here at LTX we did extensive research when choosing a TMS to assist our customers, and they have certainly reaped the benefits. Here we will explain just what a TMS is, and why it’s essential to cutting LTL freight costs and employee time.
What is a Transportation Management System?
A transportation management system (TMS) is software that facilitates interactions between the company’s order management system, warehouse/distribution center management system, and carriers. It is the logistics hub in a combined network of shippers, carriers and customers. A typical TMS software includes route planning and optimization, load optimization, execution, freight audit and payment, advanced shipping, order visibility, track and trace, and carrier management.
Misconceptions of TMS
Having a transportation management system in place is essential to having an effective and efficient supply chain. So then why are only 35% of shippers using one? Technology can be overwhelming to a business owner, especially one that has been doing things the same way for years. So here are a few things to consider:
“If it ain’t broke, don’t fix it” – Yes, maybe your systems do work. But, if you’re having to hire extra people, and spend extra time making them work, are you truly being efficient?
“Technology means huge upfront costs and long-term commitment” – False. With new SaaS, cloud-based applications there are lower cost of acquisition with monthly fees instead of capital costs.
Ignoring or putting off new supply chain technology is essentially choosing not to improve your business operations. Your current systems might not be broken, but you are sitting on a potentially very expensive IT upgrade should it fail before you have a new plan in place.
Reasons to Implement a TMS
Now that we know why such a small margin of shipper’s employ a TMS, let’s review all of the reasons why it is so essential to your LTL shipping.
Reduce cost by better route planning, load optimization, carrier mix and mode selection
Greater flexibility to makes changes in delivery plans
Increased ability to plan better for on hand inventory
Cash flow improvements through proper freight accounting
Improved accountability with visibility into the transportation chain
While technology systems have been collecting data for years, new TMS software has the ability to leverage its improved computing capabilities to analyze it. This is known as big data analytics and can turn data into business intelligence.
It’s Time to Implement, Where Do You Start?
As you’ve learned, continuing in your old ways can end up leaving you in the dust among proactive competitors. So, take a long hard look at your processes to start. If possible, get an outside opinion or analyst to take a look. While they’re analyzing your current systems, you can work on some other homework.
First, think about your needs. There is no sense implementing a TMS with all the bells and whistles (and paying for them) when maybe you only need half of those features. Next, do some research on what your competitors are doing. They are your competitors for a reason, so they must be doing something right. See what systems and processes they are using, then do them better.
A Transportation Management System can drastically change the way your transportation supply chain performs. It is one of the easiest ways to improve your operations and you should always be on the lookout for better technology.
The simplest way to ensure that you’re staying on top of the technology ball is to partner with a reputable third-party logistics provider (3PL). A 3PL will have a TMS already in place that will become available to you and your company. On top of that, the 3PL will have already vetted the software to know that it runs smoothly and effectively. And, if they are like us here at LTX, they will be able to easily integrate their TMS into your other, already implemented, systems.
For more information on LTX’s TMS and how we can save you time and money, click the “Contact Us” button below.