Transportation Management System: Value, Features, and Market Overview

Transportation management accounts for the lion’s share of success in logistics. An efficient transportation management system helps a company streamline their supply chain processes, optimize operations, and reduce shipping and freight transportation costs.

Supply chain disruptions of the past decade have clearly shown that the ability to accurately manage transportation networks can be a make-or-break element of a company’s survival in the evolving market. At the same time, understanding the importance of automated transportation management and the implementation of a dedicated solution is still open to question for 65% of businesses.

In this article, we'll sort through the significance of transportation management system software, providing comprehensive insights to unveil its tangible business benefits and practical implementation options.

What is a transportation management system?

A TMS (transportation management system) is a comprehensive tool that manages and optimizes the movement of goods from suppliers to customers. 

Technically, a TMS addresses four major industry-specific needs companies tend to have while managing their transportation network:

• Transportation planning
• Execution of transportation plans
• Transportation visibility and analytics

Just like that, a transportation management system provides users with vast real-time transportation data, making it easier for companies to plan operations and strategize business decisions.

Who uses a transportation management system?

Transportation management tools are commonly used by businesses that ship and receive goods on a regular basis. This means that typically, users of transportation management system software fall into one of the following categories:

• Manufacturers that need to manage the transportation of raw materials to production facilities and finished goods to distribution centers or end customers.

• Retailers coordinating the delivery of merchandise from suppliers to warehouses and distribution centers while fulfilling orders for online customers.

• Distributors, whose work is to optimize the movement of goods from suppliers to distribution centers and from distribution centers to retailers or end customers.

• Third-party logistics (3PL) providers and freight forwarders managing freight brokerage, carrier selection, and load tendering on behalf of their clients.

• Transportation carriers, including trucking companies, railroads, ocean carriers, and air cargo carriers that need to manage their fleets, optimize routes, and track shipments.

• E-commerce companies managing the delivery of goods purchased online, including parcel shipments and last-mile delivery to customers' doorsteps.

• Wholesalers and suppliers taking over inbound transportation from suppliers and outbound transportation to customers.

Top 6 transportation management system benefits

While small businesses that have relatively simple transportation needs and low shipping volumes may manage operations using manual methods such as phone calls and spreadsheets, companies with larger turnovers are likely to experience difficulties without a dedicated software solution.   

Having an automated transportation management system is crucial for businesses due to a number of reasons.

1. Lower transportation costs

Effective transportation management systems optimize routes, consolidate loads, and select carriers based on cost-efficient criteria. This strategic approach helps minimize fuel expenses, lower labor costs, and avoid unnecessary surcharges, resulting in significant savings for businesses.

2. Real-time delivery tracking

A TMS provides companies with real-time visibility into shipment status and location. This enables proactive monitoring of delivery progress, anticipation of potential delays, and timely communication of updates to customers, enhancing overall transparency.

3. Increased customer satisfaction

With precise delivery tracking and efficient transportation processes, businesses can ensure timely deliveries and accurate updates for customers. This commitment to reliability and communication fosters positive customer experiences, building loyalty and trust over time.

4. Enhanced supply chain management

Transportation management systems integrate seamlessly with other supply chain management tools, such as inventory management systems, order management systems, and enterprise resource planning (ERP) systems. This integration enables businesses to synchronize transportation activities with inventory levels, production schedules, and customer demand forecasts, leading to greater supply chain visibility, agility, and responsiveness.

5. Cost optimization

Beyond transportation, dedicated software helps businesses identify opportunities for cost optimization throughout the supply chain. By leveraging data analytics and optimization strategies, businesses can negotiate favorable rates with carriers, identify inefficiencies, and implement measures to maximize overall cost-effectiveness.

6. Improved warehouse efficiency

Transportation management systems also contribute to warehouse efficiency by optimizing inventory management and streamlining order fulfillment processes. By automating tasks such as receiving, picking, and packing, businesses can reduce processing times and minimize inventory costs.

What’s inside a transportation management system?

As we’ve just highlighted the importance of warehouse efficiency, another crucial thing to understand about modern transportation management is its diversity and interconnected nature. 

Typically, a TMS is connected to carrier systems and works in conjunction with other software that makes part of supply chain management—most often, these are the enterprise resource planning (ERP) and warehouse management system (WMS).

Additionally, transportation management software may encompass more functionality that’s either offered as a part of the solution or available through an integration with third-party tools or services. While each of these components performs a specific function, when integrated they efficiently support the end-to-end transportation management process.

• Integration with an ERP system enables seamless exchange of data related to orders, inventory, and customer information, ensuring alignment between transportation and broader business processes.

• Integration with a WMS allows for efficient coordination between transportation and warehouse operations, ensuring timely movement of goods from storage to shipment.

• Integration with order management systems (OMS) enables a TMS to receive and process orders efficiently, ensuring accurate fulfillment and timely delivery to customers.

• Modern transportation management software often includes functionality for automating billing and invoicing processes, enabling accurate and timely invoicing based on transportation services rendered.

• Transportation management systems may also include procurement functionality for sourcing transportation services from carriers, managing contracts, and negotiating rates to optimize transportation costs.

• Some TMS platforms offer customer support functionality, allowing businesses to address inquiries, resolve issues, and provide assistance related to transportation activities.

• Integration with shipping carrier systems allows TMS to access carrier rates, schedule shipments, generate shipping labels, and track shipments in real-time, facilitating efficient transportation execution.

Much of the functionality listed is commonly associated with supply chain management in general, and in particular, with logistics and warehousing. 

What is the difference between a WMS and TMS?

WMS and TMS solutions are different in operational focus, scope of work, and the features they perform. For example, ensuring an optimal flow of goods from supplier to customer is both a task of transportation and warehousing, as transportation is about physically moving goods from one location to another. Warehousing, in turn, is about making sure goods are stored, organized, and prepared for transportation in a timely manner.

While a WMS and TMS may overlap in functionalities, they are typically separate systems that work in conjunction with each other to facilitate smooth and efficient supply chain operations. At the same time, a WMS module can come as a standalone component of a transportation software logistics management system or be integrated into a TMS using a dedicated third party.

So, while the goal of a transportation management system can be formulated as improving the efficiency and cost-effectiveness of transportation, it still makes part of logistics operations and contributes to overall improvements of a company’s supply chain management lifecycle. That’s why global transportation system management is usually associated with a variety of industry-specific tools and should be perceived as an interconnected system.

Features of a transportation management system 

Considering that any transportation management system software focuses on optimizing planning, executing, and gaining visibility of transportation operations, its diverse functionality can be divided into three respective categories.

Transportation planning features

As a rule, the transportation process starts when a shipper leaves a transport request. This request consists of a quote and shipment details. Next, the request is tendered to available carriers that are responsible for capacity planning and cargo distribution. 

So, the features that come in useful at this stage include the following:

• Order management

During the early stages of transportation, order management functionalities facilitate the consolidation of transportation requirements. This includes aggregating order details, quantities, and delivery locations to generate comprehensive transport requests, ensuring accurate and efficient transportation planning.

• Tendering and bidding

Once transport requests are created, a TMS automates the tendering process by sending requests to available carriers. Carriers then submit bids or proposals in response to these requests, and the TMS evaluates and compares these bids based on predefined criteria. This streamlines the process of selecting the most suitable carriers for transportation tasks.

• Shipment rate management

A fundamental component of a TMS is a rate engine that calculates transportation rates for various shipping modes including parcel, less-than-truckload (LTL), truckload, and intermodal shipments. This engine applies predefined rules such as base rates, discounts, and contract agreements to determine accurate shipping costs as well as allows users to create custom pricing rules to accommodate complex tariffs and automatically generate quotes for clients as they submit transport requests.

• Route optimization

This functionality allows for analyzing various factors such as distance, traffic conditions, and delivery schedules to determine the most efficient routes for transportation. By selecting optimal routes, organizations can minimize transportation costs, reduce fuel consumption, and improve delivery times, enhancing overall operational efficiency.

• Load planning

Load planning features facilitate the efficient consolidation of shipments into full truckloads or containers. TMS platforms optimize load configurations based on factors such as shipment volumes, weight capacities, and delivery priorities, maximizing capacity utilization and minimizing empty space. 

Transportation execution features

Now that the shipper and carrier have reached an agreement and loads and routes are planned, the focus shifts to executing the transportation tasks efficiently. Here the following TMS functionality comes in handy. 

• Fleet management

TMS platforms provide tools for managing and optimizing fleet operations, including vehicle tracking, maintenance scheduling, and driver management. By centralizing fleet-related data and automating routine tasks, organizations can improve fleet efficiency, reduce operating costs, and ensure compliance with regulatory requirements.

• Dock scheduling

Dock scheduling involves the efficient coordination of activities related to the allocation of dock space, scheduling of appointments for trucks to arrive and depart, and management of loading and unloading processes within a warehouse or distribution center. 

This critical process is interconnected with warehouse management and involves integrating with WMS. By leveraging real-time data from the WMS regarding inventory levels, incoming shipments, and storage capacity, organizations can optimize dock utilization, minimize wait times, and ensure smooth flow of goods in and out of the facility. 

• Settlement management

Settlement management encompasses the financial transactions and documentation associated with transportation transactions, which may involve verifying proof of delivery (POD) among other tasks. This includes generating freight invoices, managing payment terms and contracts, reconciling transportation charges, and processing payments. 

Transportation visibility features

Both planning and execution stages as well as the overall business efficiency of the transportation management processes require end-to-end control and visibility. So, in this lifecycle, visibility features are essential for making informed decisions about future operations and building strong business relationships with partners. 

• Real-time shipment tracking 

As a rule, goods and containers become visible because they are previously assigned RFID tags and can be tracked remotely using radio waves. TMS platforms provide real-time visibility into the status and location of these shipments as they move through the transportation network. By tracking shipments and providing updates to stakeholders, organizations can monitor the progress of transportation activities, identify potential issues, and proactively respond to changes in the supply chain.

•  Event notifications 

Transportation visibility features include event notifications that alert stakeholders to significant events or milestones in the transportation process. These notifications can include alerts for delays, exceptions, or deviations from planned schedules, enabling organizations to take timely corrective actions and minimize disruptions to transportation operations.

• Collaboration tools 

Once integrated in a TMS, collaboration tools enable seamless information sharing, coordination of tasks, and resolution of issues, fostering stronger relationships between shippers, carriers, suppliers, and customers. These can be, for example, self-service connectivity portals—dedicated spaces where customers can create and view the status of their orders, while partners can send tender offers as well as review and submit invoices.

• BI and reporting

Transportation visibility features encompass advanced business intelligence (BI) and reporting functionalities, offering stakeholders detailed insights into transportation operations. These tools leverage comprehensive data analytics to provide in-depth analysis of key performance indicators (KPIs), such as on-time delivery rates, transit times, and carrier performance metrics. Users can generate customizable reports and dashboards to track performance trends, identify bottlenecks, and optimize transportation processes.

Custom or ready-made: choosing a TMS for your business

When it comes to approaching transportation management in practice, businesses are primarily challenged with questions like: What ready-made solutions can today’s TMS market offer? Which TMS works better for us? Do they have enough personalization and scalability to address our specific needs or should we go for custom software development?

The TMS market is indeed rich in dedicated software solutions. Some of them are provided by global digital leaders like Oracle and SAP, while others not so commonly known yet may still appear beneficial to a number of transportation providers.

In this part of the article, we’ll overview and evaluate the most popular transportation solutions compared to custom TMS development and provide you with the practical tips to get started.

Transportation management system examples

The changing scope and complexity of transportation challenges regularly fuel the evolution of the TMS market, bringing more advanced and flexible solutions.  

For example, in their 2024 TMS rating, Gartner provides a variety of transportation management systems that have gained significant recognition among global users. Below we’ll overview some of these and other solutions that aim to address shippers’ and carriers’ major transportation management system requirements.

Oracle Transportation Management (OTM)

Oracle's TMS offers end-to-end transportation management capabilities, including freight planning, execution, and settlement, helping organizations optimize transportation operations and reduce costs.

OTM provides features such as route optimization, carrier management, freight audit, and visibility tools to enhance operational efficiency and visibility across the supply chain.

SAP Transportation Management (TM)

SAP TM integrates with SAP's suite of business applications, providing end-to-end visibility and control over transportation processes, from planning to execution and settlement.

As part of the solution, the provider offers load planning, carrier selection, freight tendering, and freight cost management, enabling organizations to optimize transportation operations and improve service levels.

MercuryGate TMS

MercuryGate's TMS is known for its flexibility, scalability, and ease of use, offering a comprehensive set of transportation management capabilities to meet the needs of shippers and logistics service providers.

Among others, this TMS offers functionality for load planning, carrier selection, rate management, and shipment tracking.

Uber Freight TMS

Uber Freight Transportation Management System provides a digital platform for booking and managing freight shipments, offering transparency, efficiency, and access to a wide network of carriers.

This TMS allows users to book shipments, track deliveries, and manage documentation through a user-friendly interface.

Manhattan Associates TMS

Manhattan Associates' transportation management solution is known for its scalability, flexibility, and ability to adapt to changing business needs, offering a wide range of transportation management capabilities.

This TMS provides features for load optimization, appointment scheduling, carrier management, and freight audit, helping organizations improve efficiency and reduce transportation costs.

Kuebix TMS

According to the positioning, Kuebix TMS offers a modular and scalable solution that can be tailored to meet the needs of businesses of all sizes. This software provides functionality for rate management, load planning, carrier selection, and freight tracking.

BlueJay

BlueJay TMS provides a cloud-based platform for managing transportation operations, offering flexibility, scalability, and real-time visibility. The solution includes features for route optimization, freight tendering, shipment tracking, and offers extensive analytics.

project44

Project44 focuses on providing advanced visibility solutions that integrate with various transportation management systems, offering real-time tracking and insights. This TMS enhances supply chain visibility by connecting shippers and carriers on a single platform.

Why supply chain visibility fails?

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Benefits of custom TMS solutions

Although ready-made TMS solutions are designed to tackle users' primary transportation needs, the majority of them are still limited in scalability and personalization hence investing in them can sometimes prove risky and inefficient.  

On the other hand, robust and large-scale solutions like the ones provided by SAP and Oracle are rather a fit for users with enterprise-scale needs, and implementing such solutions may not be practical for small and mid-sized businesses, as a significant portion of their functionality is likely to remain unused.

In contrast, developing a custom TMS solution brings a number of competitive advantages:

• Functionality

Custom TMS solutions can be tailored to precisely match the workflows and processes of the organization, providing comprehensive functionality that meets specific business needs. By developing a custom solution, businesses can incorporate features and capabilities that are essential for their operations, enhancing efficiency and productivity.

• Security

On-demand software development offers enhanced security measures, as such solutions are tailored to meet the organization's security requirements and standards. With a custom solution, businesses can implement robust security protocols, encryption methods, and access controls to protect sensitive transportation data and ensure compliance with industry regulations.

• Interconnectivity

With tailored transportation management solutions, organizations can enable seamless data exchange with other systems and applications within the organization's IT infrastructure. Businesses can automate workflows and synchronize information across various departments and systems, improving visibility and collaboration throughout the supply chain.

• Scalability

Custom TMS solutions are highly scalable and can adapt to the changing needs and growth of the organization over time. Businesses can easily scale up or down the system's capacity, add new features and functionalities, and integrate with other systems and technologies as needed, without being limited by the constraints of off-the-shelf solutions.

• Cost

While the initial investment in developing a custom TMS may be higher compared to purchasing off-the-shelf software, it offers long-term cost savings and ROI. Businesses can avoid recurring licensing fees, reduce dependency on external vendors, and eliminate the need for additional customization or integration efforts. Such solutions are built to address specific business needs, minimizing the risk of investing in unnecessary features or functionalities.

How to get started with transportation management software

Approaching the implementation of the transportation management system technology development is both promising and challenging at the same time. From accurately identifying the business needs to address to implementing and deploying the solution—there are plenty of challenges companies may face until they start getting measurable results. 

At Trinetix, we follow a strategic research-based approach that allows our clients to get predicted outcomes from technology adoption and innovation enablement.

Here's how you can begin your TMS development journey and why Trinetix might be the right partner for you:

1. We clearly define your transportation and logistics requirements to identify pain points in your current processes, such as inefficient route planning, lack of visibility, or manual paperwork. Determine what features and functionalities are essential for your business to streamline operations and improve efficiency.

2. As a next step, we collaborate on the design and development of your custom TMS solution: you share your vision, requirements, and expectations with our team, and we leverage our industry knowledge and technical expertise to create a solution that meets your needs. 

3. Once the TMS solution is developed, we take over the deployment processes, providing comprehensive support, including data migration, system integration, user training, and post-deployment support. Trinetix will work closely with your team to ensure a smooth transition and minimal disruption to your operations.

4. The partnership doesn't end after the TMS solution is deployed. We will continue to provide ongoing support and maintenance to ensure the system operates smoothly and remains up-to-date with evolving business needs and industry trends, collaborating on further optimization and enhancement of the TMS solution to drive continuous improvement and ROI.

What the future holds for transportation management

As we look ahead, the future of transportation management systems is poised to be shaped by advancements in AI, machine learning, and data analytics. These technologies will enhance predictive capabilities, enabling companies to anticipate disruptions and optimize routes dynamically. Furthermore, the integration of IoT devices will provide real-time visibility into the supply chain, empowering businesses to make informed decisions swiftly. Embracing these innovations will not only streamline operations but also foster a more sustainable and resilient transportation ecosystem. 

The evolving transportation needs set the requirements high. But with Trinetix by your side, you can confidently navigate the complexities of TMS development and unlock the full potential of your transportation management capabilities. If that resonates with your goals, let’s chat and discuss how we can maximize your business impact and improve operational efficiency.

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