Guide to Transportation Management System

8 min read
transportation management system

Manufacturing, warehousing, and transportation are supply chain processes that consist of many activities — from carrier management to delivery planning to shipment tracking. While you can manage these operations with the help of spreadsheets when your business is still small, once your turnover increases, it becomes evident that spreadsheets are not enough. You need something more robust to control your shipping processes, you need an efficient management system to benefit your business needs. That’s where a transportation management system (TMS) comes in.

The emergence of a cloud-based transportation management system has leveled the playing ground. In today’s marketplace, bigger and smaller companies use the transportation management system to compete and provide excellent services.

Here, we will look at transportation management systems, their functions, and their benefits to various business operations.

What Exactly Is a Transportation Management System?

A transportation management system (TMS), also known as a transportation management solution or transportation management software, is a digital logistics software that utilizes technology to help businesses plan, optimize, and execute the physical transportation of goods while ensuring appropriate documentation and compliance.

TMS also facilitate transportation and makes it easier for businesses to manage and optimize their shipping operations. These systems can be deployed across all shipping modes, whether by land, sea, or air.

Transportation Management Systems Basic Features 

TMS functions to execute and enhance physical goods transportation. The essential features of transportation management systems include but are not limited to the following:

Strong optimization engine: TMS tracks and analyzes performance with the help of dashboards, reports, analytical data, and more. These modules are essential for the system.

Monitoring in Real-time Mode

Transportation management systems collect, organize, and manage extensive tracking data. It tracks the shipment transit in real-time throughout its process, from warehouse to final destination. IoT and mobile devices that contain GPS will continue to be key for implementing real-time monitoring and dispatching.

Driver Contract

A contract is an essential document between the driver and the company. The transportation management system has a module where all the carrier contract terms are stored to ensure they meet the specified transportation conditions.

ETA Calculation

This feature lets you take into account weather conditions, route conditions, and self-learning algorithms to determine the estimated delivery time. ETA calculations are present in many different areas of transportation and logistics, all the way from shipment delivery to tracking food deliveries and ride-sharing services.

WMS, ERP, or OMS Integration

When an organization combines TMS data with other internal sources such as Order Management System (OMS), Warehouse Management Software (WMS), or Enterprise Resource Planning (ERP), they get real-time insight into items from purchasing through to warehouse, packaging, and delivery.

Business Intelligence and Reporting

Analytical reports are one of the easiest ways to understand and share vital information. As a result, a TMS has reporting tools such as dashboards and charts, specific maps for visualizing trends, and more.

Remember that business peculiarities and clients may need different TMS features. In this case, custom solution development is preferred over an off-the-shelf one.

Working Principles of Transportation Management System

A transport management system lets people plan, execute and monitor shipments. This system integrates with different data sources to facilitate clients’ shipping orders and related information. Here’s how TMS works:

Transport management system work is closely related to fundamental SCM systems, such as Warehouse Management Systems (WMS) and Enterprise Resource Planning (ERP) taking part in order processing.

For example, the warehouse management system (WMS) coordinates activities such as storing management, laboring scheduling, or cross-docking performed between freight carriers and warehouses while orders are received automatically from ERP integrated with transport management system software. TMS, ERP, and WMS work together to exchange specific information, process and quickly deliver the right items to clients.

What Companies Need Transportation Management Systems?

TMS is used by many companies that ship and receive goods regularly. Companies that can use transportation management system includes:

  • Manufacturers

  • Distributors

  • Retail businesses

  • Ecommerce companies

  • Carriers, fleets, and trucking companies

  • Companies that provide logistics services such as LSPs, 3PL, and 4PL.

  • Other supply chain businesses

Why Is a Transportation Management System Important? 

TMS plays a vital role in supply chain management, affecting every aspect of the transportation process—from procurement and planning to lifecycle and logistics management. With the current dynamic trade environment that we live in, it is more important to have a transportation management system that will let you navigate complex processes around trade policies and compliance successfully.

Besides, this robust system provides deep visibility, which results in more efficient shipping planning and execution, leading to higher customer satisfaction. In turn, this leads to more sales and helps businesses grow.

How Can TMS Benefit Your Business?

Transportation management systems provide several benefits to businesses. This includes:

  • Faster delivery and time savings

  • Greater flexibility to change the delivery plans

  • Improved accountability in the transportation chain

  • Improvement in security and visibility, especially in transit

  • Cash flow improvements through proper freight accounting

  • Scale the business by meeting and exceeding your customer demands

  • The ability to track freight on a single platform both globally and locally

  • Better export and import compliance to minimize penalties and shipment delays

  • Simplification of supply chain management across different geographic areas, carriers, and modes

  • Optimization of supply chain planning for profitability and efficiency purposes

  • Automation of shipping operations for faster and more accurate documentation and billing

  • Reduce cost by better carrier mix, route planning, load optimization, and mode selection

  • Improvements in customer satisfaction and customer service with real-time updates and fewer shipment delays

What Does the Future Hold For TMS?

Customer expectations keep rising from on-time and same-day item deliveries to real-time updates provided throughout the shipment process. In fact, the ever-changing global trade regulations have forced many companies to innovate new technology and keep pace by investing in a transportation management system.

In this case, companies can integrate their global trade management systems with new technologies to improve visibility and provide excellent customer service. Some of these new innovative technologies that are presently available include:

Route Optimization & Dispatch Optimization

Certain players in the transportation space are ahead of the game regarding route optimization and dispatch algorithms. While problems like the Traveling Salesperson Problem and the Vehicle Routing Problem are not new to transportation and logistical operations in any way, we believe there is a lot of room for improvement in this area in order to fully optimize supply chains name, shipments, and transportation across these sectors.

Machine Learning (ML) and Artificial Intelligence (AI)

With the help of these technologies, companies can forecast transportation time more accurately, reveal temperature-sensitive/expired goods, and offer more accurate route recommendations.

Digital Assistants

Companies can implement this technology into their workflows to provide their customers with immediate recommendations, textual support, and advice concerning the TMS.

Cold Chain Running

This is helpful when perishable goods are transported through the supply chain. Cold chain running allows regulating and controlling such items’ temperatures according to their different conditions.

Predictive Analytics

This is powered by machine learning and can support your strategic decision-making by helping you to generate accurate predictions and evaluate scenarios. You can apply it to assess carriers, optimize routes, define high-risk loads, plan capacity and operations, and more.


This system makes available complex integrations among users, shippers, and carriers. Moreover, blockchain enhances transparency and traceability inside a transportation management system in a supply chain while providing customers with secure data. It might take quite a while to effectively apply blockchain technology to transportation, supply chain operations, and logistics, but it could provide interesting benefits in the long term.

Internet of Things (IoT)

IOT allows companies to cut fuel and maintenance costs, speed up deliveries, and enhance carrier safety. In addition, shippers can manage fleet movements in real time through IoT-based digital products. Being able to track drivers is a requisite for effective route optimization and intelligent business planning. We believe we will continue to see an increase in IOT in various areas of supply chain management, transportation, and logistics operations.

In Summary

Transportation management systems can help businesses of all sizes and specialties optimize their shipping logistics and supply chain management. While the shipping industry is complex, TMS software is a valuable solution to gain visibility, simplify moving operations, and create more efficient transportation planning systems.

If you’re looking to develop a transportation management system, Flatirons Development can help you. We specialize in developing robust transportation software for companies across the globe. Connect with the Flatirons Team today to learn more about our solutions.

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