Transporting goods efficiently and cost-effectively is critical for businesses today. However, managing logistics in-house can be complex and resource intensive. Implementing robust transportation management system (TMS) software can optimize your shipping operations and provide a high return on investment.
This guide will walk you through the key factors to consider when selecting the right shipper TMS solution for your unique business needs.
And when you’re finished reading, check out the other articles in our ‘Shipper TMS’ series:
- How can TMS integration benefit shippers?
- Guide to buying the right shipper TMS for your business
- Best TMS providers for shippers
What is a shipper transportation management system (TMS)?
A shipper transportation management system (TMS) is software used by companies that need to ship products (known as shippers) to manage and optimize their shipping operations. A TMS solution automates processes like shipment booking, load consolidation, routing, carrier management, shipping documentation, and tracking to make the process simpler and more efficient.
Key features of a shipper TMS platform include the ability to compare carrier rates, generate optimized routes, manage carrier profiles, produce shipping labels and documents, provide real-time shipment visibility, and analyze shipping data through reporting and analytics. The goal of a TMS system for shippers is to improve logistics efficiency, reduce transportation costs, gain transparency into the shipping process, and save money.
Top transportation management systems are typically offered as a cloud-based software-as-a-service platform that handles shipping needs from order to final mile delivery. Leading software for transportation management in logistics is provided by TMS companies like Truckbase and Trimble.
How does a transportation management system (TMS) work?
A TMS in logistics works by connecting to various back-end systems like ERP, accounting software, and warehouse management systems to gather relevant order, shipment, and inventory data.
The shipping TMS then uses this data to automate processes like shipment planning, execution, and freight audit. For planning, it can suggest optimal carriers, modes, routes, and rates for a shipment based on business rules and historical data. Once the shipment is booked, the TMS shipping software tracks its status and provides visibility through proactive alerts about delays or issues.
A transportation shipping management system also generates documents like labels, bills of lading, and customs paperwork. It monitors invoice accuracy and enforces business rules like freight classes to ensure optimal spending. Reporting and analytics within a TMS supply chain management platform gives insights into carrier performance, costs, trends, and opportunities for improvement.
TMS software providers connect with carriers through EDI, API integrations, or online portals to exchange booking, tracking, and billing information electronically. Built-in workflow tools allow easy management of processes like claims, disputes, and approvals. Transportation management systems are often cloud-based, providing access to shippers and carriers via web and mobile applications.
By centralizing and automating the shipping process, TMS systems for shippers improve efficiency, reduce costs, enhance compliance, and provide end-to-end visibility. Transportation management software facilitates data-driven decisions that optimize the supply chain.
11 tips for finding the best transportation management system (TMS) software
With so many TMS management options on the market, finding the right one to meet your specific needs and objectives may seem daunting. Here are the most important tips for finding the best transportation management system software that suits your needs:
- Clearly define your TMS service requirements and pain points. Ask yourself questions like, “What shipping volumes do you have? What modes do you use?” This helps match TMS capabilities.
- Look for a TMS tool that supports integration with your other logistics systems like WMS and ERP. API and EDI capability is key.
- Ensure the transportation planning software provides optimization tools for load consolidation, route planning, and mode/carrier selection. This drives efficiency.
- Check that the transport management system software offers online load booking, shipping document generation, customs clearance, and tracking capabilities. TMS automation is key.
- Seek advanced reporting and data analytics to gain insights into freight spend, carrier performance, and shipping trends.
- Look for SaaS-based TMS options for lower startup costs, quicker implementation, and less IT involvement. Cloud-oriented platforms are preferred.
- Evaluate transportation software that’s configurable to your workflows rather than forcing business process changes.
- Look for a TMS application that offers relevant transportation vertical expertise to match your business needs.
- Choose a freight TMS with mobile access so you can manage shipments on-the-go.
- Check that the logistics TMS provides excellent ongoing support and has resources to train your staff.
- Review the total cost of ownership over three to five years, not just start-up fees. Ongoing costs matter.
Following these tips will help select the right TMS company that maximizes logistics efficiency, visibility, and cost control.
How much does a transportation management system (TMS) cost?
Here are some typical cost factors in a TMS purchase:
- Software license fees: For on-site TMS freight platforms, an upfront license purchase is typical. This can range from $10,000 for a basic system to over $100,000 for more robust transport management solutions.
- SaaS subscription fees: For a cloud-based TMS, there are monthly or annual subscription fees instead of a license. Paying around $1,000 to $3,000 per month is typical.
- Implementation and integration: This can cost anywhere from $50,000 to $300,000 depending on the complexity of integration with other software systems.
- Mapping and set-up: There are often additional fees to map workflows, configure settings, and test integrations. This can cost anywhere from $10,000 to $40,000.
- Training and support: You must also consider ongoing costs like training users to properly use the software and providing help desk support. This costs around $5,000 to $20,000 per year.
- Customization: Modifying TMS software to meet unique business needs costs extra, usually between $40-$150 per hour.
- Maintenance and upgrades: Annual fees for ongoing maintenance, bug fixes, and updates cost around 18-22% of license costs.
- Transaction-based fees: Some TMS logistics companies charge per shipment or per carrier integration. These add to variable costs.
Overall, for a mid-size company, the total cost for implementing TMS software for shippers and using it for three to five years could easily be $200,000+ when factoring in all expenses. Going with a SaaS model reduces start-up costs.
Reap the benefits of a shipper transportation management system (TMS)
Selecting and implementing the right transportation management system is a strategic investment that can significantly improve your logistics operations. Be sure to thoroughly evaluate options, involve key stakeholders, and align on requirements before choosing the best transportation management software. Next, develop an implementation roadmap that includes integration with existing systems, testing, training, and change management to drive user adoption. Taking these steps will help you maximize the value of your new TMS solution.
FAQ
A transportation management system (TMS) is a software platform that helps shippers manage, plan, execute, and optimize their domestic and global shipments across modes like full truckload, less than truckload, parcel, rail, and ocean.
Shippers need a TMS to improve efficiency, reduce freight costs, and gain visibility into their supply chain. A TMS can help shippers better manage orders, transportation, and logistics providers from a centralized platform. A TMS automates processes and provides data-driven insights.
According to industry estimates, around 40-45% of global shippers currently use some form of transportation management system (TMS) to manage their logistics operations. Among larger companies shipping full truckload volumes, TMS adoption rates can be as high as 70-80%.