User Experience
October 13, 2022
15 min

How Can a TMS Improve Supply Chain Management?

Team Traqo

Things have gotten more accessible in terms of supply chains. There was a time when a skilled logistics expert could sit down with a simple spreadsheet tool and plan out routes with some assurance that the items would arrive on time and under budget. However, things are different now than they were in the past. Linear supply networks are changing into complex webs with many parts that all connect.

What is the management of the supply chain?

"Supply Chain Management" (SCM) ensures that goods and services are made, sold, and used correctly. It also includes moving and storing unfinished goods, inventory, and finished goods.

Supply chain management keeps track of and connects a product's life cycle stages. Companies with a good handle on their production, distribution, sales, and stock levels will be able to do this.

Planning for both supply and demand is a part of supply chain management. However, instead of focusing on just one part of the chain, it looks at the whole thing and uses many different ideas and methods to ensure that every step is as efficient as possible.

Each department should work to cut costs and help the companies get the most out of their long-term performance. This method can cut prices by skipping steps that don't need to be done for transportation or handling.

What is TMS?

TMS stands for "transportation management system." It is software that helps businesses keep track of their freight and items as they are moved from one place to another. It also keeps track of any regulatory or compliance information that needs to be held on file.

With the help of a transportation management system, shipping operations can be more efficient. This system also helps companies manage and optimize ground, air, and sea transportation.

How can TMS help improve the management of the supply chain?

Money Saved on Transportation

Shipping costs can be cut for businesses that use TMS. Therefore, a TMS that can quickly optimize pricing, route, and consolidations to find the most cost-effective freight capacity while ensuring that carriers meet SLAs is beneficial.

Speeds up how well business operations work

When logistics teams use a top TMS, they can quickly reach their goal of efficient execution. In addition, when a business chooses a TMS software platform customized to its needs, the system automatically takes care of most routine operational tasks. This gives the logistics team more time to work on more complicated problems.

Waste reduction in the supply chain The optimization module of the TMS looks at all possible load plans to find the best one. Then, even if the first scheduled motor carrier isn't available, the cargo is given to other carriers, from the least expensive to the highest. This is called a "waterfall tender process," ensuring the cost is as low as possible.

TMS software is essential to carrier management because it helps find capacity in a tight market and improves onboarding processes after a spot rate is found. It uses databases like RMIS to control carrier risk. Integration with other logistics service providers makes your business run better, whether you use RMIS or one of the many freight load boards.

Getting the most out of manufacturing, stocking, and shipping

When all freight movements, both coming in and going out, are part of a single system, the whole supply chain works much better. Even though production, storage, and distribution centers are the most obvious places to improve efficiency, the same can be said for sales, customer service, and vendor relations. All of these areas benefit significantly from streamlined communication and anticipatory problem-solving.

Honesty all the way through and better conversations

The client gets better service when all logistics and supply chain activities are brought together in the "control tower" part of a TMS. But everyone in the supply chain, from the supplier to the customer, gets something out of it.

Supply Chain Analytics got better with more data

Data is knowledge and a compelling feature. The TMS gives its customers a lot of data, which makes it a valuable tool for logistics and supply chain experts. They can collect almost unlimited amounts of data and references and make it easy to combine, organize, analyze, and report on vast amounts of data. As a result, transportation management systems (TMSs) are becoming more and more popular.

By integrating TMS software, businesses can access key industry platforms with billions of dollars worth of freight spent on the actual origin and destination rates paid by shippers and logistics companies. This makes it easier for them to analyze and benchmark performance on specific lanes and compare it to that of other competitors. In addition, a business can now get this information without contacting the top logistics firms or using averages of averages as its benchmark data. In the end, TMS software makes making decisions based on data easier.

Ways for the logistics industry to cut costs

TMS software encourages businesses to use paperless freight audit and pay processes that rely on highly automated optical reading technologies. This is to make sure that companies are paying the agreed-upon freight rates.

The software platform for TMS is built with OCR (optical character recognition) technology to be used for auditing and managing documents. When OCR freight audit systems are used, the essential parts of a carrier's invoice are linked to the shipment's identifier. The invoice is then matched with the negotiated rates in the TMS. The whole process of auditing only takes about 15–20 seconds.

Bottom Line

Like other types of software, a transportation management system is a significant investment. Even though the costs could be high, businesses that move many items may find them worth it. By putting your operations in one place, you can better track and analyze data, streamline your workflow, and save time and money. You can tell if a TMS is financially viable by looking at how much it costs and how much you expect to make.

Written by
Team Traqo


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