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What Are TMS Services?

Feb 2

A transportation management system (TMS) is specialized software that assists in the planning, execution, and optimization of goods transportation. In a TMS, users execute three key tasks: Find and compare carrier rates (prices) and services to send a customer's order, book the cargo, and follow its progress to delivery.

TMSs are used to increase shipping efficiency, lower costs, get real-time supply chain insight, and assure customer satisfaction.

TMS software is mostly used by shippers and carriers. TMS services are used by manufacturers, distributors, e-commerce companies, wholesalers, retailers, and third-party logistics providers (3PLs).

A TMS is one of the most important technologies in supply chain management (SCM), which includes both supply chain execution (SCE) and supply chain planning (SCP). TMSs are available as stand-alone software or as modules inside enterprise resource planning (ERP) and supply chain management (SCM) software suites.

While some TMSes are focused on a single mode of transportation, the majority of systems allow for multimodal and intermodal travel. A single carrier employs at least two means of transportation — truck, rail, air, or sea — and is legally responsible for completing the contract's conditions, even if it hires subcontractors. Shipments that require more than one carrier and contract are referred to as intermodal transportation. Shippers have greater control over carriers, rates, and modes of transportation with intermodal, but they are also more accountable for managing the process.

TMSes have gained momentum as facilitators of global commerce and logistics during the last decade. In its March 2020 Magic Quadrant study, Gartner predicted that the worldwide TMS market will increase at a CAGR of 11.1 percent over the next five years, reaching $1.94 billion by 2022 and accounting for roughly a third of the SCE industry.


The operation of transportation management systems

A TMS is essentially a database of comprehensive carrier information, but it is also a transactional and communication system that allows users to plan, execute, and track shipments. To achieve all of that, it has to be well-integrated with carrier systems and data sources, or it needs to be able to download carrier data. It should also make it easier to enter client orders that describe what should be sent.

Orders are often received automatically from TMS-integrated ERP or order management systems. A TMS may be used with a warehouse management system (WMS) to improve coordination of processes such as palletization, labor scheduling, yard management, load building, and cross-docking that occur at the interface between warehouses and freight carriers.

ERP, WMS, and TMS are the three basic SCM systems, and they all play essential but mostly separate roles in order processing. Integration between the three allows them to share specific sorts of data and standard papers that are required to deliver the correct items to clients as quickly as feasible.