The Role of Transportation Management System in Supply Chain Management

Introduction

Transportation has always been a vital part of businesses, one that they cannot exist without. Today, transportation is much more than the movement of goods from one destination to the other. It plays a major role in ensuring customer satisfaction, operational costs, quality of products placed on the shelves among many others. As capacity and cost become increasingly important for investors, developers continue to come up with solutions that offer robust support for the supply chain system and take care of such concerns.

A transportation management system (TMS) is one of the tools used by businesses to manage their supply chain. TMS manages key processes in the transportation system among them; planning, decision making, measurement, and transport follow-up. TMS functions include selecting transportation modes and carriers, tracking vehicles on a real-time basis, controlling service quality, optimizing and planning transport schedules, simulating transportation costs, and batching shipment orders, just to mention a few.

Using TMS to achieve transportation excellence

Real-time dynamic optimized models have allowed businesses to respond to supply chain changes in a way that traditional methods would not handle. Supply chain managers are now able to respond to challenges and changes in a more timely manner. TMS has increased focus on performance management. More sophisticated and effective reporting systems allow businesses to track and trace their transportation operations. In supply chain management, it is easier to track goods and have accurate times of delivery.

Enhanced freight payment tools now have better capabilities. This is a TMS area that is yet to be fully developed but experts continue to explore. “In an era where bigger capacities are required, more companies are looking into moving to match and pay processes for incoming freight bills” (Bekiaris & Yuko, 2004). Improved payment tools ensure that order deliveries are not delayed, especially in agreements where one has to pay before goods are released. Payment capabilities available now are instantly recorded in the company’s systems, making data and information management even easier.

Another way through which TMS enhances transportation excellence is by integrating fleet management capabilities. TMS solutions offer better ways to establish backhaul techniques and opportunities. TMS solutions also offer robust support for the integration of different transportation modes such as ocean and rail, to help solve the cost and capacity challenges facing businesses today. They offer capabilities that assure compliance, proper documentation, and accurate cost calculations.

Enhancing customer service and minimizing costs using TMS

Route optimization and planning is a keys to TMS’ benefits. Using TMS allows transport managers to create daily routes using powerful programs and algorithms. The result is better resource utilization, where drivers deliver more and drive less. According to Mason and Mauricio (2003), “the answer to delivering more products does not have to be putting more vehicles on the road”. TMS enables businesses to transit more volumes, increasing goods available to the customers and reducing costs. Route optimization also helps managers understand how the end customer is affected by delivery costs.

Load optimization is another important benefit offered by TMS. “Since each route requires different loading patterns, load optimization allows quick load designs for multiple route types and assignment of specific equipment to warehouse bays” (Gilmore, 2007). Businesses can pick orders, allocate them to the correct routes and truck them to their final destinations. Load designs are also done in a way that ensures safety to minimize damages. Research shows that most damages on goods occur at the time of loading or offloading. If this is minimized, customers get better quality goods, and the cost incurred due to breakages is minimized. Well-organized and updated load and offloading sheets provide supply chain managers with accurate information for records purposes.

As issues of security and safety continue to rock the transportation industry, especially in water transportation, real-time tracking and monitoring of vessels are of paramount importance to businesses. Pirates and other shipping concerns have meant that businesses resort to more expensive means of transporting goods such as air, increasing operational costs. TMS solutions have offered tracking systems that allow constant communication between the ship crew and their managers. This way, any danger can be detected early and reported to proper authorities. Such measures are expected to reduce the time products take on transit and reduce the cost of doing business.

Underutilization of TMS

According to research, so far businesses are only utilizing 30% of TMS solutions. The percentage is expected to grow shortly but experts argue that the rate at which businesses are appreciating TMS solutions is too slow. They argue that if the business took up all solutions offered by TMS, there would be more opportunities to create more effective supply chain management systems and minimize costs. In an era that demands transportation of extremely high volumes of goods and minimizes costs of doing business, there are still more TMS solutions with the capacity to meet such demands, yet they are not utilized. Many businesses are still stuck in the traditional supply chain models and they aren’t willing to fully assimilate TMS in their businesses.

Businesses need to learn how to link forecast data into TMS. Blanchard (2010) points out that “business must no longer treat transportation as an infinite resource but instead, it should be treated as a constraint like manufacturing capacity”. Business leaders and their supply chain managers must start linking their transportation capacity with demand forecasts. Supply chain and transport managers also need to start extending their visibility to mobile solutions. Real-asset management and optimized dock operations will ensure this happens.

Conclusion

TMS is one of the strongest and most beneficial tools in supply chain management. It has offered businesses solutions that have helped improve security, increase capacity and minimize costs. TMS has allowed businesses have a more timely delivery of goods, which boosts customers’ confidence and improves sales. As issues of cargo security become increasingly important, tracking technologies have helped resolve this by offering real-time communication and updates amongst the transportation team. Experts continue to argue that TMS is yet to be fully utilized and that businesses that have adopted the system are yet to fully utilize its capabilities. As that debate rages on, it is evident that TMS is playing an important role in helping businesses achieve transportation excellence and more is yet to come.

Reference list

Bekiaris, E., & Yuko, N. (2004). Economic impacts of intelligent transportation systems: Innovations and case studies. Amsterdam [u.a]: Elsevier.

Blanchard, D. (2010). Supply chain management: Best practices. Hoboken, N.J.: John Wiley & Sons.

Gilmore, D. (2007). Achieving transportation excellence. World Trade, 15(11), 36-39.

Mason, S.J., & Mauricio, R. (2003). Integrating the warehousing and transportation functions of the supply chain. Logistics and Transportation, 39(2), 141-159.

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NerdyRoo. (2022, June 3). The Role of Transportation Management System in Supply Chain Management. Retrieved from https://nerdyroo.com/the-role-of-transportation-management-system-in-supply-chain-management/

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NerdyRoo. "The Role of Transportation Management System in Supply Chain Management." June 3, 2022. https://nerdyroo.com/the-role-of-transportation-management-system-in-supply-chain-management/.

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NerdyRoo. 2022. "The Role of Transportation Management System in Supply Chain Management." June 3, 2022. https://nerdyroo.com/the-role-of-transportation-management-system-in-supply-chain-management/.

References

NerdyRoo. (2022) 'The Role of Transportation Management System in Supply Chain Management'. 3 June.

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