Transportation, along with manufacturing and warehousing, is one of the main supply chain processes. It comprises a whole lot of activities — from delivery planning to carrier management to shipment tracking — that have to be properly handled.
Small businesses with few shipments can manage these operations with the help of spreadsheets and phone calls. However, once your turnover grows, it becomes obvious that Excel is not enough and you need something more robust to control your transportation processes. That’s where specialized technology comes into play.
What is a Transportation Management System (TMS)?
A transportation management system or TMS is a category of software that helps in planning and executing the physical movement of goods. It can be used by all members of the supply chain from manufacturers to distributors and third-party logistics providers (3PLs) – virtually any party that wants to coordinate shipments.
Essentially, a TMS allows you to plan and execute your shipment processes and have visibility over them. Such software is often modular, meaning that you can get different functions separately depending on your needs. Besides, your ecosystem of tools may consist of different modules of ERP, logistics management systems (LMSs), warehouse management systems (WMSs), and of course, TMS. Some features will interconnect with fleet management software as well.
What does the future hold?
Freight volume keeps growing every year, increasing the complexity and pressure on the transportation market. While the industry is evolving to satisfy demand, adapt to customer requirements, and comply with regulations and sustainability goals, brands’ needs change as well. They strive for more automation, transparency, analytics, and first and foremost – digitization.
Shippers and carriers alike must abandon paper-based processes not only to compete but to survive. And it’s not that hard when the technology is here, offering efficient machine-to-machine communication, accurate routing algorithms, immediate mobile access, and a lot of other handy perks. As incredible as it may seem, there are still a lot of innovations available today that you can enhance your TMS with.
Predictive analytics powered by machine learning can support your strategic decision-making by generating accurate predictions and evaluating scenarios. You can apply it to evaluating carriers, defining high-risk loads, optimizing routes, planning capacity and operations, and much more.
IoT devices hold a lot of potentials to enhance numerous supply chain processes and provide unprecedented visibility. Smart connected sensors can play a tremendous role in shipment tracking, fleet maintenance, storage monitoring, and so on.
Blockchain technology, despite its novelty and related challenges, is being implemented to improve the traceability and security of logistics operations.
Solving The Problems With Exchanging Data
The most difficult problem to solve seems to be streamlining data across multiple players in a single transaction. Using a typical ocean import container from China to Los Angeles as an example, the players are numerous — from the Chinese supplier, the Chinese motor carrier, the Chinese freight forwarder, the steamship line, the American trucker, the American customs broker, the American trucker and the American buyer. All these players exchange data like a baton in a relay race.
Each participant in the process contributes data to the string. The problem is collecting and reporting the data in a timely and streamlined manner. Blockchain is supposed to solve the equation, and it may well do so, but as of this writing, it’s still in its infancy.
Couldn’t the TMS of the future solve this problem by having the supplier in the origin country issue a universal code to be scanned at each handoff in the relay race? At each scan, the TMS data is updated and distributed to those who need to know.
The new era promises to ring in real differentiators like being able to handle domestic transportation in all modes for countries other than their own country. Once this occurs, the TMS products that now have freight payment components will be challenged to accommodate different currencies, banking, and payment protocols in each country. The advantages are huge, and the stakes are high. According to Technavio’s market research, the TMS market is expected to grow by $2.04 billion between 2020 and 2024, progressing at a compound annual growth rate (CAGR) of more than 8% during the same period.
As the world continues to get smaller, companies will no longer have to employ different substandard TMS products, the data from which needs to be consolidated in some sophisticated business intelligence (BI) tool for any meaningful carrier negotiation or strategic business decision to be made.
Technologies are evolving together with the transportation industry. So now, knowing the opportunities software provides, you can implement the right solutions to automate your business operations, offer better service to your customers, and gain a competitive advantage.