We might think we can easily identify what transportation management software is, but as was pointed out in a recent discussion on LinkedIn, it’s often confusing what actually makes up TMS.

To the point, JP Wiggins pointed out in a LinkedIn group discussion –

“The issue is qualifying ‘what’ a TMS is. It can mean anything from parcel labeling software to fleet management to global multi-country fulfillment.  Our research is showing that buyers of TMS are getting lost when trying to find solutions for them.” 

So what, exactly, is a TMS?

STARTING SIMPLE:

A TMS, as the acronym is commonly used, is a transportation management system.  It’s usually the subset of your supply chain that handles most aspects of your transportation operations, and is often part of an enterprise resource planning system.

The system for transportation management, due to how varied the supply chain for any industry can be, needs to adaptable.  It needs to be able to assist with procurement, shipping, and all the details to ensure both routes in the supply chain take place smoothly and as cost effectively as possible.

That’s where transportation management software comes into play, and due to the integral nature of an effective software solution to any transportation management system, the acronym is often used interchangeably for both.

Transportation management software, however, isn’t necessarily your entire system.  Some software options are limited, only allowing a certain number of shipments, or syncing only with certain carriers, or lacking the option to connect with essential programs like Quickbooks.  When using these limited management software options, your system will include multiple software tools to help you manage the entire shipping process.

The system includes everything – every piece of software, every tool, every method you use to manage all aspects of your shipping lanes, your shipments, and how they get from point A to point B.

That’s a transportation management system.

THE DIFFERENCE BETWEEN A SYSTEM AND SOFTWARE

Often, to cut costs, companies will use a free or low cost transportation management software, which doesn’t sync with load boards, utilize the web services of carriers, or offer document collection or management within the software.

More comprehensive software options allow for syncing with various load boards, accounting tools, and also provide a way to manage documents and contacts.

Ultimately, your system is made up of all the software and tools you use to make it work.  That’s common sense, right?

While a system encompasses the whole, software is typically meeting a specific need.  Organization, ease of booking, collecting all carrier data into one place, or accounting – often, there’s a single software solution that’s available to help you manage these things.  When using multiple tools to manage your system, you often need a system to manage the system.  It gets extremely complicated, extremely fast.

This is where free or low cost options become more trouble than they’re worth.  Are you really saving that much when you have to spend additional hours of your own time, or your employees’ time, to make the software work within your system?

There are software options, however, that are comprehensive enough to become your entire system.

Software that doubles as a solution for a system integrates with your warehouse management tools, your carrier web services, your accounting software, load boards, document organization, your address book, not to mention the basic needs of generating labels.

Software handles a few of the tasks your supply chain needs to keep running.

A system is what makes the entire thing run smoothly.

THE FOUR FUNCTIONS OF AN EFFECTIVE TRANSPORTATION MANAGEMENT SYSTEM

There’s four main functionalities any effective transportation management system needs to manage in order to be productive.

  • They need to aid in planning and decision making: finding the best shipping route based on various needs – fewer stops, transport costs, lead time, partial or full load, and so on. An effective system makes this kind of planning and decision making as easy as selecting your priorities as you book a shipment or request a quote.
  • Actually executing the transportation plan: Once you’ve chosen the shipping plan that best fits the needs for that shipment, an effective software solution should allow you to actually book the shipment. This means checking and confirming the carrier’s rate acceptance, dispatching the carrier, and generating any needed labels or bills of lading.
  • Tracking and following up the shipment: You don’t just click “ship” and wait for the package to show up – shipments need to be tracked (preferably in real time), notifications sent when the shipment is received, invoices generated or updated, and alerts sent to you or to your client of any delays or problems along the way.
  • Measuring effectiveness: Any system needs to be checked and monitored to ensure it’s really as effective as it can be. Generating custom reports to review the key performance indicators that you’ve decided on for your business is essential to monitoring if your transportation management system is as efficient as it should be.

These are all the functionalities a system needs to have – not all software offers all of these features (Pro Tip: Brokerware™ does).

In order to determine what software solution, or solutions, you need to utilize to improve the management of your transportation system, you’ll need to sit down with your business managers and clients to determine what their priorities are.

There’s a few essential features that even a basic transportation management software should offer, and you can read more about those here.

SO WHICH IS IT?  SOFTWARE OR SYSTEM?

It’s important to distinguish between your entire system and the software you use to manage it.  No software can replace the human element of your system – it can help identify smart decisions, and improve on your process, but it’s no replacement for experience and knowledge of the industry.

That’s why you need a software that works with you and your team to make your system work as efficiently as possible.

The most effective transportation management software allows you to manage your entire system within a single portal.

The best transportation management software allows you to manage the system within a single portal – without having to open multiple windows, copy and paste information into each field, or double enter information.

An ideal software solution integrates seamlessly with your other systems, without requiring complex navigation to do so.

You should be able to easily update information for tariffs, shipping lanes, contacts, and labels, as well as track your shipments in real time.

In addition, it should integrate with your accounting software – if you’re using QuickBooks, your transportation management software should allow the ability to sync the necessary data to keep your books accurate and up to date.

Software helps you manage your system, plain and simple.  That’s why we designed BrokerWare™ the way we did – because we’ve actually worked in the freight broker industry, and we know what a freight broker is looking for in their software.

It’s important to choose the software that’s the best fits the needs of your system.  Software that can be customized as needed for your business needs, or a combination of software solutions that accomplish the same thing.

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