What Is A TMS Platform? Overview, Capabilities, & Examples

So you are deeply passionate about your business, excelling in your core competency – managing product shipments. Your network of carriers, pricing structures, and operational efficiency sets you apart in the industry. Yet, as your business expands, drowning in administrative tasks isn’t an ideal scenario. That is where you need a TMS platform.

You may have heard discussions about TMS platforms in your business circle but what exactly does it mean for your business? Consider it as the ultimate solution designed to streamline every aspect of your shipping process – from carrier selection to tracking shipments, managing rates, and even handling paperwork.

If you have found this intriguing, there is more to discover. Keep reading as this post is going to tell you exactly what you want to know about a TMS platform. Here’s what we will cover in it:

• What is a TMS platform
• Exploring its types and associated costs
• A detailed overview of its capabilities
• 3 examples of TMS platforms

What Is A TMS Platform?

A transportation management system (TMS), or a TMS platform in short, is software that helps companies organize and optimize their shipping operations. It handles planning, executing, and tracking shipments across different modes of transport.

TMS platforms streamline processes by providing tools for managing carriers, routes, and scheduling. They also generate reports for analysis that help improve efficiency and reduce costs in logistics and supply chain management.

3 Types Of TMS Platforms

When it comes to TMS platforms, there are 3 types, each with its own features and benefits. Let’s take a closer look at all 3 of them and see which one suits your shipping needs best.

01

On-Premises TMS Platform

These transportation management systems are traditional, residing on a company’s own servers and managed in-house. They require a substantial initial investment and ongoing maintenance. While they offer a high level of customization and control, they can be less flexible in adapting to changing needs.

02

Cloud-Based TMS Platform

This newer breed of transportation management system operates on remote servers accessed via the internet. They are maintained by third-party providers, offering scalability, cost-effectiveness, and easier integration with other software. Cloud-based TMS platforms allow real-time updates and are accessible from anywhere which promotes collaboration among various stakeholders.

03

Hybrid TMS Platform

As the name suggests, these platforms combine elements of both on-premises and cloud-based transportation management software. They offer flexibility by allowing certain functions to run on-site while leveraging cloud capabilities for others. This setup suits companies looking to balance control and scalability.

How Much Does A TMS Platform Cost?

It depends on which TMS you choose and what its vendor factors into its plans’ pricing. Most commonly, the price increases with the number of users. Monthly costs of TMS solutions range from $100 to $5,000 and the initial setup cost ranges from $500 to $150,000.

What Is The Difference Between Transportation Management & Freight Management?

Transportation management oversees the movement of goods from one place to another. It manages the whole process, from planning and executing shipments to tracking and optimizing routes. It is the broader umbrella term that includes various tasks related to moving goods around efficiently.

On the other hand, freight management is a subset of transportation management. It specifically deals with the logistics of shipping goods via multiple carriers or modes – like trucks, trains, ships, or planes.

Freight management is more focused on the minute details of each shipment, including selecting carriers, negotiating rates, managing documentation, and ensuring timely deliveries.

TMS Platform Capabilities: Understanding How It Works

Understanding how a TMS platform operates might seem tricky at first. But once we uncover its main functions, you will see it is easier than it seems. Let’s discuss the capabilities of a TMS platform in detail.

01

Shipment Planning & Optimization

1.1. Dynamic Routing

TMS determines the most efficient routes for shipments in real-time. It considers traffic conditions, weather, delivery schedules, and any specific constraints or preferences set by the logistics service providers.

The system continuously assesses and updates routes to ensure timely and cost-effective deliveries. It uses algorithms that analyze multiple route options and select the optimal path for each shipment based on current conditions and constraints.

1.2. Load Planning & Consolidation

Load consolidation is about maximizing the capacity of transportation by combining multiple shipments into fewer loads. The TMS evaluates available shipments and identifies opportunities to consolidate compatible loads heading toward similar destinations or along the same routes.

This way, it minimizes empty space in trucks or containers to reduce transportation costs and environmental impact. The system considers factors like shipment sizes, delivery windows, and compatibility to efficiently consolidate loads without compromising on delivery timelines or customer requirements.

1.3. Mode Selection

TMS helps choose the most suitable transportation mode – truckload, less-than-truckload, rail, air, ocean – for each shipment based on various factors. It evaluates shipment urgency, cost-effectiveness, distance, and specific requirements like temperature control or special handling needs.

TMS assists logistics service providers in making informed decisions by providing insights into the pros and cons of different modes

02

Carrier Selection & Management

2.1. Carrier Performance Evaluation

TMS platforms provide a systematic evaluation of carrier performance based on predefined metrics and KPIs. These metrics include on-time delivery rates, adherence to safety regulations, communication responsiveness, and overall service quality.

Through historical data and real-time performance metrics analysis, the system helps identify top-performing carriers and those that may need improvement. This evaluation process assists in making informed decisions regarding carrier selection for future shipments.

2.2. Rate Negotiation & Management

Within a TMS, tools and functionalities facilitate rate negotiation with carriers. It includes analyzing market rates, historical data, and specific shipment requirements to negotiate competitive pricing.

The platform helps in managing rate contracts and agreements with carriers, ensuring compliance and transparency in pricing structures. It also helps in optimizing costs by identifying opportunities for rate improvements or negotiating volume-based discounts.

2.3. Automated Carrier Communication

Efficient communication between shippers and carriers is vital for effective fleet management and overall supply chain planning. TMS platforms automate communication processes for seamless interaction between parties.

These systems use standardized messaging protocols or APIs to exchange information on shipment details, status updates, pickup/delivery instructions, and documentation requirements. This reduces manual errors, improves operational efficiency, and enhances collaboration between logistics stakeholders.

03

Route Optimization

3.1. Geospatial Technology In TMS

Geospatial technology within a TMS uses geographic information systems (GIS) and mapping tools to analyze and optimize routes. TMS provider integrates mapping data, road networks, and location-based information to determine the most efficient paths for transportation.

The TMS solution uses algorithms to calculate optimal routes based on factors like distance, road types, traffic flow, and geographical constraints. Geospatial technology enables visualization of routes and helps in better decision-making and route planning for efficient business operations.

3.2. Traffic & Weather Considerations

TMS solutions incorporate real-time traffic and weather data to optimize routes dynamically. These systems continuously monitor traffic conditions and weather forecasts along planned routes. Through this information, they can suggest or automatically reroute vehicles to avoid traffic congestion, accidents, or adverse weather conditions that could impact delivery schedules.

3.3. Last-Mile Delivery Optimization

Last-mile delivery, the final segment of the delivery process, is crucial for customer satisfaction and cost efficiency. TMS platforms focus on optimizing last-mile delivery by considering delivery windows, customer preferences, and proximity to delivery destinations.

They employ algorithms that analyze multiple variables like package size, vehicle capacity, traffic patterns, and delivery schedules to determine the most efficient routes for the last leg of the delivery process. This optimization ensures timely and cost-effective deliveries while meeting customer expectations.

04

Real-time Tracking & Visibility

4.1. GPS Tracking & IoT Integration

GPS tracking provides precise location monitoring of vehicles and shipments throughout their journey. These systems use IoT devices like sensors, RFID tags, or connected devices embedded in cargo or vehicles to gather data on temperature, humidity, shock, or any other specific parameters critical to the shipment.

4.2. Shipment Status Updates

Real-time updates include information about the current location, estimated time of arrival, and any intermediate stops or delays encountered during transit. This provides logistics managers and stakeholders with actionable insights into the progress of transportation operations.

This visibility helps in proactive decision-making and smooth logistics management and allows for effective communication with customers or other stakeholders regarding shipment progress.

4.3. Exception Management

Exception management within a TMS involves identifying and handling deviations from planned transportation operations. The system monitors shipments and compares their actual progress against predefined benchmarks or expected timelines.

If any discrepancies, delays, or issues arise, the TMS triggers alerts or notifications for logistics managers to intervene and take corrective actions promptly. Exception management helps in resolving issues efficiently, minimizing disruptions, and maintaining the smooth flow of transportation operations.

05

Reporting & Analytics

5.1. Data-Driven Decision-Making

TMS platforms collect and process vast amounts of data related to transportation operations, including:

• Costs
• Shipment details
• Carrier performance
• Delivery times, and more

These systems use advanced analytics tools and algorithms to transform raw data into actionable insights. Logistics managers can make informed decisions to optimize transportation processes, identify cost-saving opportunities, improve service levels, and enhance overall efficiency.

5.2. Key Performance Indicators

TMS solutions incorporate predefined and customizable KPIs. These KPIs include metrics like:

• Inventory turnover
• Freight costs per mile
• On-time delivery rates
• Carrier performance scores
• Compliance with regulatory standards

The TMS generates reports that present these KPIs in a digestible format so that logistics managers can monitor performance, identify trends, and benchmark against set goals. These metrics provide a clear understanding of how transportation operations are performing and highlight areas for improvement or optimization.

5.3. Customizable Reporting

TMS platforms offer customizable reporting functionalities that allow you to tailor reports based on specific business requirements. Logistics managers can create reports and incorporate relevant data points, metrics, and visualizations. They also come in handy to conduct freight auditing.

3 Examples Of TMS Platforms

To understand TMS platforms better, let’s take a look at the 3 leading software. These examples will give you a solid idea of how these TMS software work in the real world and get things done.

01

SAP Transportation Management

SAP Transportation Management, or SAP TM, is a software platform designed to streamline and optimize transportation and logistics operations within a company. It is a part of SAP’s supply chain management suite that helps enhance visibility, efficiency, and control over transportation processes.

SAP Transportation Management Key Features

• Supports various transportation modes like road, rail, air, and sea.
• Enables the creation and management of transportation orders so that users can consolidate, plan, and execute shipments efficiently.
• Facilitates communication and collaboration between shippers and carriers for real-time information exchange and better coordination.
• Provides comprehensive reporting and analytics capabilities to offer insights into transportation performance, costs, and efficiency metrics.
• Helps ensure compliance with international trade regulations, managing documentation and processes for cross-border shipments.
• Uses algorithms and optimization techniques to generate optimal transportation plans based on factors like cost, time, and resource constraints.
• Automates the auditing of freight bills and facilitates the payment process, ensuring accuracy in invoicing and compliance with contracts.
• Tracks and manages transportation-related events in real-time and provides notifications and alerts for deviations or delays in the shipment process.
• Integrates with other SAP modules or external systems like ERP, WMS (Warehouse Management System), and IoT devices for holistic supply chain management.
• Allows for accurate calculation and monitoring of freight costs, including tariffs, rates, and additional charges, to provide cost visibility throughout the transportation process.
• Assists in selecting the most suitable carriers based on predefined criteria like cost, service level agreements, and performance ratings, optimizing carrier selection decisions.

02

Descartes Systems Group

Descartes Systems Group’s TMS is designed to streamline logistics and supply chain operations for businesses. It is a comprehensive platform that integrates various tools and functionalities to optimize transportation processes.

Descartes Systems Group Key Features

• Provides tools to track and report carbon emissions associated with transportation activities.
• Provides access to a vast database of global trade regulations, tariffs, and compliance requirements.
• Offers tools to manage customs documentation and compliance for smoother cross-border movements and reducing delays.
• Allows companies to enforce specific routing guides to ensure that shipments follow predefined carrier and route selections to optimize cost and service levels.
• Provides control tower visibility through a centralized dashboard and allows users to monitor shipments, carriers, and potential disruptions across the supply chain.
• Focuses on optimizing the final stage of delivery, considering factors like route planning, delivery windows, and customer preferences for enhanced service quality.
• Delivers advanced analytics capabilities that use historical and real-time data to identify trends, predict potential issues, and optimize future transportation strategies.
• Offers mobile applications for drivers and field personnel that help them access shipment details, update statuses, capture electronic proof of delivery, and communicate in real-time.
• Enables the scheduling of delivery or pickup appointments dynamically, considering carrier availability, warehouse capacity, and customer preferences.

03

MercuryGate TMS

MercuryGate is a robust TMS designed to streamline and optimize transportation processes for businesses across various industries. It helps you manage your supply chain by providing tools for planning, executing, and optimizing the movement of goods.

MercuryGate TMS Key Features

• Optimizes loads by consolidating shipments, minimizing empty space in trucks, and reducing overall transportation costs.
• Provides comprehensive tools to manage and analyze freight costs, including invoice auditing, accruals, and cost allocation across shipments.
• Utilizes real-time data and algorithms to dynamically optimize routes based on changing conditions like traffic, weather, or unforeseen events.
• Offers a collaborative platform for shippers, carriers, and other stakeholders to communicate, exchange documentation, and resolve issues in real-time.
• Facilitates the management of freight claims by automating the process, tracking claims status, and streamlining communication between parties involved.
• Provides advanced algorithms to compare rates from multiple carriers and select the most cost-effective options based on predefined criteria like transit time, cost, and service level.

Vector’s Yard Management System & TMS Platform Integration: A Value-Driven Synergy

The fusion of TMS and Vector’s YMS creates a seamless operational ecosystem. TMS manages transportation workflows to optimize routes, carrier management, and shipment tracking. On the other hand, Vector brings finesse to yard operations and efficiently manages trailer movements, dock assignments, and inventory within the yard.

Let’s discuss this in detail.

01

Unified Visibility & Control

Integration provides holistic visibility and control across transportation and yard operations. TMS’s real-time tracking capabilities align with Vector to provide comprehensive insights into shipment statuses, vehicle locations, and yard inventory. This unified visibility streamlines decision-making and enhances responsiveness to changing logistics dynamics.

02

Streamlined Operations & Reduced Downtime

When a TMS platform is integrated with Vector, logistics operations achieve better efficiency. The synchronization ensures efficient coordination between transportation schedules and yard activities. As a result, dock utilization improves, reducing dwell times, and minimizing idle resources, thereby enhancing overall operational productivity.

03

Optimized Resource Allocation

The integrated system enables smarter utilization of assets, like trailers and warehouse space, by aligning transportation schedules with yard capacities. This synergy minimizes bottlenecks and optimizes resource utilization throughout the supply chain.

04

Enhanced Data-Driven Insights

The combined data from TMS and Vector offers a comprehensive view of operations, enabling informed decision-making. You can use its robust reporting and analytics to identify trends, optimize processes, and drive continuous improvements.

05

Future-Ready Scalability

The integrated TMS and Vector’s YMS provide a scalable solution for evolving logistics needs. Its adaptability allows seamless integration with emerging technologies and future enhancements, ensuring that the system stays agile and capable of accommodating evolving business requirements.

Conclusion

Using a TMS platform comes with lots of benefits but its successful implementation needs good planning and knowing exactly what your organization needs. Spend time picking the right platform that fits your needs. Keep training and supporting your team so they can use the TMS effectively.

 Also, make technology a big part of your culture and daily operation and encourage everyone to see its value. Basically, a TMS is at its best when you have a comprehensive strategy, stay committed, and keep refining things as needed.

While a TMS platform handles the bigger picture of your transportation management, our YMS focuses on the details of organizing and managing your yard space efficiently. It syncs up with your preferred TMS to become an extension of its capabilities. With this integration, you will experience improved visibility and coordination across the entire logistics chain.

Get in touch with us today to experience this synergy and its benefits firsthand.

This post was written by Marjan Venema. Marjan is a Smart Blogger certified content marketer, working from the Netherlands with over 30 years of experience in software requirements, analysis, development, and support for the Business Planning and Analytics, Financial and Manufacturing industries. Her specialty is writing comprehensive engaging content that makes complicated and complex topics easy to understand and consume. She writes straightforward language in a conversational style and illustrates abstract topics with concrete examples.