How Does A Transportation Management System (TMS) Work?

How Does A Transportation Management System (TMS) Work?

Troy Smith

A transportation management system (TMS) is a technology-based logistics platform that helps companies plan, execute, and optimize the physical movement of products, both incoming and departing, as well as ensure that the shipment is compliant and that all relevant paperwork is present. Frequently, this technology is integrated into a larger supply chain management (SCM) system.

A transport management system (TMS), also known as transportation management software or transportation management solution, provides insight into daily transportation operations, trade compliance information, and paperwork, and guarantees that freight and commodities are delivered on time. Transportation management systems may also assist businesses in managing and optimizing their transportation operations, whether they are on land, air, or sea.

Management of the supply chain and transportation

A typical SCM system includes procurement, product lifecycle management, supply chain planning, order management, manufacturing, inventory, and warehouse management, as well as transportation management.

What is the significance of a transportation management system?

In supply chains, transportation management systems are critical, affecting every step of the process from planning to procurement to logistics and lifecycle management. A well-designed system delivers wide and deep visibility, resulting in more efficient transportation planning and execution as well as higher customer satisfaction. As a consequence, revenues increase, enabling businesses to flourish. It's vital to have a system in place that enables you to successfully navigate challenging trade regulations and compliance procedures in the ever-changing global trade environment in which we live and conduct business.

Who uses a TMS and what is a TMS?

Businesses that regularly carry, distribute, and receive goods, such as:

• Manufacturers\sDistributors

• Businesses that deal with the internet are referred to as "internet businesses."

• Companies that offer goods

• Companies that offer logistical services include third-party and fourth-party logistics (3PL and 4PL) organizations, as well as logistics service providers (LSPs)

Businesses in practically every industry, from construction to health sciences, employ transportation management systems. The majority of clients are companies that spend $100 million or more on freight, but the advent of cloud-based TMS systems has made it more affordable for smaller organizations to enjoy the advantages of incorporating a transportation management system into their supply chain.

TMS's special offers

Businesses may acquire a stand-alone transportation management system that can be integrated with their current ERP software and supply chain management (SCM) systems, whether they are hosted on-premises or in the cloud. You may use a TMS with trade documentation capabilities to enhance your TMS, or you can utilize a TMS with global trade management (GTM) skills. Other TMSs may be found as modules inside ERP and SCM systems, although they are often less feature-rich.

Plan, execute, and optimize for timely product delivery

Any organization may use a transportation management system (TMS) to plan, execute, and optimize goods movement.


A transportation management system (TMS) may help a corporation choose the best shipping method and carrier based on cost, efficiency, and distance, as well as optimize multi-leg carrier routes. When integrated with global trade management tools, a strong TMS can provide visibility into every step of the supply chain, as well as information on trade and tariffs, as well as any potential delays caused by customs and other trade limitations.


Load matching and carrier communication, documenting and monitoring shipments, and assisting with freight invoicing and payment are all features provided by transportation management systems. Certain current TMS systems provide track and trace services, which enable real-time data exchange between carriers, distributors, warehouses, and customers. Such advanced systems may also be capable of handling tough international logistics, such as delivering required import and export documentation and verifying that shipments comply with trade rules.


TMSs often employ reports, dashboards, analytics, and transportation intelligence to analyze and track performance.

Advantages of TMS

A TMS, as well as modern transportation management in general, may benefit businesses. Here are a few of the most significant advantages:

• Costs for both the business and the end-customer are decreased.

• Supply chain process simplification across locations, modalities, and carriers

• Billing and paperwork are improved by automating corporate operations.

• Visibility and security are being increased, especially in transportation.

• Delays and delivery times are reduced when manual operations are reduced.

• The capacity to track freight both locally and globally on a single platform

• More strict import and export compliance, resulting in fewer fines and delays in shipments.

• Better reporting results in quicker responses and process improvements, which leads to new business insights.

• Customer service and satisfaction increase as a consequence of real-time updates and less shipping delays.

• The ability to expand the company by meeting and exceeding customer expectations for swift, on-time delivery.

A cloud-based TMS offers value

A cloud-based transportation management system offers many of the same commercial advantages as other cloud systems, such as enhanced economies of scale, lower total cost of ownership, no upgrade fees, and a quicker return on investment (ROI).

IT advantages from a cloud-based TMS include faster deployments, less hours needed for training and installation, automatic updates with the latest features, and improved security.

TMS's potential Customers' expectations are rising, not just for on-time deliveries, but also for two-day and even same-day deliveries, with real-time information provided throughout the shipping process. To keep up with ever-changing global trade constraints, supply chains are being compelled to adapt, which usually entails investing in a transportation management system.

Customers will get quicker responses and corporations will obtain more detailed data if transportation management systems become more robust and feature-rich. Machine learning helps TMSs to grow more intelligent, allowing them to deliver better recommendations and make more accurate predictions.

Companies may integrate current transportation and global trade management systems with new technologies to improve visibility and customer experience. Some of the most recent innovative technologies include:

IoT fleets are being monitored

Thanks to Internet of Things (IoT) devices and sensors, real-time fleet monitoring, including in-transit visibility of driving conditions, routes, and assets, has become commonplace. Fuel and maintenance costs, as well as delays and driver safety, may all be decreased.

Technology that helps people with disabilities

Chatbots are conversational computer assistants who answer to shipping information in a conversational way, resulting in higher customer satisfaction.

When considering artificial intelligence and machine learning, two phrases that spring to mind are adaptive intelligence and machine learning.

Using machine learning to evaluate prior data and trends, transportation management systems may better estimate transit times, plan capacity, detect at-risk shipments (such as commodities about to expire and time- or temperature-sensitive items), and much more. Thanks to better artificial intelligence, your TMS will be able to provide more accurate and intelligent suggestions, such as alternative delivery routes during high traffic hours.


Blockchains are already being used by shippers, customers, and carriers to create complex interfaces. Intelligent track and trace solutions provide transparency and traceability while ensuring accuracy and security across your supply chain.

Keeping the cold chain in check

Another blockchain alternative in transportation management systems is cold chain management, which is useful when different temperatures must be maintained at various checkpoints along the supply chain. For example, perishable or temperature-sensitive goods and items may need to be kept cool in the truck but much warmer on the shop shelves. Cold chain management allows for temperature monitoring throughout the supply chain, with real-time data transmitted to enterprises and authorities in the country of origin.