A Transportation Management System (TMS) is a subset of

supply chain management In commerce, supply chain management (SCM) deals with a system of procurement (purchasing raw materials/components), operations management, logistics and marketing channels, through which raw materials can be developed into finished produc ...

concerning

transportation Transport (in British English) or transportation (in American English) is the intentional Motion, movement of humans, animals, and cargo, goods from one location to another. Mode of transport, Modes of transport include aviation, air, land tr ...

operations, which may be part of an

enterprise resource planning Enterprise resource planning (ERP) is the integrated management of main business processes, often in real time and mediated by software and technology. ERP is usually referred to as a category of business management software—typically a suit ...

(ERP) system. A TMS typically acts as an intermediary between an ERP or legacy order processing and

warehouse A warehouse is a building for storing goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial parks on the rural–urban fringe, out ...

/distribution module. In this setup, the TMS Planning Module evaluates both inbound (

procurement Procurement is the process of locating and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. The term may also refer to a contractual ...

) and outbound (

shipping Freight transport, also referred to as freight forwarding, is the physical process of transporting commodities and merchandise goods and cargo. The term shipping originally referred to transport by sea but in American English, it has been ...

) orders, providing the user with suggested routing solutions. The user reviews these suggestions and selects the most reasonable option, which is then passed to the transportation provider analysis module. This module determines the best mode of transportation and the most cost-effective solution. Once the optimal option is chosen, an electronic load tendering and track/trace system is used to execute the shipment through the selected carrier. The TMS also supports freight audit and payment processes. Integration with ERP systems (once orders are transformed into shipments) and sometimes with Warehouse Management System (WMS) programs are also commonly linked to ERP.

Licensing

These systems have been offered with different types of licensing arrangements. The four main offerings are: # On-premises licensing (traditionally purchased

license A license (American English) or licence (Commonwealth English) is an official permission or permit to do, use, or own something (as well as the document of that permission or permit). A license is granted by a party (licensor) to another part ...

) # Hosted licensing (remote,

SaaS Software as a service (SaaS ) is a cloud computing service model where the provider offers use of application software to a client and manages all needed physical and software resources. SaaS is usually accessed via a web application. Unlike oth ...

, Cloud) # On-premises hosted licensing (a blend of 1 and 2) # ''Hosted – TMS free of licensing'' (same as 2 but free with no license requirements) Additionally, some software providers were either acquired or merged with supply chain management consultancies and started offering shippers "blended" managed and software services as an outsourced process. ''Primary Tier 1'' TMS providers are still independent, carrier and 3PL neutral, and ERP neutral. While ERP providers are moving to improve their on-premises transportation management offerings by adding TMS modules to their existing, implemented base, the advent of Software-as-a-Service or "SaaS" delivery resulted in a surge of emerging TMS providers.

Functionalities

Transportation management systems manage four key processes of transportation management: # Planning and decision making – TMS will define the most efficient transport schemes, according to the given parameters, which have a lower or higher importance of various factors according to the user policy: transport cost, shorter

lead-time A lead time is the :wikt:latency, latency between the initiation and completion of a process. For example, the lead time between the placement of an order and delivery of new cars by a given manufacturer might be between 2 weeks and 6 months, dep ...

, fewer stops possible to ensure quality, flow's regrouping coefficient, etc. # Transportation Execution – TMS will allow for the execution of the transportation plan, such as carrier rate acceptance, carrier dispatching, and EDI. # Transport follow-up – TMS will allow the following any physical or administrative operation regarding transportation: traceability of transport events by event (shipping from A, arrival at B, customs clearance, etc.), editing of reception, customs clearance, invoicing and booking documents, sending of transport alerts such as delay, accident, non-forecast stops. # Measurement – TMS have or need to have a logistics

key performance indicator A performance indicator or key performance indicator (KPI) is a type of performance measurement. KPIs evaluate the success of an organization or of a particular activity (such as projects, programs, products and other initiatives) in which it e ...

(KPI) reporting function for transport. Various functions of a TMS include: * Planning and optimizing terrestrial transport rounds * Inbound and outbound transportation mode and transportation provider selection * Management of motor carrier, rail, air, and maritime transport * Real-time transportation tracking * Service quality control in the form of KPIs (see below) * Vehicle Load and Route optimization * Transport costs and scheme simulation * Shipment batching of orders * Freight Negotiation * Cost control, KPI (Key Performance Indicators) reporting and statistics * Freight Audit ** Typical KPIs include, but are not limited to: **# % of On-Time Pick-Up or Delivery Performance relative to requested **# Cost Per Metric – mile; km; weight; cube; pallet **# Productivity in monetary terms, e.g., cost per unit weight or shipping unit **# Productivity in operational terms, e.g., shipping units/order or weight/load However, all the above logistical functions need to be scrutinized as to how each parameter functions.

Market

Gartner Gartner, Inc. is an American research and advisory firm focusing on business and technology topics. Gartner provides its products and services through research reports, conferences, and consulting. Its clients include large corporations, gover ...

predicts the global transportation management system market to grow 60% from $1.3 billion in 2019 to $2.1 billion in 2024.

References

{{Reflist Freight transport Transport software