A Transportation Management System (TMS) is a subset of

supply chain management In commerce, supply chain management (SCM) is the management of the flow of goods and services including all processes that transform raw materials into final products between businesses and locations. This can include the movement and sto ...

concerning

transportation Transport (in British English), or transportation (in American English), is the intentional movement of humans, animals, and goods from one location to another. Modes of transport include air, land ( rail and road), water, cable, pipel ...

operations, of 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 sui ...

(ERP) system. A TMS usually "sits" between an ERP or legacy

order processing Order processing is the process or work-flow associated with the picking, packing and delivery of the packed items to a shipping carrier and is a key element of order fulfillment. Order processing operations or facilities are commonly called "di ...

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 outskirts of cities, ...

/distribution module. A typical scenario would include both inbound (

procurement Procurement is the method of discovering 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. When a government agency buys goods or ser ...

) and outbound (

shipping Freight transport, also referred 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 ex ...

) orders to be evaluated by the TMS Planning Module offering the user various suggested routing solutions. These solutions are evaluated by the user for reasonableness and are passed along to the transportation provider analysis module to select the best mode and the least cost provider. Once the best provider is selected, the solution typically generates electronic load tendering and track/trace to execute the optimized shipment by the selected carrier, and later to support freight audit and payment (settlement process). Links back to ERP systems (after orders turned into optimal shipments), and sometimes secondarily to Warehouse Management System (WMS) programs also linked to ERP are also common.

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 (or licence) 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 party (licensee) as an element of an agreeme ...

) # Hosted licensing (remote, SaaS, 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 Software as a service (SaaS ) is a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. SaaS is also known as "on-demand software" and Web-based/Web-hosted software. SaaS is cons ...

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 according to the user policy: transport cost, shorter

lead-time A lead time is the 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, depending on vari ...

, fewer stops possible to ensure quality, flows 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, custom clearance, invoicing and booking documents, sending of transport alerts (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 en ...

(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 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 en ...

) 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 a technological research and consulting firm based in Stamford, Connecticut that conducts research on technology and shares this research both through private consulting as well as executive programs and conferences. Its clients ...

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