The logistics process is one of the most complicated aspects of the supply chain, as many challenges may arise. Transport Management Software (TMS) assists in handling those issues and improving the entire process. Though TMS is implemented to improve operations, some practices can be implemented to get more out of the software.
Transport Management Software is a system used to plan, organize and optimize the delivery of goods. TMS helps businesses move freight in all modes in an efficient, reliable and cost-effective manner, from one destination to the next. There are three main tasks that TMS performs which include comparing prices, finding available carriers to deliver customer orders, booking the delivery and then tracking it along the way.
TMS Benefits
The primary users of TMS are carriers and shippers, but it can also be used by eCommerce businesses, manufacturers, distributors, wholesalers and retailers. There are many benefits that companies that implement the software can expect to experience, which include:
1. Reduced Costs
The number one reason for implementing TMS for many businesses is to lower their costs. Through load and route optimization, enterprises begin to use fewer vehicles and human resources for shipments, reducing costs. Due to route planning, businesses can also reduce the amount they spend on fuel as optimal routes reduce lading. The total cost savings that companies can expect from TMS range from 10-30%.
2. Real-time Visibility
TMS offers businesses the ability to track goods during the delivery process until the goods reach the customer. The visibility gained can help companies detect any issues within the routes that drivers are using and avoid them, which can prevent delays from occurring.
3. Improves Customer Satisfaction
TMS allows you to improve the customer service that you offer. This is because TMS provides route optimization, which ensures that customers receive their packages on time. TMS can also create a communication line that customers can use to give feedback; allowing improvements to be made, further impacting customer satisfaction.
4. Increase Productivity and Efficiency of Operations
By making use of TMS, companies can improve the efficiencies and productivity of their logistics operations. One of the ways that this happens is through the software’s ability to store and analyze data – data that can be used to create KPIs regarding the transportation area. Modern TMS also includes machine learning which is continuously learning and improving operations.
TMS Practices
To constantly improve customer service operations while still saving costs, there are some TMS practices to implement, which include:
1. Straight Pooling
Pooling refers to when a group of shipments are delivered to multiple delivery points and are headed for the same geographical area all combined in one truck. Pooling is similar to Less-Than-Truckload (LTL), but unlike LTL, which share different shipments with other businesses, pooling combines your product’s shipments until they reach the distribution centre where they are to be offloaded and sent to their final destination which is usually the end customer. Using this method has many advantages for your business as it reduces delivery times given the fact that there will be fewer stops. Through pooling, you can easily track shipments and reduce costs that might have been spent on fuel. You also use fewer trucks when you use pool distribution which is great for saving costs, but also enables you to go green – an initiative that every business should be behind.
2. Shipment Aggregation
Aggregation is when you create a single shipment by combining multiple shipments orders to the same geographical area. Aggregation is intended for shipments with the same ready-times and delivery dates. These shipments would have been released separately, but they are combined to reduce loading and unloading time, bill of lading expenses, and other trucks expenses.
3. Freight Consolidation
Freight consolidation refers to the process where multiple small shipments headed to the same destination are consolidated on a single track, where they are shipped to their final destination. Using the truck to its full capacity can be beneficial as it would be able to reduce costs. Freight consolidation requires the shipment to be part of the stop-off route of the truck’s final destination. You need to consider the out-of-route distance you will incur, how much time will be spent during stop-off and pick-up, as well as how much stop-off you will have. If the stop-off charges are not too high and the stop-off and pick-up processes do not disturb your route plan, it will be a great way to save costs. Through freight consolidation, you will use fewer trucks, and since your shipments are handled less, it will guarantee their safety. It will also guarantee quicker deliveries which are important for customer satisfaction.
4. Cross-Docking
Cross-docking can greatly reduce the need for warehousing, and this is because products are delivered from the manufacturing area directly to the customer. This ensures that you reduce the materials you handle; helping you avoid experiencing a drop in value due to changes in demand or ageing issues. Due to less material handling, you can evade damaging products on the warehouse shelf, as well as theft.
Cross-docking assists in simplifying warehouse operations and improving the distribution of products. It allows your suppliers to bring your products to one location, which is usually the end customer, ensuring that customer demands are being met. Through cross-docking, your business can decrease labour costs as when you decrease your reliance on storage and warehousing, you will not require people to handle materials.
Find out How TMS Refines Last-Mile Delivery.