8 Keys to Fitting a Transportation Management System to Your Business
You wouldn’t buy a regular screwdriver to do a job that needed a Phillips head. You might be able to get the job done, but it would take more time and energy, and the result probably won’t be as good.
Transportation Management Systems (TMS) are like that—as is any other tool designed for a specific function. The right TMS can help you make better business decisions, improve efficiency, and meet customer needs. But to get the right one for the job, you need to choose among a variety of features.
The following are eight key TMS features available on the market. When you’re ready to evaluate a new package this list will help you identify needs and wants.
1. Carrier Contract Management – Most businesses have many multimodal carrier relationships. Each carrier relationship may involve many contracts. Each carrier may have a different method of charging for accessorials and fuel. All of these moving parts can make contract management and rate comparison difficult. Digitizing contracts ensures that everyone can see all contracts and costs across the board. Some TMSs track all carrier agreements and individual terms in real-time and allow you to select the lowest cost carrier by displaying the total costs, including accessorial charges.
A TMS can also alert you when it’s time to renew, as well as ensure the new contract includes the proper discounts.
And by telling you the exact total cost of delivery, a TMS can let you know how much to charge the end customer.
2. International Logistics Functionality – For businesses that work globally (and those that plan to), a TMS can manage international shipments by:
- Being able to select air or ocean carriers
- Providing multi-language interface screens
- Supporting the use of foreign currencies
- Managing shipping papers for international deliveries (commercial invoices, SEDs, shipment declarations, NAFTA paperwork, etc.)
- Calculating any cross-border fees, value-added taxes, and freight forwarding charges involved in an international shipment
There are many regulations involved with international shipping and just as many vitally important tasks associated with them. A globally-capable TMS “knows” the current trade agreements (and embargoes) and can assist with trade management by performing system checks and assigning export control classification numbers. It can also perform an embargoed countries check and restricted party screening to make sure no export control regulations are inadvertently violated.
3. Risk Management – A TMS can help you avoid the risks associated with international shipping by:
- Automating audited processes
- Providing reports
- Ensuring due diligence with in-country regulatory programs or cross-border customs requirements
A TMS can also help with shipping hazardous materials. The government can (and does) leverage big fines for improperly prepared hazmat shipments. Recently, the U.K. Civil Aviation Authority fined Burwood Aviation Supplies for shipping an oxygen generator without the proper paperwork and without warning labels on its box, and the U.S. Federal Aviation Administration just proposed a fine against Amazon for allegedly shipping paint that leaked through its box. You can minimize the risks associated with shipping hazardous materials by choosing a TMS that manages the necessary specific hazmat paperwork, including proper labeling and packaging,
Digitized data can also protect your brand and company assets by providing visibility.
4. Item Visibility – Many customers want to pinpoint the exact location of their orders at any given moment. A TMS can provide visibility down to the item level, providing shipment status information from time of carrier pick-up through delivery. It can offer:
- Integration via EDI with a carrier
- Auto pick up
- Automatic notifications
- Exceptions alerts
Visibility can also help your business to reduce cycle times and manage logistical costs.
5. Freight Settlement – A TMS can make accounting simpler. Not only can it audit and pay freight invoices, but it can create payment vouchers, allocate costs, and assign billing codes for accountability and budgetary purposes. Instead of a stack of paperwork or bunch of computer files, a TMS can provide one invoice, one bill, and one payment.
6. Parcel Shipping Support – Many businesspeople have jumped on the “inventory is evil” bandwagon promoted by Apple CEO Tim Cook, and want smaller shipments more frequently. A TMS can make this change easier by handling parcel rating and routing along with traditional truckload and less-than-truckload.
7. Benchmark Data Capability – A TMS can collect carrier rates and service information and develop benchmark data for specific shipping lanes, giving information for negotiating better rates.
8. Business Intelligence – A TMS can capture transactions and data from multiple sources, and use analytics and big data to:
- Reduce shipment delivery times
- Minimize logistical costs
- Develop performance metrics and key performance indicators (KPIs)
- Create computer models that predict supply chain issues
By analyzing your shipping practices, a TMS can provide insight that can help you make better decisions based on hard data.
Conclusion
A TMS can help you make smarter decisions, save you time and money, and reduce your potential for risk, but only if you match this tool to your job.
Srini Vasan is the CEO of eShipGlobal, an on demand TMS provider.
