How to Create Transportation Management Software: Types, Examples, and Features
Choosing a transportation management system (TMS) can be challenging. The market is full of solutions, and picking the one that will be a perfect match for your business is tough. In this article, we talk about different types of TMSs, their benefits, and how to choose an off-the-shelf solution.
What is transportation management software?
Commercial transportation isn’t just about the flow of goods from origin to destination. It encompasses the planning, orchestration, execution, and tracking of the physical movement of goods in an extremely complex process involving worldwide networks of shippers and freight forwarders moving raw materials, parts, and finished goods along global supply chains. Meeting ever-increasing consumer demands for greater transportation efficiency requires accuracy, speed, and flexibility to manage all the moving parts.
What to choose: a ready-made logistics management app or custom logistics management software development?
To move goods efficiently and ensure the coordinated movement of goods from origin to end user, companies require comprehensive transportation management systems that enable not just a physical supply chain but an information supply chain — that is, the movement of data within an organization and among its partners.
A transportation management system helps companies coordinate the shipping process. A TMS automates the following logistics and shipping activities:
- Route optimization
- Network design
- Load building
- Order management
- Freight auditing
Logistics management software helps companies improve shipping efficiency, reduce transport costs, achieve real-time visibility of logistics processes, and enhance customer service.
Types of transportation logistics software
Logistics management system can be categorized into the following types depending on their feature set:
- A TMS combines a wide set of features into one solution and can be customized to meet a company’s needs. This type is best suited for enterprise-level companies because it offers an end-to-end solution for trade management.
- Point solutions are small systems with a small set of features for specific transportation processes based on business needs. For example, a point solution can help an e-commerce company manage orders and control inventory.
- An extended TMS has advanced features that are not included in traditional shipping and logistics management software, such as for contract management and accounting
TMSs can also be divided into cloud-based and on-premises solutions.
A cloud-based TMS is hosted on a vendor’s servers, and users can get access to it via a browser on a subscription basis.
A cloud solution is considered more scalable and easier to use. Cloud services are generally updated quite often with the latest innovations because the vendor is responsible for updates and maintenance. One of the greatest benefits of a cloud-based TMS is that it can be accessed through a browser anytime, anywhere, and from any device. On the other hand, it requires monthly payments and an internet connection.
An on-premises TMS requires you to host and maintain your own server. This type of TMS doesn’t require any monthly payments and offers strong control and customization. On the downside, it can’t be accessed from mobile devices, can be hard to use, and requires updates and maintenance.
Even though a one-time payment and a decent degree of control sound appealing, businesses usually gravitate towards cloud-based TMSs due to their flexibility, pay-per-use model, and innovative solutions. You should choose between an on-premises and cloud-based TMS based on your own business needs and priorities.
Key features of TMSs
Transportation management software often includes a large set of features. Here are the most common:
- Carrier management. Help your employees choose service providers based on criteria like geographical coverage, type of service, and price.
- Route planning, scheduling, and optimization. Choose the most efficient route based on information on traffic, road speeds, maps, fuel costs, types of transportation, etc.
- Shipment planning. Minimize spending by scheduling shipments and arranging them into an efficient set based on different factors like inventory availability, type of transportation, and time frame.
- Track and trace. Provide users with an amazing platform for real-time exchange of shipment data between distributors, carriers, and customers. A TMS can offer GPS tracking or IoT-based tracking options to help dispatchers and customers supervise the cargo delivery process 24/7 on their mobile phones and web applications.
- Analytics and business intelligence. Let users use warehouse data efficiently, improve dashboard functionality, and make reports in modern formats.
- Fleet management. Improves such processes as managing, monitoring, optimizing, and maintaining vehicles used for transportation.
- Calculations. Automate calculations of optimal cargo load, inventory, fuel consumption, and number of stops.
- Billing. Automate processes of creating and sending invoices, adding attachments and notes, and customizing invoices for users.
Benefits of logistics software
- Save time. Instead of doing manual work or sending disjointed emails, shippers can instantly access the information they need through a single digital platform. A logistics delivery management software lets shippers compare rates side by side and make strategic choices regarding their shipments.
- Improve customer service. Logistics management solutions help the supply chain run smoothly and makes tracking information as transparent as possible. Shippers can inform their customers of late or missed deliveries through a TMS to keep a positive relationship between shippers and customers.
- Capture data. When you use a TMS, the platform will capture all of your freight, allowing you to generate historical reports so you can get actionable insights to optimize over time.
- Reduce costs. A TMS reduces costs by giving you more carrier options, thus reducing the time to process freight and get compliance from your individual locations to choose the carriers you’ve specified.
- Upgrades and supply chain system integrations. The value of a TMS can be increased when you integrate things like an ERP or get the benefits of upgrades that allow for new capabilities like e-commerce, reverse logistics, and last-mile delivery.
- Business intelligence. Transportation management software can give you profound insights into all business metrics. All data is stored in one place and is available for custom reporting and analysis. You can improve your company processes by analyzing your previous experience to reach your highest level of performance.
Build TMS software vs buy an existing solution
If you’ve decided to implement transportation management software in your business, you face the option of buying a ready-made solution or building one yourself. The market is full of great solutions that you can buy a subscription for, set up, instruct your team on, and start using. If it’s so easy, why do so many companies choose a longer and more complex way?
No matter the type of software, business, or industry, the issue of buying or building can be solved by following this simple rule:
If a certain issue you’re trying to solve with TMS software is closely related to your core business offering, then the best thing you can do is build a custom software solution.
The logistics management software development help you have full control over software that differentiates your business and helps it function as well as make a profit. All other standard business needs can be solved with ready-made solutions.
For example, if your company is a logistics service provider, then managing transportation services is the base of your value proposition. If you have enough resources, custom logistics software development would be the perfect option for you.
If you build your own solution for your company, it will mean complete independence for your business. Your company’s data will be 100% secure because it will be stored in your own data centers, and your software will perfectly meet your needs.
How to choose a TMS for your business
Choosing a transportation management system for your company is a huge decision because there are a variety of providers and features. A TMS helps companies move freight efficiently, reliably, and at lower rates. Implementing a TMS allows you to monitor and evaluate process analytics and optimization. A TMS can route drivers, schedule deliveries, and report business KPIs.
At present, only 35% of shippers are using transportation management systems. Choosing the right system positions you to be a market leader and gain a competitive advantage. That’s why today we’ll share the top five things to think about before creating your TMS.
#1 What modes does the transportation & logistics software support?
Transportation modes fall into categories such as parcel, less-than-truckload (LTL), white glove, truckload, air, and ocean. List those you use most and make sure you note what percentage of your total transportation spending is attributed to each mode. Most likely, you’ll have different needs for surface modes and need a system that focuses on the modes you need.
#2 Does the TMS offer integration?
Say you’re using an augmented reality enterprise resource planning system, so you need a system that integrates with it. But what else are you using? Think about your warehouse management system, your e-commerce platforms such as Magento, Shopify, or WooCommerce, and any other systems you use. The ideal TMS will be compatible with all these other platforms.
#3 What carriers or service providers must be supported?
Some companies stick with one carrier; others use specialty carriers according to drivers’ needs. Which carriers do you currently use? Are you interested in working with others? Find a TMS that supports the ability to load multiple carriers for multiple modes.
#4 Does the TMS support multi-carrier and multi-mode ratings?
A multi-carrier rating engine lets users rate all available carriers and helps you make the best shipping decisions for every order. A good multi-carrier rating engine will take all details into account and choose the least expensive service that will meet your shipping deadlines on an order-by-order basis. Just as you need access to multi-carrier ratings, you may also need multi-mode ratings for incoming freight.
#5 Does the TMS support multiple locations?
Do you have dozens if not hundreds of warehouses or shops that need access to the TMS but want to make sure you have enterprise visibility as well as the ability to set business and compliance rules? A TMS should allow not only all your locations to process your outbound shipments but provide a vendor module so your vendors have a portal to log in to the TMS. This allows you to have full and complete enterprise visibility and control over all inbound and outbound shipments.
Best examples of TMS to learn from
Cloud-based TL, LTL and parcel delivery service provider for omnichannel shippers, e-commerce companies, 3PLs and freight brokers. The solution manages orders, schedules, agent ratings, order fulfillment and billing from a single screen, making it easy to manage complex shipments. The software is used in North America and abroad with relatively low total cost of ownership.
Primarily focused on domestic trucks. Rail, international ocean and air are currently not available, although their functionality continues to expand. Total Cost of Ownership (TCO) is relatively low.
Largest independent supplier of SCM packages. A reliable platform for large complex shippers and third-party logistics companies. Meets the demands of a global supply chain. The Total Cost of Ownership (TCO) is high when compared to other TMS platforms.
Choosing a transportation management system is hard. We hope this article has shed light into the world of TMSs. These are the key takeaways for choosing transportation management software:
- When choosing between a cloud-based and on-premises TMS, remember to base the choice on your own business needs and priorities. An on-premises option is appealing, with its one-time payment and a high level of control. But businesses usually gravitate towards a cloud-based TMS due to its flexibility, pay-per-use model, and innovative solutions.
- When choosing between a ready-made solution and a custom build, remember that if a certain issue you’re trying to solve with your TMS software is closely related to your core business offering, then the best thing you can do is build a custom software solution.
- Answer these questions before settling on a solution: What modes does the TMS support? Does the TMS offer integrations? What carriers or service providers are supported? Does the TMS support multi-carrier and multi-mode ratings? Does the TMS support multiple locations?
If you want to build custom transportation management software for your business or if you have any questions regarding this topic, contact Mobindustry for a free consultation.
Frequently Asked Questions
- A TMS
- Point solutions
- An extended TMS