Transport costs are influenced by many different factors. These were described in detail in the articles of this series. Starting with the article on alignment with customer requirements, in which the importance of analysing the actual needs of the customer was emphasised. Then to the next part, which dealt with the dimensioning of the transport systems, which in turn were based on the previously created requirements in order to best meet the customer’s needs while keeping costs low. As soon as transport processes have been defined and implemented, they must also be controlled transparently in operational terms, so the third article provided an insight into a possible reporting system. Our fourth article, “the Achilles’ heel of transport logistics” showed that a closer look at the processes often reveals interface problems as cost drivers. Finally, essential information of supporting software is presented, so that processes can be optimized, planning can be automated and cost reduction initiatives can be optimally supported and accompanied with the right IT infrastructure. Therefore, this last article in the series is dedicated to the most important functions of a transport management software and gives an outlook on trends and future developments.

TMS, short for Transport Management Software, describes software for the administration, planning and control of the physical movement of goods, as well as for the commissioning and documentation of transport services.

Capabilities of TMS and factors critical to success

TMS serves to support the user in his decisions, to simplify processes and, the more advanced the programs are, even automate them. The essential capabilities that every TMS should have are often called ‘core capabilities’.

Additional functions that extend planning or analysis options, for example, are called “extended capabilities”.

Core capabilities include, for example:

  • Strategic freight procurement and purchasing
  • Planning (e.g. route planning, operative transport planning)
  • Implementation (e.g. commissioning and communication with carriers)
  • Visibility (e.g. track and trace, navigation)
  • Settlement of transportation shipments across multiple modes (e.g. full truckload (FTL), less than truckload (LTL))
  • Simple analyses (zB capacity utilization, XYZ-Analysis)

Extended capabilities include, for example:

  • Strategic planning
  • Forward-looking scenario analysis
  • What-If scenarios
  • Multicarrier parcel shipping
  • 3D load design
  • Last-mile optimization
  • Driver planning

In addition to functionality, there are a number of other aspects that are essential for selecting the right software. An important point for broad acceptance of the TMS software is good general usability. After all, if the users do not find their way around or if it takes several training sessions until the program is used in an almost optimal way, this generates additional costs.
Furthermore, it must be possible to connect to existing systems such as PPS or ERP software as easily and quickly as possible. Since production plans, quantities, dimensions or other master and movement data are retrieved from these, possible incompatibility must be ruled out even before implementation.
The larger the company is, the more important the scalability or expandability of the TMS software becomes. An already established system should be able to be extended without particular effort, wether it is due to the enlargement of a team, the connection of an additional region or the addition of further transport modes.

What the future holds

TMS systems and their functions are developing into an important competitive advantage in our digitalised world. Digitalized supply chains are necessary to master the fundamental challenges of transport logistics. Accordingly, systems are needed that can record and track goods movements in real time. In this way, customer requirements can be met on time and delivery chains can be controlled in the best possible way. If, for example, it is possible to establish cross-functional real-time communication between TMS and ERP and warehouse management of one’s own company as well as with the customer’s systems, material flows can be controlled and documented in a purposefully and structured manner.

Thanks to real-time communication, even transports already on their way can be diverted or held up, whereby so-called event management is used. This allows traffic jams or accidents to be avoided and potential risks to be averted. Additional external real-time data such as regional weather warnings or forecasts could trigger an update of the route planning.

An added value (in addition to fast, real transport optimisation) lies in the detailed documentation and recording of information, so that logistics processes can be specifically analysed and subsequently improved. Thus, good TMS systems not only plan and support today’s handling and planning, but also provide answers to tomorrow’s questions.

This concludes the series of transport cost optimization. It is important to us, that our readers get an overview so that the best solution for the existing requirements can be introduced. Remember, optimization is always a continuous improvement.