With shipping costs on the rise, many companies are looking for every way possible to make up the costs. Hormel’s Chief Executive James Snee explains, “We’re thinking about minimizing miles, maximizing weights, how many days a week do you need delivery.” Luckily for Snee, that’s exactly what TMS software was built to do. A transportation management system (TMS) helps manage and streamline your logistics, allowing you to save time and money.
So what should a company look for in TMS software functionality? That’s dependent on what your company needs and the scope of the business you do. But to help you get started, we’ve created a list of TMS software requirements you can use to decide what you’ll need from transportation software.
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Top TMS System Requirements
Automatic Order Processing
Modern systems utilize electronic data interchange (EDI) to standardize communication. EDI replaces manual means of communication such as mail, to speed up exchange of information. EDI is useful in order processing, eliminating the need for manual order entry. This reduces the time involved with data entry, but it also reduces error. When using EDI, your system can automatically pull order data from other resources to create orders automatically.
However, most systems will allow you to also create orders using data not sourced from EDI. So, for instance, if your suppliers still run on very manual processes, you can still work with them without EDI. Moreover, you can choose a system that will generate confirmation notifications that can be sent to the appropriate parties.
Automated Data Entry via EDI
This feature also takes advantage of EDI to streamline communication. If you choose a system that allows users to schedule shipment pickups in advance, your system will typically use EDI to automatically communicate with carriers. Furthermore, scheduled pickup allows users to plan deliveries by what’s most profitable and efficient.
By choosing a system that enables users to access information on pickups and drop-offs, you maintain a higher level of visibility of your deliveries. This allows you to deal with arising issues early on to foster customer satisfaction.
Monitor Pickup and Drop-Off Information (Locations, Dates, Times, etc)
Send Pickup and Drop-Off Information Automatically
Plan Trips by Efficiency
Schedule Shipments in Advance
Auto Carrier Selection
Choosing a carrier to handle your shipping can be difficult. You have to consider a multitude of factors like cost, geographic accessibility and whether or not you’ll need multiple carriers. Your needs may also be slightly different from shipment to shipment. But you probably don’t have the time to go through and choose a carrier by hand for each package. That’s where auto carrier selection comes in.
Auto carrier selection manages all your carrier options in one place. Not only does it conveniently centralize your selection process, but it also chooses the best carrier automatically. Systems do this by taking into account factors such as cost, preference, insurance coverage, equipment needed and more. These are all considered using an algorithm which determines the lowest cost option that can provide all other necessary aspects.
Automated Carrier Selection
Multimodal shipment involves a level of detail not seen in many other industries. Between the actual logistics of managing several modes of transportation and the legalities of subcarriers, a TMS solution to handle it all can be useful.
If you plan on implementing multimodal shipments, make sure your transportation management software can manage all the modes you utilize. This includes road, rail, sea and air. Your system should handle the logistics of cross-border freight as well as any domestic considerations. You also may prefer a system that can handle cross-docking, which minimizes storage time and warehousing costs.
Domestic and Foreign Support
This feature facilitates shipment planning to ensure the best delivery pattern. First, shipment consolidation creates groups of items to be transported together by palette, container and/or weight, maximizing load efficiency. Many systems do this by taking into account your constraints, business rules, and carrier capacity.
Some TMS solutions incorporate distribution strategies like multi-stop, multi-pickup, pooling and direct. These are all used in conjunction to reduce transportation costs and improve resource management. You can also consolidate shipments of all sizes from small parcels to high volume shipments.
Consolidation by Weight, Container and Palette
Omnichannel revenue is one of the reasons why many companies today still utilize brick and mortar storefronts in a world where online retailers like Amazon reign supreme. But wherever there’s more opportunity for profit, there’s more opportunity for failure. That’s why it’s important TMS providers supply a centralized method of dealing with disputes. Dispute management covers all claims related to cargo, such as damages and goods lost in transit.
One of the ways to manage your disputes is to integrate your financial data. This allows you to instantly audit agreed-upon rates and see the associated billing records. If you are liable for damage, you’ll want full visibility of potential revenue loss. Additionally, some systems offer dispute reporting and analytics. Reporting gives you quick means of sharing the important data and analysis can help you understand trends.
Integrated Financial Data
Reporting and Analysis
Payment and Settlement Process
Transportation is a complex process but understanding how well your company is performing doesn’t have to be. Most performance tracking systems manage metrics like on-time appointments, multimodal transit times and loading and unloading times. With the help of performance tracking, you’re able to get quick insight on where you perform the best and where your team could use some work.
TMS software allows users to monitor all modes of transportation, providing better visibility into the movement of goods. You can also set deadlines, see historical performance and receive notifications for events or delays. This helps you get ahead of issues, enabling you to resolve them before the consequences become apparent.
Loading and Unloading Time
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Accurate billing is incredibly important for maintaining good relationships with your carriers. And while there’s arguably no better place to spend money than in collecting due payment, having a TMS functionality to streamline the process to save resources is always helpful.
Your TMS software should support billing and the various models commonly used in transportation management, like door-to-door or cost-plus. You may also want a system that can calculate the transportation costs for both the party ordering the goods and the supplier. Certain solutions can automatically calculate carrier rates using rate databases, as well.
Ordering Party and Supplier Billing
Automatic Calculation of Carrier Rates
This feature ties largely into performance tracking, with many systems using the flow of goods as a metric of performance. If your product has stopped moving somewhere, it’s important you find out why and how you can get it moving again as quickly as possible.
Cargo tracking provides supply chain visibility, allowing users to track cargo by SKU numbers and various other identifiers. If you’re looking for end-to-end visibility, consider a system that can track shipments en-route, at pool locations and that can provide delivery confirmation. There are solutions that can help you track returns as well.
SKU Number Tracking
Order Number Tracking
Customer Reference Numbers
Tracking by Date
With the supply chain becoming more and more globalized, it’s important to maintain local protocol wherever possible. Users can choose the units of measurement, currencies and languages present on labels. Localization can also come from the method of deployment you choose. Hosted solutions can be easily updated with new TMS features to make localization a breeze. However, on-premise solutions allow a company full control over how the software works.
Units of Measurement
In order to properly manage your fleet, you need a system that can dispatch your drivers, track their location and provide a means of quick communication. Most solutions enable dispatchers and drivers to communicate right in the app. Additionally, many TMS solutions can optimize the dispatch process by choosing the best driver for the route and mode of transportation based on skill, availability and seniority. Dispatchers can also track drivers to ensure they’re on the correct shipment route.
Driver Assignment Optimization
Reports are one of the easiest ways to understand and convey vital information. Transportation software provides classic reporting tools like charts and dashboards but also includes specialized maps to visualize shipping patterns.
Visual Data and Maps
Business intelligence (BI) in the context of transportation isn’t too different from standard analytics tools. However, with so many working parts involved in logistics your software needs to be able to collect and consolidate data from multiple sources. A TMS system should also track industry-specific KPIs and predict trends using “What-If” analysis.
Additionally, transportation analysis provides the visibility to see where your company is underperforming and areas of especially high cost. You can then use this new information to plan future shipments, with the software efficiently mapping out resource usage based on historical data.
Mobility is often considered a “nice-to-have” in other realms of software, but when your entire industry is on the go, it’s a necessity. Some vendors offer designated mobile apps, with others relying on their mobile website. While some systems can be accessed from any device with internet access, there are others that are OS specific. Most commonly, TMS applications have been optimized to run on iOS or Android, but there are systems available that can run on Blackberry and Windows Mobile as well.
It’s also beneficial to consider the user-interface of the application on mobile devices. While design isn’t a part of TMS functional requirements (since it doesn’t affect how the software works), it does affect the adoption rates within your company. If you expect some resistance during the implementation, user-friendliness is definitely something to include on your TMS checklist.
Operating System Support
Mobile TMS Application
Both methods of deployment have their benefits and their drawbacks, so it’s helpful to include which you prefer in your TMS requirements before comparing systems. Cloud-based systems are typically cheaper to set up and easier to maintain. However, on-premise solutions exist if access to the internet is an issue or if you need maximum control over your data.
Get our TMS Software Requirements Template.
Now that you’re familiar with what transportation management solutions can provide, it’s time to make your own list of requirements you’ll be using during your software selection. We recommend using our free requirements template. You can customize it to include only the features you need, and you can set reminders to get feedback from stakeholders. Once you’re done with that, you can start comparing systems to find a solution best suited to your needs.
What transportation management system business requirements will you utilize? Did we miss any requirements on our TMS software checklist? We’d love to know all your thoughts on the topic, so leave a comment down below!