A transportation management system is a subset of supply chain management
concerning transportation operations and may be part of an enterprise resource
planning system. A TMS usually "sits" between an ERP or
legacy order processing and warehouse/distribution module. A typical
scenario would include both inbound and outbound orders to be evaluated by the
TMS Planning Module offering the user various suggested routing solutions.
These solutions are evaluated by the user for reasonableness and are passed
along to the transportation provider analysis module to select the best mode
and least cost provider. Once the best provider is selected, the solution
typically generates electronic load tendering and track/trace to execute the
optimized shipment with the selected carrier, and later to support freight
audit and payment. Links back to ERP systems, and sometimes secondarily to
WMS programs also linked to ERP are also common.
Licensing These systems have been offered with
different types of licensing arrangements. The four main offerings
are: On-premises licensing
Hosted licensing On-premises hosted licensing
Hosted - TMS free of licensing Additionally, some software providers
were either acquired or merged with supply chain management consultancies
and started offering shippers "blended" managed and software services as an
outsourced process. Primary Tier 1 TMS providers are still independent, carrier
and 3PL neutral, and ERP neutral. While ERP providers are moving to improve
their on-premises transportation management offerings by adding TMS
modules to their existing, implemented base, the advent of
Software-as-a-Service or "SaaS" delivery resulted in a surge of emerging TMS
providers. Functionalities
Transportation management systems manage four key processes of transportation
management: Planning and decision making – TMS will
define the most efficient transport schemes according to given parameters,
which have a lower or higher importance according to the user policy: transport
cost, shorter lead-time, fewer stops possible to ensure quality, flows
regrouping coefficient, etc. Transportation Execution – TMS will
allow for the execution of the transportation plan such as carrier rate
acceptance, carrier dispatching, EDI etc..
Transport follow-up – TMS will allow following any physical or administrative
operation regarding transportation: traceability of transport event by
event, editing of reception, custom clearance, invoicing and booking
documents, sending of transport alerts Measurement – TMS have or need to have a
logistics key performance indicator reporting function for transport.
Various functions of a TMS include but not limited to:
Planning and optimizing of terrestrial transport rounds
Inbound and outbound transportation mode and transportation provider selection
Management of motor carrier, rail, air and maritime transport
Real time transportation tracking Service quality control in the form of
KPI's Vehicle Load and Route optimization
Transport costs and scheme simulation Shipment batching of orders
Cost control, KPI reporting and statistics
Freight AuditTypical KPIs include but not limited to:
% of On Time Pick Up or Delivery Performance relative to requested
Cost Per Metric - mile; km; Weight; Cube; Pallet
Productivity in monetary terms, e.g. cost per unit weight or shipping unit
Productivity in operational terms, e.g. shipping units/order or weight/load
However, all the above logistical functions need to be scrutinized as to
how each parameter functions. Patents
Several specific patents have been filed to protect the intellectual property
rights of US TMS development corporations. However, judgments against
several non-US software companies in 2009, 2010 and 2012 had not been
unenforceable as of 2014. The largest number of TMS patents were
filed by IBM, SAP, Manhattan Associates, TheFreeTMS.com, Oracle, JDA, and
Sterling. Each holds over 15 patents protecting various aspects of their
technology. References