Logistics and transportation companies need a system that can manage routes, loads, shipping orders and compliance so they can operate as efficiently as possible. Transportation management systems can help manage and support day-to-day operations, but supply chain leaders should be aware of potential disadvantages as well.
A TMS is software that stores data, including truck schedules, departure times, delivery dates and more. TMSes can help companies streamline their processes, reduce paper-based documents and gain more visibility into their loads and trucks, among other advantages.
Learn more about the advantages and disadvantages of using a TMS.
The advantages of using a TMS
A transportation management system can help logistics companies in various ways. Here are a few.
1. Identification of cost-saving opportunities
A TMS' intelligent routing capabilities can help users choose the most cost-effective routes and carriers.
This ability can help reduce fuel expenses and speed up deliveries.
2. Real-time shipment tracking
Some TMSes provide GPS integration, and combining this tracking with load details can provide real-time visibility into shipment location and estimated time of arrival.
These capabilities can help improve customer service, as customer service representatives are able to provide more accurate shipment data.
3. Improved compliance and documentation
Companies must meet Department of Transportation and potentially customs regulations. A TMS can help with this.
A TMS provides easy access to the appropriate permits and loads documentation to help ensure that a company's shipments meet legal requirements.
4. Reduction of paper documentation
A TMS helps companies reduce paper use because the system enables users to collect and transmit information like load details, bills of lading and other required forms.
The disadvantages of using a TMS
However, using a TMS can bring potential problems as well. Supply chain leaders should be aware of these issues.
5. High implementation costs
Supply chain leaders must plan for the costs of the application, hardware and company disruption caused by implementing the system.
Changing from a paper-based system or legacy application to a new TMS can be extremely disruptive. The new TMS may frustrate employees, potentially even leading to employee departures, and employee resistance to change can cause a software rollout to take longer and potentially result in increased costs.
Subscription-based TMSes can reduce required upfront capital, but platform rollout and ongoing support cost money as well.
6. Potential failed implementation
Poor planning and lack of standardization can lead to a failed implementation.
A company may also run into trouble if its implementation partner lacks the required knowledge for the implementation or does not follow the proper implementation best practices.
7. Incorrect platform selection
Supply chain leaders must consider their company's business requirements when choosing a TMS and should clearly understand what each platform can deliver.
Without the proper planning, leaders may choose a TMS that does not fulfill their needs -- for example, one without needed customization -- which leads to more inefficiencies and disruption.