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The Role of TMS Software in Modern Freight Procurement
Supply chain transportation is among the most important sectors of the global economy. That’s why this industry has seen a variety of innovations and improvements in transportation management systems.
From the containerization revolution in the 1970s to modern AI-driven freight procurement features, TMS platforms have continuously evolved to help shippers and carriers optimize procurement and operations. A modern transportation management system (also known as TMS software) is an example of such a solution. In the following paragraphs, we’ll shed some light on the definition of a transportation management system and its role in modern freight procurement.
Defining a Transportation Management System
A transportation management system (TMS) is a digital platform that enables companies to plan, execute, and optimize the movement of freight. The key tasks of a transportation management solution include rate shopping, freight booking, and real-time tracking and visibility. Managing costs and generating reports about performance and efficiency are also among the core functions of TMS software.
These complex systems can be used by shippers, carriers, and other businesses in the supply chain (e.g. 3PL service providers). Because transportation cost control and process optimization are critical, TMS platforms have become essential for companies looking to scale efficiently.
How a TMS Is Different for Shippers vs. Carriers
Most systems offer a combination of tools for both carriers and shippers. Some platforms might be best suited for small to mid-sized businesses, while others offer an enterprise-grade level of support. Shippers and carriers benefit from TMS software in different ways. Let’s briefly examine how TMS software helps shippers and carriers separately:
- The main role of transportation management systems for shippers is to help them optimize procurement, manage contracts, conduct freight execution, and audit freight. Analyzing and optimizing logistics costs is also among the main benefits of TMS systems for shippers.
- Transportation management solutions are used by carriers to dispatch loads, manage fleets, optimize routes, and manage billing. The powerful analytics offered by TMS software make it possible to optimize costs, increase profitability, and easily update shippers in real time.
Supporting Technology Features
Most sectors are driven by technologies, and the freight industry is not an exception. Modern innovations make transportation management systems an even more powerful tool in the arsenal of logistics operators. Some platforms gradually integrate new features while others rely on integrations with third-party tools to better assist businesses that use them. Let’s shed some light on some of the supporting technologies that are used alongside or within TMS systems.
Machine learning and artificial intelligence are powerful technologies within TMS software as well. They’re beneficial for dynamic routing, smart pricing models, predictive procurement, or to detect anomalies. Thanks to the increased popularity of AI-powered solutions, a growing number of transportation management systems aim to integrate such features into their platforms. AI models can predict lane volatility weeks in advance, allowing procurement teams to rebalance contracts vs. spot.
Automation and advanced analytics features can also be seen in most of the modern TMS software solutions. They allow companies to minimize manual tasks and offer predictive and prescriptive insights for capacity planning and cost forecasting. Some logistics companies and shippers also prefer to use third-party tools that offer additional functionalities or a wider set of supporting features.
Payment automation tools, Excel macros, trackers of benchmarking indexes, and other supporting technology features are also used alongside transportation management systems. Some of these tools can be integrated with TMS platforms, while others are used separately.
The TMS Features That Support Freight Procurement
Freight procurement is a complex process. TMS platforms offer multiple ways to simplify and optimize procurement. Thanks to the innovative features of transportation management solutions, companies can manage their freight procurement operations more easily. Here are five TMS software features that help in that regard:
- Automated bidding and rate benchmarking streamline RFPs and improve spot procurement decisions.
- Carrier management and contract storage allow shippers to track performance and keep all compliance documents in a centralized system.
- End-to-end shipment tracking gives procurement teams real-time visibility into freight movement.
- Automation and efficiency tools reduce or eliminate email communication, manual spreadsheets, errors, and administrative workload.
- By improving the overall efficiency of the freight procurement process, TMS software solutions help businesses scale and support their strategic sourcing.
Frequently Asked Questions About TMS Software
Transportation management systems are complex platforms that combine a variety of features to help both shippers and carriers. With this in mind, we put together a brief list of the most common questions shippers and carriers ask when evaluating TMS software. Read on.
What Is A Transportation Management System?
A transportation management system is a solution that helps carriers and shippers optimize the transportation of goods. TMS software combines dozens of features and can be integrated with other third-party solutions such as ERPs, CRMs, or warehouse management systems.
What TMS Features Support Freight Procurement?
The top features that support freight procurement include:
- RFP management
- Spot procurement
- Carrier management
- Real-time shipment tracking
- Freight audit tools
- Compliance tools
Efficient Freight Procurement Starts with Smart Technology
A modern transportation management system helps you cut freight costs, streamline procurement, and improve visibility. Book a demo with ShipperGuide to see how it works.