What is a TMS, and why it’s not just for the big players anymore?
TMS stands for ‘Transport Management System’, which is such a general term that it doesn’t really tell us much more than the acronym. Or why exactly it is important for the logistics industry.
An article on supplychainbeyond.com describes a TMS as “a logistics platform that allows users to manage and optimize the daily operations of their transportation fleets”, which gets us a little closer.
“If your business moves anything from one place to another, you are also in the business of logistics management.”
The keyword here is “optimise”. A TMS should help companies get the most out of their fleets. This can range from route optimisation (finding the fastest way from A to B), to advanced telemetrics that can tell you if a container that needs to be kept cold is getting warmer (if it contains perishable goods for example).
A good TMS should enable greater efficiency within a business’ operations, so as to enable the business to operate more effectively, and as such more profitably.
They can help track fleets, manage the capacity of vehicles, deliver data about driver performance, enable dispatch to driver communication, and more.
TMS’s for years were a logistics solution that was only available to the biggest (and wealthiest) companies. Software was “hard coded” which meant that updates were costly and slow to happen. There were huge amounts of proprietary hardware that needed to come with it. And the effectiveness that they brought came at a massive financial cost.
In steps technology.
These days many transport management systems are cloud based, which has several important implications. Possibly the biggest of which is the fact that companies no longer need to own big servers themselves to store the software, which in turn has reduced the cost of in-house IT teams. Or in the case of many SMEs (small and medium enterprises) has allowed them to operate with no IT headcount at all.
Another huge disruptor in the industry has been the smart-phone. Even the cheapest smart-phones can enable companies to easily communicate with their drivers in the field, and even track their whereabouts. Additionally, this has led to huge advancements in security and accountability, as drivers can confirm deliveries instantly using ePOD (electronic proof of delivery).
With the increase in accessibility for smaller companies, and reduced implementation time and costs, the TMS is now adding value to a vast range of industries. Essentially, if your business moves anything from one place to another, you are also in the business of logistics management.
The explosion of eCommerce has given rise to courier start-ups around the globe, and they can now easily keep track of their delivery personnel from a single screen. Restaurants can assess if a rider can make it to their destination before the food gets too cold. Retailers can easily manage their own deliveries. And best of all, customers are getting better experiences because they have more information about their deliveries, and more flexibility around delivery times.
Before technology enabled smaller businesses to enjoy the benefits of TMSs, the first thing many business owners would hear about a missed delivery was a call from an angry customer. Now they can anticipate the inevitable obstacles that come their way, and be proactive about getting over them.
Imagine you have 5 drivers out on deliveries. With the right TMS you can see all of them in one shot, by simply opening up your browser on your computer or iPad. Before this was available, you would have to send out (at least) 5 Whatsapps and wait for replies. Before that you would have had to make 5 phone calls.
These changes have also opened up new ways of operating. Many delivery businesses now crowdsource part or all of their divers. By being able to broadcast work across a network of drivers, small companies are increasing response times, and creating a more competitive pricing environment.
The success of most delivery operations relies on the cooperation between drivers and dispatchers. Effective cooperation requires effective communication, and as such many TMSs focus on this.
Needless to say the effectiveness of any TMS will relate to how well it suits your particular business model.
What is your biggest headache as a business operator?
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