How To Build A Transportation Management System

A transportation management system can be a game changer for your company — this is what you can read online here and there. If you wonder why, if you are still uncertain whether you do need one, our article is exactly for you.

Together, we’ll cover what this transportation management system is in its essence, what advantages it has, what types of it you can use in your organization, and how much it would cost to build one.

In order to proceed, we have to shed a light on the main terminology we’ll be using in this article.

What Is Transportation Management System?

According to Technopedia.com, “a transportation management system (TMS) is part of supply chain management (SCM) centered on transportation logistics. A TMS enables interactions between an order management system (OMS) and distribution center (DC) or a warehouse.”

To put it briefly, TMS, among other things, helps a supplier to keep track of the shipments and keep in touch with its buyers. It’s one of the most used systems in trading and logistics. Being an excessively important part of the supply chain, it plays the key role in the successful outcome of the trade deal. But is it indeed that necessary for the trading company to have a TMS? And what exactly will a TMS bring to your corporation?

Why Do You Need To Build Transportation Management System?

Let’s consider some of the advantages that a TMS will provide you with.

TMS conveys such functions:

• shipping facilitation;
• cargo tracking;
• freight settlement;
• managing unexpected circumstances;
• income statements;
• performance ratings;
• safe passage provision;
• drivers online support.

This system takes over the whole shipping process:

1. Planning the route. TMS determines the least labor-intensive route. It develops the transportation plan according to the number of cargos, means of transportation, buyers demands, needs, etc.
2. Transportation itself. TMS regulates the way cargo is being moved. It checks the schedule, accuracy of the driver’s performance, the safety of the cargo. These are only some of the main checkpoints in the process of transportation.
3. Support and execution. TMS performs administrative tasks needed to successfully get the shipment to its destination. This may include getting customs clearance, documents verification, workflow facilitation, etc.

Automating such complicated processes as cargo shipment is one of the advantages provided by contemporary innovations.

The biggest merit of TMS is its availability and clarity. In the old days, being unable to keep a record of the cargo remotely, distributors suffered tremendous losses if the transportation came to a halt. Nowadays, it is the development of transportation management system that helps to avoid such lamentable outcomes.

As the way of life accelerated in the past few decades, demands for workflow automation appeared. TMS helps the distribution center to cut the expenses, expand their domain and enlarge the earnings. Simply put, this system helps you to proliferate.

In addition, your customers are in the loop and convinced of the integrity and reliability of your company. Moreover, TMS supplies you with data, and in order to be successful, you have to possess information and know how to use it to your advantage.

Which Type Of TMS Should You Use?

There are 3 basic types of TMS that you can consider building. Each of them has its advantages and disadvantages, so think it over and build the transportation management system that would be the most suitable for you.

Manual System This one requires human resources. Consequently, it will bring more expenses to your corporation. Human labor is costly and, on top of that, needs a constant checkup. The manual system is relatively outdated nowadays. Thus, your working team will require education and practice. Also, the system is prone to human error. Moreover, you must consider the lack of data as well as low progress rates. However, your fear of the system defects and technical failures may be put to rest in this case.

Automated TMS This is the most profitable, cost-efficient, convenient and modern system. All procedures are under the charge of technology. This system is data-driven. It will not be a nuisance to you but rather a helpmate for your business. Any mistake, either present or anticipated, will be handled and solved.This system is extremely transparent for all participants of the trade. Whether there is a delay, an issue on the route, changes in the transportation length, all of that will be displayed in the system. Moreover, you may add a feature that will notify all parties about any changes. Plus, the system may be accessed through the phone. Obviously, it’s easier to keep track of the information if it’s on the palm of your hand.One type of automated TMS is a cloud-based one. With it, all information can be accessed through the cloud.

Outsourced TMS With this one, you just have to pay a third-party company, and it will work out your problems and manage your transportation system. On the one hand, this system is the least labor-intensive for your organization. However, it’s doubtful whether you can entrust the growth and expansion of your company to a third party.

How Much Does It Cost To Build Transportation Management System?

First of all, you have to determine whether you want to build your own TMS or buy one. The cost will differ tremendously.

Building your own TMS will require time, qualified human resources, and expenses. Moreover, you need to make sure the solution is of high quality, which means it is bug-free and usable.

The TMS development cost depends on your needs and the time the project will take. If you start from scratch, the developers will have to create the design (UI and UX) on top of everything else. In case you decide to restrict the system to the mere basics (i.e. driver-dispatcher communication, control panel and consolidated accounting), this will cost you approximately $300K.

There’s also an option to buy an already existing TMS and adjust it to the needs of your corporation. It may be less time-consuming and labor-intensive, indeed. However, the customization process may be difficult, and there is no guarantee you will get the solution with all the features you need.