Transportation & Logistics Analysis - Technology & Data

The TMS is the foundation for the digitalization of transport

April 20 2020

The Transport Management System (TMS) tools have proven themselves, whether it be to reduce transport costs on the shippers' side or to rationalize operations on the carriers’ side. In these times of digitalization of transport, they are an essential means of support. Upply takes this into account by developing its connections with the TMS.

The features listed by the consulting firm BP2R in its white paper "How to understand the acquisition and deployment of TMS software" provide a measure of the scope of the offer: "TMS brings together all or part of the freight transport management functions. The extremely wide variety of functional needs of the different players has led to a very diversified offer, ranging from the design of a logistics network to real-time monitoring of trucks, through trip optimization, improvement of the filling ratio of vehicles, invoice control, automated EDI of orders and documents".

There is therefore the promise of great benefits for customers made by those involved in the digitalization of transport. This range of solutions can be completed by the tool developed by Upply to compare the rates of freight transportation over the world, as well as by the use of its digital road transport markeplace which allows to ship goods simply everywhere in France.

A tool still little used by shippers

TMS have come a long way since the 1980s, when rudimentary applications with basic features were introduced. The choice of modes and the management of orders enabled shippers to increase their efficiency and reduce their transport costs. Today, the latest TMS applications aim to offer comprehensive solutions to deal with the complexities of global commerce.

However, the use of TMS’ is still largely limited to large shippers. The high costs of implementation and maintenance seem to discourage SMEs. According to Inbound Logistics, approximately 35% of shippers currently use a TMS in the United States, and most of them are large companies. In France and Europe, this figure would seem to be even lower (around 10%). A company that combines mission planning and control of transport performance via a TMS can, however, make considerable savings in the long term.

On the carrier side, the situation is different. The use of TMS is strategic, because it is the nerve center of the company, allowing it to control activity from A to Z and also the production tool. The rate of acquisition of the tools is significantly higher than that of the shippers and we are clearly in a renewal market.

TMS Shippers and TMS Carriers: what differences?

TMS are not mirror systems that can be interchanged depending on whether one is a buyer or seller of transport. The difference comes mainly from the objectives sought in the tool. As such, there is a big divide between the two versions.

  • Shippers essentially seek to optimize the act of purchasing. The essential link is the transport order (TO) to describe, organize and optimize the cost center. Whether the shippers are manufacturers or distributors, the KPIs (financial, quality, service, etc.) will be referred back to the TO each time. It is a fundamental element for the organization of the TMS that enables it to deal with more elaborate features, tactical ones such as the budget or operational ones such as tracking orders.
  • Carriers, on the other hand, focus on optimizing their means and resources. The transport unit (driver and equipment) or TU becomes the essential link to describe, organize and optimize the profit center. The search for and assigning of orders to transport units, monitoring and controlling of performance, social management of drivers, compliance with regulations, and fleet maintenance are all features expected of a TMS.

However, under the impetus of the major transport organizers or LLPs (Lead Logistics Providers), these differences have been able to be erased over time. LLPs simultaneously have the roles of service providers for shippers, fleet managers and customers of the carriers. They combine the optimization needs relating to both OTs and TUs. New units of measurement have appeared, such as the tonne per km loaded, the package per km, etc., marking a synthesis between the TMS' of shippers and carriers.

Transformation of the shipper / carrier relationship

The upheavals associated with the acceleration of interaction between partners or with the implementation of decision-support algorithms, among others, have profoundly changed the shipper / carrier relationship. This relationship is much more extensive than it first appears, as shown in the diagram below:

Source : Upply

Shippers, carriers, context (environment, social, hazards, etc.) and the market (cyclical or not) form the four cardinal directions of this diagram.

The interactions between the actors are (mainly) at the center. They are now multiplied, updated in real time and are active in all strategic, tactical and operational areas of transport.

Thanks to its connections with WMS', CRMs, ERPs and complementary platforms like Upply, the TMS constitutes the heart of the machine which enables the interaction between shippers, carriers and their ecosystem.

The TMS has become mobile; it has evolved onto the smartphones of drivers, operators and supply chain managers. All the actors interact, react or anticipate without the constraints of time or space barriers. The solutions are delivered as SaaS and therefore freed from their old proprietary servers. The TMS is connected in real time with the transport equipment (truck and trailer). Diesel consumption and the cold chain are monitored, analyzed and alerted at all times.

There is a real added value to get real-time information on the pertinence and availability of a specific service, and to pool the requirements and resources in a physical and digital environment. It is the best way to identify areas of improvement, for the benefit of all.

Inbound Value defines the 4 essential pillars that qualify digital transformation as being:

  • The disappearance of space and time barriers
  • The ability to stay connected on the move
  • The Internet of Things
  • The universality of internet.

There is no longer any doubt about the advantage of the duo TMS/digital platform in the digitalization of transport!

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With more than 20 years of experience in the international supply chain, William works as a road transportation expert for Upply. Entrepreneur by nature, he has successively worked in operational and functional management among various industries, such as chemistry, automotive and building materials; alternately shipper and service provider.
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