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Transportation management systems are becoming a must-have tool for both SMBs and enterprises as they help companies save delivery time, decrease logistics costs, boost warehouse performance, minimize product dispatching issues, and improve the entire supply chain efficiency.
The pandemic and worldwide same-day shipping trend are also powerful accelerators that force entrepreneurs to buy or build transportation management software. It helps brands win the competition by meeting customers’ demands in a fast and client-centric way.
Despite the transparent usefulness of TMS solutions, many manufacturers, distributors, e-commerce brands, wholesalers, retailers, and 3PL providers are still wondering if the benefits outweigh the cost. If this resonates with your current business operations, our post is what you need.
Keep reading the article to know:
A transportation management system (TMS) is a technology solution designed to help manufacturing, distribution, e-commerce, wholesale, retail, and other businesses automate the planning, executing, and optimizing activities focused on the incoming and outcoming movement of goods. Simply put, TMS is a complex yet easy-to-use tool that brings visibility into your shipment processes so that you can plan and execute way more time- and cost-efficiently.
The target audience of transportation management systems can be divided into 2 groups:
Many companies often confuse transportation management and fleet management software. Despite some interconnected features, the key difference is that FMS solutions bring real-time visibility into vehicles’ locations while TMS brings transparency into day-to-day processes like planning and execution operations.
The AlliedMarketResearch report states that the global TMS market value was equal to $5.46B in 2019 while it’s projected to reach $11.4B by 2027 with a CAGR of over 9% during this period. The growth is obvious as companies evolve their logistics operations step-by-step, unwittingly welcoming new complexities. One of such is the increased demand for manual effort as the total data volume of operations may exceed thousands of records daily.
Handling it manually, manufacturers, retailers, and third-party providers will need to invest much funds in expanding the entire staff and onboarding newcomers, which may take weeks or even months. What’s more, increasing the number of labor resources is way less efficient than introducing optimization and automation approaches that process most manual operations in a matter of seconds and can be handled by a small team of specialists.
For this reason, over 35% of businesses now utilize transportation management platforms to administrate their logistics network, save time and money, and stay on top of the competition. All these facts stimulate the TMS market to grow and adopt new technologies and trends. Here are some core tendencies to become commonplace in the near future.
IoT Fleet Tracking
Internet of things (IoT) devices and sensors increase the accuracy of incoming data on a vehicle’s location, in-transit visibility, loading capacities, routes, and assets. This technology can help delivery companies minimize fuel consumption and fleet maintenance costs, reduce the delivery delay ratio, and improve drivers’ safety.
Mostly adopted by industry-leading vendors, virtual assistants are the so-called chatbots that introduce a win-win strategy for all supply chain parties: operators, drivers, and customers. Operators can adjust template scenarios to get specific data on each shipment, drivers can request their daily schedules within a single click, and customers can get answers to their frequently asked questions or request estimated times of arrival for specific orders.
Machine Learning (ML) Algorithms for Increased Data Accuracy
ML-powered TMS systems help predict multiple supply chain data way more accurately. The core processed metrics include capacity planning, at-risk order identification, inventory conditions tracker (temperature-sensitive and close-to-expire products), and in-transit conditions like traffic and weather. Also, artificial intelligence algorithms generate more efficient and informed recommendations, alternate delivery routes, and other insights.
The Blockchain ecosystem with smart contracts and hash functions opens up mature opportunities for companies by providing advanced security, authentication, integration, and monitoring capabilities. Improved supply chain transactions, multiple integrations with third-party tools, accurate order tracking, and minimized fraud and theft risks are some of the core Blockchain benefits for your logistics business.
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Transportation optimization algorithms and real-time tracking help dispatchers automatically build the most time- and cost-efficient routes. A system generates the most effective scenarios to transport goods from point A to point B by processing schedules, executives’ shifts, time windows, and loading capacities. Optimizing each component of your supply chain management system helps reduce transportation costs.
A transportation management system allows dispatchers to capture drivers’ locations and shipments in real-time. It also helps monitor multiple to-the-minute metrics like fuel consumption, overaccelerating, improper braking, harsh cornering, pit stop frequency, etc. This helps prevent potential theft risks, quickly respond to drivers’ live requests, and coordinate the delivery process without delays, thus streamlining on-time shipment.
Using real-time order tracking, dispatchers can also ensure on-time delivery of goods using built-in customizable notification tools. Managers can adjust them to send, for example, 24- and 1-hour alerts or messages to customers along with order status updates like “shipped from a warehouse”. More than that, customer-focused mobile applications can offer a to-the-minute order tracking feature that helps users to monitor their shipments personally. These capabilities increase customer loyalty, enhance service, and make customers love your brand.
Apart from shipment tracking, TMS solutions help bring transparency to your warehouse by automating each step of inventory operations, from receiving, put-away, storage, picking, and packing to shipping. This helps decrease the number of manual efforts and eliminate human error risks by avoiding hands-by operations. So, TMS software helps streamline warehouse and inventory processes saving your time and funds.
Real-time tracking of shipments, inventory and other processes can help generate valuable insights on how to improve your company’s supply chain management, from inventory stocking to final delivery. Reducing transportation costs with route optimization, automating warehouse management with high to-the-minute visibility, and increasing customer loyalty with client-oriented tools – all these transportation management system benefits make your supply chain management optimized, automated, and improved.
Along with the above-mentioned advantages, TMS solutions help solve domain-specific challenges that most businesses face. They include:
The functionality modules of TMS solutions are divided into 3 core groups: operators/dispatchers, drivers/executives, and customers. Let’s go block-by-block and discuss each feature in greater detail.
Real-Time GPS Vehicle Tracking
Operators need to have transparency into the up-to-the-minute vehicle location, like tracking multiple metrics like overaccelerating, improper braking, harsh cornering, and distracted driving, to ensure smooth delivery performance. This real-time monitoring helps prevent high fuel consumption and incorrect routes and assists drivers in adapting to fast-changing off-road conditions like high traffic and weather conditions.
More than that, vehicle tracking allows dispatchers to facilitate first-come-first-served bookings and orders without any delays using dynamic routing and rerouting algorithms. Customers may change their time windows in real-time which should be quickly processed by dispatchers so that they notify drivers of the updated schedules.
In case of urgent changes, operators can also manage driver availability right from the single platform and reassign orders to different executives based on their current schedules and map zone availability.
Insightful Dashboards with Analytics and Reporting
It’s hard to process dozens if not hundreds of drivers in real-time unless you have decent analytics and reporting functionality within your transportation management system. First, dispatchers can use intelligent analytics tools to access key delivery performance metrics by each trip, driver, or map zone hourly, daily, or weekly. The most visually-appealing way to process multiple data in parallel is by building custom charts and graphs up to your logistics needs.
This helps quickly identify not-so-obvious errors, mistakes, and growth points that may seem discreet while handling dozens of operations but may influence the final costs and efficiency of your supply chain.
Next, managers should have easy-to-use reporting functionality which helps to convert analytical raw data into easy-to-interpret results with the KPI metrics you’re planning to achieve. So, dispatchers can generate insightful PDF materials on drivers, shifts, customers, metrics, or even inventory operations. The faster managers can generate reports, the faster your departments adjust to new scenarios and solve challenges.
As a result, analytics with dashboards and reporting features bring transparency into the day-to-day logistics pipeline and management sprints, enhancing the decision-making process and allowing you to share visualized, digestible data across multiple departments.
Here’s an example of analytics functionality by OnFleet.
Managing Orders, Driver Schedules, and Vehicle Availability
The core day-to-day operations of managers mostly include management of incoming orders, vehicle availability, and driver schedules. First, operators need to process incoming customer orders, align them with drivers’ schedules, and assign them to specific drivers based on time windows, executives’ shifts, etc.
Second, creating properly organized schedules is vital for efficient fleet operations. However, managing dozens or hundreds of schedules and aligning them with the specific labor law rules, existing trips become trouble.
Third, managing vehicle availability is about assigning new orders to available trucks and drivers to vehicles, which involves a good bit of analyzing multiple customer-related data like time windows and driver-centric conditions like shifts and total working hours.
Handling all of this manually, operators will spend tons of time daily processing data correctly. This inevitably increases labor costs and potential human factor mistakes that may cost you another fortune. So, fleet management automation tools for orders, schedules, and vehicle availability can save tons of time, decrease human errors, and help build efficient fleet management pipelines.
Up-To-the-Minute Daily Schedule, Trip, and Order Details
A mobile application for drivers is a must-have tool to bring automation and avoid manual operations for both managers and executives. It helps drivers access daily schedules, trip and order details, automatically navigate optimal routes, and use an online chat for support and recommendations.
First, drivers perform many deliveries daily, which means they should have a clear real-time schedule by their side. It should provide day-to-day activities with arrival and departure points, accurate timings, an estimated route duration, etc.
Second, customers often specify details, add comments, and change time windows dynamically, meaning that drivers should have up-to-date information on the assigned trips. Trip and order update functionality provides all required data for drivers to perform deliveries accordingly.
Third, managers frequently provide real-time updates, and notifications, and send alerts to drivers via mobile apps. Vice versa, executives can use an online chat to get support from dispatchers on off-road conditions, dynamic route changes, and get up-to-the-minute updates.
Driver-Customer Contact Functionality
Apart from contacting dispatchers to get schedule updates or support, drivers should have their own capabilities to get in touch with customers while they’re delivering goods to. This helps to take the load off managers and streamline the driver-customer relationship. The best way to succeed is to embed the functionality right in the mobile application for drivers so that they have customers’ contact details like phone numbers, emails, additional addresses, etc.
Online bookings and orders
Whether you deliver goods or transport passengers, customers should have easy-to-use features to make an order or book a ticket online. For example, if you provide an airport shuttle bus service, users need to have such transport management features like:
Here’s an example of the booking process flow by Flibco.com, an industry-leading Luxembourg-based shuttle bus service in Western Europe.
In contrast, if you’re an e-commerce or retail brand, end-users should have essential shipping, packaging, and checkout procedure features like:
Real-Time Delivery Status and Truck Location Tracking
Among the core modules of a mobile application for customers, up-to-the-minute shipment status tracking is a must in 2022. Customers want to have high visibility into their order status and ensure they’ll get packages within the specified time slot.
This increases customer loyalty and even positively impacts the lifetime value of your buyers. The OptimoRoute study states that over 25% of customers said they were extremely likely to return to a brand providing real-time delivery tracking for repeated purchases. This means you can get 25% more sales if offering this user-centric functionality.
So, once a customer proceeds with the checkout process and the package is shipped, provide real-time delivery status and truck location tracking features right in the app. You can either integrate a ready-made solution or build tailor-made GPS tracking from scratch. Both methods require OBD sensors placed on your fleet vehicles.
ETA Notifications & Updates
Notifications, updates, and upgrades are a great way to keep your customers in a loop so that they know all details on orders, discounts, new coverage areas (if any), delivery methods, etc. Not only does it provide customer-oriented information, but it also helps to share new business-related announcements and make clients feel they’re the heart of your brand.
Once you’re all set with features, it’s high time to define whether you need a custom solution tailored to on-demand needs or boxed transportation management software. Here is a comparison of both approaches with their pros, cons, and use cases so you can make the right choice.
Custom Transportation Management System Benefits
Custom TMS Drawbacks:
So, we recommend building custom TMS solutions when you:
Ready-Made TMS Software Pros
Off-the-shelf TMS Software Cons
So, we recommend purchasing ready-made transportation management software when you:
Ascendix Tech has helped multiple companies with transportation software development to build custom on-demand business-user balanced systems that help automate most day-to-day logistics operations. Now we want to outline 3 case studies that show the core challenges and solutions we delivered to different businesses that operate in the transportation domain.
Flibco.com is a fast-growing Luxembourg-based shuttle bus service that operates in Western European countries. The company initially contacted us to get help with a web-based bus ticket booking app to help customers get from an airport to a specific destination and vice versa.
So, the core initial challenges included:
Once we conducted a discovery session, we identified the following goals:
We helped Flibco.com create an on-demand mobility platform to revolutionize how customers get from their homes to airports and vice versa. The system provides decent functionality for both dispatchers, drivers, and customers automating must-have operations for each side.
The client contacted Ascendix to help them implement a B2C school bus shuttle service platform designed for parents to book commutes for children and deliver them from/to schools using low-carbon transport vehicles. They include electric buses, velobuses, and pedibuses.
After a project discovery session, we defined the following milestones to complete:
The client is a parent company with the biggest private fleet in Luxembourg operating in public, school, airport, and group travel domains. It contacted Ascendix to get help with the buildout of a B2B SaaS-based transportation platform from operators for operators.
The core mission was to bring the mobility-on-demand solution that would help other transportation companies solve the same challenges and leverage professional tools within a single platform.
So, we delivered the next solutions to the client:
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A transport management system is a software platform designed to automate most day-to-day fleet operations and help managers, drivers, and customers streamline their processes.
The core benefits of transportation management systems include cost minimization, real-time delivery tracking within a single platform, enhanced customer service, improved warehouse efficiency and productivity, and increased supply chain efficiency.
The 3 essential components of transportation management are planning, executing, and optimization. Planning is about designing the best optimal route based on driver and vehicle availability, cost efficiency, and trip distance. Execution is dedicated to streamlining communication, load capacity operations, tracking, documenting, etc. Optimization means tracking and analyzing real-time and post-processed data by generating performance reports, dashboards, and analytics.
Daniil specializes in content marketing and has a deep knowledge of promoting the company's products and services through high-quality content. On the Ascendix blog, Daniil shares his tricks and tips on custom software development, provides technology trends and insights, and helps you get valuable content to make your business even more successful and profitable.
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