How a Transportation Management System Benefits Your Logistics

July 20, 2022
14 min

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:

  • What a transportation management system is
  • Key transportation management system benefits and problem-solving growth points
  • 8 must-have features of transportation management software
  • Custom TMS vs ready-made platforms: what fits your needs
  • Ascendix expertise in custom TMS development.

Bus Ticket Reservation Software Development Case Study for Flibco

Download our case study on custom bus fleet management system development for Flibco.com to see the challenges, solutions, and business results delivered.

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What Is a Transportation Management System

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:

  • manufacturers, retailers, wholesalers, e-commerce brands
  • third-party logistics (3PL), fourth-party logistics (4PL), and logistics service (LSP) providers.

 

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.

 

Virtual Assistants

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.

 

Blockchain

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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12 Transportation Management System Benefits

Transportation cost minimization

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.

 

Real-time delivery tracking within a single platform

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.

 

Enhanced customer service

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.

 

Improved warehouse efficiency and productivity

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.

 

Increased supply chain efficiency

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:

  • Manual-only processing of orders and fleet management operations
  • Non-effective driver schedules that increase labor and services expenses
  • Non-optimized fuel consumption due to long idling times and inefficient delivery routes
  • Low visibility and lack of analytics which limit proper decision-making processes
  • Lack of client-oriented customer service which leads to a sales drop and higher competition
  • Disorganized vehicle loading utilization which increases fuel consumption and creates delivery delays
  • Lack of transparency in the order confirmation process.

Bus Ticket Reservation Software Development Case Study for Flibco

Download our case study on custom bus fleet management system development for Flibco.com to see the challenges, solutions, and business results delivered.

Full Name
Work Email

8 Must-Have Features of Transport Management Systems

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.

 

Key TMS Features for Operators

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.

 

Real-Time Vehicle GPS Tracking by OnFleet

Real-Time Vehicle GPS Tracking by OnFleet

 

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.

 

Insightful Dashboards with Analytics and Reporting by OnFleet

Insightful Dashboards with Analytics and Reporting 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.

 

Must-Have Functionality for Drivers

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.

 

Core Functions for Customers

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:

  • Departure/arrival addresses
  • Number of passengers
  • Details on whether it is a one-way or two-way journey (outward, return dates)
  • Total journey duration
  • Trip price
  • Duration of transfers (if any)
  • Trip-specific details with bus stops, transfers, exact timing from station to station, etc.
  • Passenger information (full name, phone number, email, etc.).

 

Here’s an example of the booking process flow by Flibco.com, an industry-leading Luxembourg-based shuttle bus service in Western Europe.

 

Departure/arrival and route screen of Flibco | Ascendix Tech

Departure/arrival and route screen of Flibco | Ascendix Tech

 

In contrast, if you’re an e-commerce or retail brand, end-users should have essential shipping, packaging, and checkout procedure features like:

  • Supported shipping options (by providers and delivery type)
  • Delivery contact information (full name, email, delivery address with suburbs/cities, states, postcode)
  • Expected delivery time based on fleet availability, customers’ delivery location, operations-based order timing, and other business-specific nuances)
  • Shipping details with a consignment ID, shipping address, method, billing address, etc.

 

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.

Custom TMS vs Ready-Made Platforms: What Fits Your Needs

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

  • Long-run cost efficiency as you invest once and support further
  • High level of control to release updates and upgrades on time minimizing data loss risks
  • On-demand infrastructure and functionalities to scale without interruptions
  • Advanced support and concierge services to keep the platform error-free and high-performing.

 

Custom TMS Drawbacks: 

  • Long-run development process which takes about 2-4 months for an MVP and 6-9 months for a full-featured product
  • High initial costs that run counter to your budget constraints.

 

So, we recommend building custom TMS solutions when you:

  • Have no budget constraints
  • Want to use on-demand features that cover your business-specific operations and follow the created pipelines
  • Want to scale logistics operations without limitations with the embedded flexibility
  • Have a specific business model with operations that cannot be covered by boxed solutions.

 

Ready-Made TMS Software Pros

  • Low initial investments, fast deployment, and launch
  • Basic features out-of-the-box right after accessing the platform
  • User interface and experience customizations to manage color schema, location of dashboards, etc.

 

Off-the-shelf TMS Software Cons

  • Long-run cost inefficiency as you need to pay for additional users, integrations, and customizations
  • Limited features and no on-demand functionality which slows down or eliminates business scaling processes
  • Low flexibility and control level which leads to high data loss risks, potential downtimes, etc.
  • Low support level.

 

So, we recommend purchasing ready-made transportation management software when you:

  • Want to deploy and start using the platform within days or weeks
  • Have modest needs in terms of functionality
  • Have no demands for specific UI/UX customizations.

Ascendix Expertise in TMS Development

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.

 

Airport Shuttle Bus Service by Flibco.com

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:

  • Bus ticket reservation software
  • Ticket booking management
  • Integration with TomTom services for optimal route generation
  • Google maps integration
  • Security management
  • Performance analytics
  • Multi-payment integration
  • Intuitive sign-up process
  • Drupal CMS integration
  • Web application SEO support
  • GDPR compliance.

 

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.

 

School Bus Shuttle Service

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:

  • Ensure a high-security level. The designed platform is available only to parents that take part in specific school-centric programs. This became possible by validating whether users have individual e-invitations.
  • Smartphone-free bus trips for children. We designed an ability to print QR codes so that students can share them with ticket officers without having a smartphone.
  • Async operations for resource-intensive requests. Platform admins can now process orders for the entire school year by introducing async operations.
  • Multi-type vehicle support. We introduced vehicle management tools that support multiple transport types and help managers process orders for any available vehicle.
  • Parents-oriented commute management. Customers can manage existing commutes and adjust addresses in already confirmed bookings.

 

B2B SaaS Transportation Platform

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:

  • Multi-tenancy architecture. We delivered an all-in-one platform with customizations for different transportation companies.
  • Intuitive order processing. We integrated a telephony service to let vendors process orders through the call center.
  • Complex driver management and contract templates. We built a complex schedule and driver management system that facilitates specific legal restrictions and labor law rules.
  • Route optimization system for minimizing fuel consumption, decreasing vehicle maintenance and operational costs.
  • Order management dashboards for processing performed orders with real-time condition changes.

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FAQ

What does the transport management system do?

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.

What are the benefits of a Transportation Management System?

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.

What are the components of transportation management?

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.

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