TMS-system: what is it and how to choose the right one?
You can manage freight in different ways. Someone still manages spreadsheets, while someone monitors the goods through the TMS-system. However, the functionality of most such systems is often not enough to fully manage the logistics in the company.
A transportation management system (TMS) helps companies move freight from origin to destination efficiently, reliably, and cost-effectively. Today’s more capable TMS solutions offer a strong ROI. Primarily, a transportation management system can save companies money by lowering their freight spend. ARC’s survey-based research found that respondents indicated freight savings of approximately 8 percent with the use of a transportation management system application. Of these savings, nearly 60 percent of users indicated that less than 10 percent of the net savings were absorbed by the TMS. These freight savings can be attributed to network design, load consolidation, multi-stop route optimization, improved data for procurement, and freight audit.
So what is it for, and what problems does the TMS system solve?
First of all, the TMS-system is a necessary tool for enterprises providing transport logistics services (trunk transportation, targeted delivery, transportation of dangerous goods or goods with special temperature regimes of transportation) or for companies delivering goods and cargo to their customers on their own (manufacturers or distributors).
The main objective of TMS is to offer a delivery route that will be most cost-effective for the company, taking into account all the conditions and parameters of transportation, and the most beneficial for the client from the perspective of delivery time and cost, cargo safety and reliability of the logistics operator in the future.
For example, one European manufacturer of building materials in its business model laid down a rule according to which, no matter what happens – the products must be delivered to the client within the time specified by the contract. For example, due to malfunctions in the production, a batch of building materials was produced and transferred to the warehouse with a delay of two days. In this case, the logistics department must find the fastest, but perhaps not the most profitable option for delivering products to the client. The result of such delivery will be analyzed later, but the client should not suffer.
Imagine how much you need to take into account the parameters and restrictions, so that delivery to another part of the country would not be with a huge minus. This company solves such transportation problems in its TMS-system, which already has criteria and parameters for choosing optimal delivery conditions in the production force majeure mode. As a result, on the “honor” board there are not photos of heroes from the logistics department, but a report on the results with a case to improve performance in such conditions. People just did their job using an efficiently working tool.
Companies to which the Transport and Transportation Management System is primarily suited:
- Transport companies owning their own fleet of cars of any type and carrying capacity. And the larger the park, the better, the more effective the application of TMS.
- Companies engaged in trunk, inter and multimodal transportation. In those cases when during the transportation of goods there is a change in the types of vehicles (dry cargo – plane – car) or it is necessary to go through the border crossing procedures of several states, possibly with intermediate storage in reloading hubs – the information load on the logistics manager increases at times, and the accuracy and information processing speed drops.
- Trading and distribution companies that distribute goods from their warehouses through a wide network of their own stores and points of sale of their customers.
- Production companies that need to organize and control the delivery of raw materials to the enterprise, and then the finished products through the network of their customers.
- Post and courier private and public services.
- Service companies providing targeted delivery of various goods and goods within settlements.
- Companies with construction equipment that provide special services: garbage collection, power grid maintenance, installation or repair work, etc.
- Companies providing passenger transportation services both within settlements and long-distance, international.
- Agricultural companies that own all types of agricultural machinery (combines, tractors, fuel trucks), as well as must control the transportation of agricultural products from the field to storage.
In fact, the use of modern transport management systems created on the basis of the TMS platform is not limited to the above areas. Modern transport is developing very quickly, and who knows, perhaps in the near future we will control cargo drones and electric trucks with autopilots. But move on.
What can be automated in transport logistics? Globally, two things are automated:
- All main or supporting processes that directly and indirectly affect the management of transport logistics are automated.
- Automation is associated with the use of software and hardware systems or only the logic of processes is automated.
Why do companies need transport automation?
- To organize and store all the necessary data and events for making management decisions.
- To increase the efficiency of the enterprise and the business as a whole.
- To maximally exclude the influence of the human factor.
A company may not always have its own fleet of vehicles, but wants to control the delivery time of its goods to its customers. In fact, without its own machines, the logistics of such a company manage virtual entities, that a certain “Gazelle” doesn’t matter with which state number and which driver it will deliver the goods to the customer’s store from 11:00 to 11:15. The main thing is that the system allowed us to calculate the type of machine and the delivery time.
In another case, it is important for us to calculate the costs of long-distance transportation, again carried out by the contractor and add our earnings taking into account all logistics operations: loading / unloading, transportation of ton / km or mileage from point to point, etc.
But most importantly, it is important for us to minimize the influence of the human factor, low-skilled mistakes and fatigue, reduce the time spent on planning and find out the causes of errors.
Example 1. The retailer company, which has a large network of stores for planning the operation of its fleet, which is more than 200 cars (transportation of goods between stores, picking up goods from suppliers, maintenance of vehicles) allocates up to 10 people and spends from one to three hours every day to discuss the work plan and routes. And it is very fluent, along the way finding out where the cars and drivers.
Example 2. For two days, the transport company could not deliver the machine, as it constantly confused settlements with the same name, but located in different regions of the country. The difference on the route was 500 km of extra mileage. In its pure form, the human factor.
Therefore, let’s see with you when it’s worth considering automation of transport logistics. Returning to the areas and lines of business that can be recommended for transport automation, the most important criteria are:
- You are a manufacturer / distributor of goods. Your company regularly delivers its products across a wide network of consumers.
- You have an ATP. Your car fleet is growing, and you feel that handling and transparency are falling.
- Manual transport control has become ineffective. You spend a lot of time planning and controlling.
- Your transportation costs are growing disproportionately to profits.
- Abuse You are faced with improper use of vehicles by drivers or your contractors are not fulfilling their agreements.
- You own special vehicles. You have more than 30 units of office or service vehicles that need reasonable planning and control.
What other complex problems are observed in the field of transport logistics:
- high cost of transportation.
- inefficient use of transport.
- the planning process is based on subjective opinions.
- there is no way to change routes online.
- no information for analytics.
- additional human resources are used.
How to solve all these problems and make your logistics work more efficiently, and for companies providing logistics services to increase the loyalty of their customers and make fewer mistakes. After all, at stake is not only the reputation, the profit and survival of the business are at stake.
The TMS transport management system, of course, is not a panacea, it is a tool that you need to learn how to use and use with maximum efficiency. But let’s see what it is and how to work with it.
Today it’s not enough just to buy or download a program and start using it. This kind of software needs to be configured and adapted to the company’s business processes. For complex automation of transport logistics, the following solutions and technologies are applied:
- Software – Transport Management System (TMS).
- Hardware and software solutions: computers, smartphones, cloud servers, GPS trackers, controllers and sensors.
- The work of experts with case studies for specific areas: trunk, multimodal, targeted delivery, etc.
- The presence of systems and techniques for business analysis, data collection and processing.
- Application of project management for a quick and effective start of a transport logistics automation project.
- Availability of solutions provider based on WEB technologies.
What effect can companies that have decided to implement a transport logistics management system have applied, have applied modern solutions, methods and approaches to the project as a whole. Here are some examples of indicators that were achieved after 2-6 months of operation of the TMS system.
- Planning time is reduced by at least 20-30%.
- 99% fulfillment of customer requests.
- The cost of maintaining the fleet (fuel, lubricants, runs) is reduced by 12-30%.
- Fleet reduction by 12-25%.
- The productivity of personnel (dispatchers, logisticians, warehouse) increases by 15-40%.
- Reduced staff costs by 8%.
So, if we combine all of the above, then the Transport Management System is software for route planning, monitoring the movement of vehicles and conducting a plan-factor analysis of scheduled flights on-line. Designed to automate the work of enterprises with an organizational structure of any complexity and optimized to work with a large number of machines (from 10 to several thousand).
The mission of TMS is to help the transport departments of trading, manufacturing and logistics enterprises to use the available transport in an efficient, economical, informed and convenient way.
Today, inside the TMS platform itself, you can select separate modules for automating certain areas of transport logistics:
- General transport management system.
- Management of trunk transportation.
- Address delivery management.
- Dangerous Goods Management (ADR).
- Management of transportation of fresh and frozen products.
- GPS monitoring system for all types of transport: auto, railway, water transport.
- Management of agro-logistics and field equipment (Agro TMS).
Let’s look at the capabilities of the TMS-system from the side of logistics management. So what can the system do:
- Automatic route planning based on more than 100 parameters and conditions: parameters of delivery / loading points, freights, GVH, kilometers and detours, vehicle parameters, driver data, fuel consumption rates, seasonality, etc.
- Manage fixed routes: edit more than 30 parameters of routes and route points, set detour points, set rules for generating events and controlling the route (deviation, execution on time / late, fix radius, etc.), create routes along the track, include the route in the group , give users access to route groups, create copies of routes, shift the start time of the route.
- Fasten the vehicle to the route both automatically (after passing a set of geo-zones specified in the route), and manually on the waybills.
- Track the movement of vehicles on the map online with overlay on the maps Google, Yandex, OpenStreetMap, Here (NokiaMap), etc.
- Monitor events related to ingredients, speeding, opening doors, temperature changes, and more.
- It has a mobile application for the driver, forwarder, courier, sales representative, merchandiser, service engineer, security service, etc. The ability to record events and their statuses at route points.
- Distribute rights and individual settings for individual groups of operators, dispatchers and logisticians. Including for regional offices.
- Set up individual tips and alerts for the logistician, dispatcher and driver (SMS, e-mail, interface pop-up messages).
- Collect data online and compare the plan fact using the business analytics module for analysis and forecasting of both logistic events (route forecasting) and economic (what will be the cost of a new route).
- TMS has the necessary reporting set, which allows you to quickly build (200 thousand records in about 30 seconds) reports on movement, plan fact, on speeding, and so on. The report designer allows you to visually create your own set of columns and graphs from the list of available.
But the system needs to be maintained and developed, therefore, if a large logistics company has its own IT service, then the main features of a TMS system from IT will be:
- Modular architecture with the ability to create redundant nodes, which avoids stopping the entire system if one module or node (physical server) fails. It also allows you to do horizontal scaling to increase capacity, if necessary, serve more requests per unit time.
- A flexible structure for assigning permissions to users on functions (access to certain actions, access to certain directories) and data (access to part of the data of directories). This allows the user to configure access only to those objects and functions that are necessary for him to perform his work.
- The ability to integrate with Active Directory-based security allows you to centrally manage employee access not only to software but also to other company resources.
- All TMS directories, with access rights, have the ability to upload data to exchange files.
- All user actions are recorded and can be viewed in the form of reports.
- TMS can carry out tracking on the Android tracker, on a mobile application for Android / iOS, work with various types of GPS / GLONASS trackers (you can connect any with an open data exchange protocol).
- TMS allows you to keep track of fuel consumption by fuel level sensors, flow sensors, CAN and OBD buses.
However, if you do not have a large company and your support is limited, then all technical issues can be moved to the “cloud” and rented software, paying only for logistics functionality. All system settings, integration with the accounting system and connection to devices will be taken over by the TMS provider. This model is also called SaaS (Soft as a Service).
Modern information technology in logistics is even closer to the use of artificial intelligence, BIG DATA and Blockchain. Solutions based on TMS, unlike other solutions for SCE (WMS, YMS), have developed most clearly in this aspect. Already, the accuracy of forecasting the concentration of orders, for example, for water suppliers is at least 89% (up to 97% in some projects). And the data collected over several years allow us to predict the economic effect for almost any scenario related to changes in the market situation for transport logistics companies.