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Transportation Management System (TMS)

Definition - What does Transportation Management System (TMS) mean?

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.

Techopedia explains Transportation Management System (TMS)

TMS handles four important operations of transport management:

  • Planning: Defines the best transportation strategies based on specified parameters, which would be of higher or lower importance as per the user policy. This includes transportation expenditure, minimum stops possible to guarantee quality, shorter lead-time, flows regrouping coefficient and so on.

  • Transportation execution: Enables the transportation plan execution. This includes carrier-rate approval, carrier sending, electronic data interchange (EDI), etc.

  • Transportation follow-up: Permits the following up of any administrative or physical operation regarding transportation. This includes event-by-event transportation traceability, receipt editing, customs clearance, invoicing as well as reserving documents, transport alerts delivery, etc.

  • Measurement: Includes or should include a strategic key performance indicator (KPI) report functionality for transportation.

Standard TMS software modules consist of:

  • Load optimization
  • Route planning and optimization
  • Delivery
  • Freight audit, payment, etc.
  • Yard administration
  • Advanced shipping
  • Order visibility
  • Carrier administration

TMSs are intended to reach the goals mentioned below:

  • Minimize expenditures by means of more effective route planning, load optimization, carrier combination as well as mode selection.
  • Enhanced accountability with exposure to the transportation chain.
  • Better flexibility to make modifications in delivery plans.
  • Realization of important supply chain execution demands.

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