A transportation management system (TMS) is a critical tool for all supply chain and logistics practitioners. It provides shippers, third-party logistics companies (3PLs), and fourth-party logistics providers (4PLs) with the visibility they need to manage the supply chain and optimize the movement of products and goods. There are various types of transportation management systems, and while using a basic TMS is better than no TMS at all, advanced transportation management systems offer enhanced functionality and can scale with you as your business grows.
Getting the right TMS in place can have considerable benefits, as a TMS helps with planning and executing the movement of goods on a comprehensive level, which aids in reducing the risks of disruptions at every point in the supply chain. Companies that better manage risk will see significant savings. Data from the supply chain risk intelligence company Interos found that of the organizations they surveyed in 2021, the average organization lost $184 million in global supply chain disruptions. Similarly, a McKinsey study found that, within 10 years, the cost of supply chain disruptions adds up to nearly half of a company’s profits.
What Is the Difference Between an Advanced TMS and a Basic TMS?
Differences exist between TMS solutions, with not every organization or product offering the same features. More advanced TMS solutions go further, providing greater visibility and control. Consider some of the differences of using an advanced TMS for your logistics operation.
Functionality
A basic, or “lite,” TMS solution offers some nice features and enhances productivity. It offers features related to basic routing and order management, and it gets your products moving.
By comparison, an advanced TMS will include additional tools to enhance success, including:
- Advanced route optimization to take into account changing conditions or specific factors related to your business.
- Real-time tracking so you can catch and adjust problems early on or offer real-time solutions for unplanned delays.
- Multimodal management provides organizations with more options to move products faster and more efficiently and affordably, depending on the factors that matter most.
- Predictive analytics is yet another benefit of an advanced TMS. Its ability to predict potential supply chain challenges allows for better planning and mitigates risks.
Scalability
A basic TMS solution is typically best suited for small businesses. It does not provide advanced features to support more complicated needs. The more complicated your logistics needs are, the more robust the features on your TMS must be, including both in the planning and execution stages.
An advanced TMS offers more of what you need if you are a medium-sized business planning to grow or if you are a large enterprise right now. It offers solutions to adapt to more complex and intricate supply chain models. In high-volume networks, this is critical. If you expect to see significant demand increases, or your supply chain experiences seasonal demand fluctuations, an advanced TMS is the better solution.
Data Integration
Organizations also must consider how well their existing data and tools will integrate into a new system. A basic TMS will facilitate some options but tends to have limitations on what types of products and solutions it will integrate with overall. More so, it does not have the ability to take the data it has and provide you with comprehensive analysis, but rather just offers the data for you to analyze yourself.
An advanced TMS goes further by providing more advanced analytics, including opportunities to incorporate the tools you need as you grow, such as an enterprise resource planning system, warehouse management system, order and inventory management tools, real-time visibility tools, and accounting systems. It also offers more comprehensive reporting tools.
Unlocking Your Full Potential
Partnering with a 4PL or managed transportation services provider and implementing an advanced TMS is a strategic play that's going to have a very dramatic impact on the profitability of your business’s profitability and resilience.
An advanced TMS equips companies with essential tools to capture and leverage data effectively, offering enhanced visibility, and control over logistics processes. By enabling real-time insights, predictive analytics, and seamless data integration, an advanced TMS transforms complex supply chains into strategic assets. This level of supply chain optimization empowers businesses to address disruptions proactively, drive growth, and maintain a competitive edge in today’s dynamic global marketplace.
