Companies relying on repeated LTL shipping will eventually consider ways to reduce the time and financial burdens associated. One option is utilizing a transportation management system, but what is that, exactly? Furthermore, how can small businesses ensure they’re using TMS to maximize efficiency and improve accounting? Here are the fundamentals and benefits of TMS:
The What
At its heart, a transportation management system is a service helping businesses big and small get freight from point A to point B; in the most efficient method possible. This accounts for the lowest cost and more reliable options. Whether shipping is done exclusively in-house or through external carriers, the TMS works to consistently monitor rates, recalculate for volume changes, and evaluate performance to deliver the most optimum choice or list of choices.
The TMS is distinct from other supply chain applications and management services in that it offers an unmatched amount of optimization potential. Whereas 3PLs and other SCM tools act as reliable outsourcing, their nature lends to behaving like sticks in the mud there are changes to a business model. Small companies growing and evolving, therefore, must learn to work around many 3PL and SCM processes. The TMS, on the other hand, functions through analytics and optimization dependent on company supply and demand stats. The best rates are consistently tied to the company’s current input/output ratio.
The How
Transportation Mangement Systems improve efficiency and organization in a number of ways. For one, they allow for enhanced delivery strategies during the distribution phase. Companies can rely on their TMS to help organize and operate a multiple-destination shipment under a single bill of lading. This removes the burden from businesses with more than enough to worry about besides whether the many stops for the day went smoothly or not.
Another benefit of using a TMS for LTL shipping, in particular, is the ability to take advantage of detailed analytics on the habits of carriers. Patterns resulting in slower than promised delivery times emerge from the data. Dates and times correlate with increased demand for customer assistance, indicating one carrier outperforms the other. These are elements which often slip through the cracks when companies are handling logistics and supply chain management entirely in-house.
The Why
The reasons companies big and small stand to gain from utilizing a TMS are obvious: streamlined inventory management and cash flow.
When clients and customers get their products on time it fosters a more secure structure for inventory control going forward. Freight shipping pricing can be difficult to decipher, which is where cloud-based LTL brokers like FreightorGator come in to help businesses regulate their supply chain without turning to third-party logistics.
Improved accountability over inventory through secured shipping arrangements with carriers also optimizes cash flow. Industry analysts claim shippers can save as much as 90-95% per invoice by using TMS software and service.
Optimum LTL shipping logistics demand due diligence on the part of companies doing business through carriers. Fortunately, this can be condensed into choosing a reputable transportation management system. Knowing what is entailed in a TMS, and more importantly, making sure it can work to boost efficiency and make inventory management more accurate, are the only things keeping shippers from vastly improving in-house logistics with outsourced supply chain assistance.
Looking for more information on how to optimize your shipping and logistics processes? Check out more here.
