From Cost Savings to Customer Satisfaction: Why a TMS is essential for modern logistics

A transportation management system (TMS) is a powerful tool that enables logistics managers to gain control over transport costs and create better visibility of internal logistics processes, resulting in higher customer satisfaction.

Applying a TMS will make a company more competitive and boost sales—thus helping businesses grow. Considering the ever-evolving global trade environment, it’s important for logistics operations to have a system that will allow them to successfully navigate complex transportation processes, collect available data and analyze them accordingly.  

The many benefits of a TMS

Freight Cost Savings: Benchmarking and the ability to track year-over-year spending is one of the most important benefits of a TMS. The ability to show ROI on the product and justify the cost of the program is a common expectation from any shipper.

Data Visibility and Control: The data that comes from a TMS can be anything from carrier KPIs, such as on-time delivery/pickup, primary tender acceptance and shipment updates to load processing and network cost. The control comes from the SOP creation and system process flows—routing guides, mode selection and carrier pricing.

Process Standardization: Many times, each desk in a logistics operation follows their own processes and operates independent of the others. A TMS standardizes all desk-level activities into standard flow, with reporting to show any deviation.

Automation: By automating order processing, carrier assignment, tendering, payment, and reporting—including analytics for decision support—companies can save time, boost productivity, and gain the flexibility to scale as they grow.

Shared Company Resources: Using a single database for company data—like approved carriers—helps share that data across multiple contacts. This value will allow single users to see resources that they would not normally know are available.

Scalability: One of the primary reasons companies look at add a TMS is for future growth. Many organizations are confident that they’re holding their ground today, but not sure how they would adjust on the fly and handle the next five years. The TMS—through automation, standardization of process flow and data visibility—allows for one system to consume massive growth without adding resources to manage that growth.

Access to 3PL Assets: One of the more overlooked aspects of the 3PL and TMS relationship is the access to their assets. These assets are their people, processes and technology. Many 3PLs have hundreds of people with 20-plus years of experience managing some of the most complex supply chains in the world. They have experts in load consolidation, mode selection, carrier managers (and the carrier relationships), engineers, Lean Six Sigma and freight audit and payment. These assets should be viewed and added to the evaluation of any TMS provider.

Reporting and Analytics: The data a TMS provider has access to is larger today than it’s even been. Several TMS providers have a spent billions to gain access to other industrial databases. This amount of freight data helps TMS providers add supporting information to shippers to help them make decisions to better guide their transportation spend.

Carrier Management Support: TMS carrier teams have the process and experience to help any shipper create/maintain their own carrier team or completely outsource this function. Their data can show target rates as well as carriers that can support execution functions. This can help identify and add new carriers as well as add structure to help support carrier management activities.

Increase Efficiency and Reduce Operational Cost: The efficiency that a TMS provides is based on standardized processes and ensuring that the preferred carrier is assigned and executes the freight.

Improved Customer Experience: Today’s customers expect greater visibility and seamless interaction—often before they even ask for it. Providing real-time insights into where an order is in the fulfillment cycle enhances their experience. A TMS is designed to support this by sharing key data points, such as order status, assigned carrier, and accurate ETAs, helping companies deliver transparency and build stronger customer relationships.

Environmental Impact: Today, reducing and tracking environmental impact is a key consideration for any TMS. Modern systems can help measure and optimize sustainability through strategies like mode switching (e.g., truckload to intermodal), load consolidation, and minimizing empty miles by leveraging private or underutilized fleet capacity. Many TMS providers include tools to calculate and report this impact, making sustainability an integrated part of their overall support strategy.

Simplification of Supply Chain Processes: TMS providers have standardized processes that can be interchangeable depending on several factors. By setting these processes, it will streamline both the process of order management, but also around carrier execution and reporting and analytics.

Improvement in Visibility: Freight is at its most venerable while in-transit. Providing visibility to the location and activity around the freight will add confidence while in-transit. There are many data points that can be shared with in-transit—anything from current location to the temperature of the trailer as well as fuel levels.

Single Platform Tracking: Many TMS providers can not only track domestic freight, but also international orders as well. This allows visibility across the entire network through a single login.

New Business Insights: Reporting is a cornerstone of any TMS. Providers can collect many data points during the order execution process, and this data can help drive all types of behavior such as: carrier management; procurement; customer satisfaction; and decision making. Using this data to learn from the history will allow processes to be adjusted for future shipments and can help build a dynamic environment moving forward.

While each company will select a TMS vendor based on their own needs it’s important to find a provider that checks as many boxes as possible. Many times, the best provider may not have all the required functionality, but it’s a better cultural fit and both companies are aligned on the strategic direction.

Selecting a TMS is akin to selecting most software vendors, there are many different value streams, it is best to document, use weighted averages and make the best selection supported by data.

Brandon Hamilton, Systems Project Manager, St. Onge