What Is a Transportation Management System and Why Do You Need One?

If you’ve been feeling the pinch lately in regard to shipping and transportation costs, you’re not alone. According to a recent Wall Street Journal article, “costs for everything—from big-rig haulers and rail transportation to airfreight, parcel carriers, and storage—have risen steeply since the middle of [2017]. And demand doesn’t show any signs of slowing down.” A number of factors, including interest rates, fuel prices, and even natural disasters, are responsible for the rising costs, and many business owners have found themselves blindsided by unanticipated expenses.

However, some handle these fluctuations better than others. The average U.S. business spends $25.30 for each $1,000 in annual revenue on outbound transportation, according to research by the American Productivity & Quality Center (APQC), but this is just the average. Top-performing companies pay as little as $6.35 per $1,000, while bottom performers spend a whopping $53 per $1,000—more than twice the national average. So clearly some businesses are smarter about shipping costs, even in the face of those unexpected spikes. The question is: what are these businesses doing differently, and what are the others doing wrong? One of the major reasons why businesses pay too much for shipping is lack of visibility. When you don’t monitor carriers or utilize FedEx and UPS contract negotiation and measure costs in real time, you can end up with an inflated bill packed with unforeseen charges and even bogus fees. But who has time for all this monitoring and measuring, you may ask? This is where a good transportation management system comes in.

Streamline Your Shipping

Simply put, a transportation management system (TMS) is a system that helps you manage and keep track of all of your shipping schedules and costs. What does that look like? Well, it depends on the size of your company. For a smaller company, a TMS might be just an automated portal used primarily for getting freight quotes. For a larger company that regularly schedules full truckload shipments, however, a TMS may include a fully customized reporting dashboard providing analytics and alerts pertaining to every aspect of its shipping activity. Regardless of what category your business falls into, the goal is to find high-quality vendors at good prices, and a TMS can help you achieve that. Better yet, it can be personalized to fit your needs, with services including any or all of the following:

• Scheduling: This can be automated to cover verification of shipment information, bill of lading distribution, and scheduling of predetermined carriers based on your specific shipping criteria.
• Tracking and tracing: Automated tracking allows you to update customers on their shipments’ status in real time, as well as trace shipments that have gone astray. Customized search tools enable you to search by purchase order number, customer name, etc., for the quickest access to tracking info.
• Invoice auditing: The system can connect directly to freight carriers to handle all aspects of the invoice auditing process, from looking at carrier pricing and ensuring that proper discounts are applied to negotiating any discrepancies and finalizing the invoice amount.
• Carrier management: This part of the system monitors on-time pickup and delivery performance, ensures rating and billing accuracy, and verifies carrier insurance certificates and SAFER scores.
• Claims management: Systematic filing of each claim ensures that you get every penny you are owed in a timely and cost-effective manner.

Best of all, the system can be seamlessly integrated into your supply chain, so that staying on top of your shipping details becomes a natural part of daily operations.
With a TMS, gone are the days of viewing shipping and transportation expenses as non-negotiable costs of doing business and viewing yourself as a victim in the arrangement. Armed with complete shipping information and a direct line to carriers, you will finally have the visibility, organization, and support you need to take control of your company’s shipping once and for all. This will allow you to streamline operations, expect the unexpected, and ultimately, cut your shipping and transportation spend significantly—a major boon for your business.

Predicting the Impact of the 2019 Rate Increases on Your Shipping

Want to get an idea of how the 2018 shipping rate increases have already affected your bottom line? Franklin Parcel can help. Request a 15-minute consultation through the form below to streamline costs and Ben will help you show you how Parcel Auditing works.