Transport plays an important role in your business, influencing your costs, customer satisfaction, stock availability and the overall supply chain reliability. As your business grows it can become increasingly hard to manage transport via spreadsheets, emails and phone calls.
Poor routing, underutilised vehicles and missing delivery windows can result in increased unnecessary costs and lower customer confidence. A transport management system will help you to plan, manage, monitor and analyse your transport.
This will give you more control and visibility within your transport, ultimately improving your efficiency and giving you the ability to react to any issues. There are 5 reasons why you should consider investing in a transport management system.
What Is A Transport Management System?
A transport management system is a type of software used to plan, manage and optimise your transport. It will help organise your shipments, allocate vehicles or carriers, plan your delivery routes, track your shipments, calculate freight costs and provide reports.
The software can integrate with your warehouse management systems (WMS), order management systems (OMS) and enterprise resource planning systems (ERP) to ensure all information is passed throughout your process with no duplication. However, at its core it will always provide you with increased intelligent decision making.
- Reduce Costs And Improve Profitability
Transport can be a large cost to your business. Fuel, vehicle maintenance, staff costs, tolls, carrier costs and administration can all increase your delivery costs. If you are manually planning your deliveries you may be increasing your costs due to inefficient routing, excessive empty runs, over-lapping routes and under utilised vehicles.
Using a transport management system will help you reduce your costs by providing a more structured approach. Route planning tools can help you to efficiently plan your deliveries by considering delivery locations, vehicle volumes, delivery windows and constraints. Shipment optimisation tools may also help you to consolidate your shipments and create fewer deliveries by combining compatible orders. Carrier comparisons can also assist you when choosing the right carrier.
You will gain more insight into your freight costs. This will help you identify any unusual costs, validate invoices and look at the trends in your shipping costs. You can monitor useful KPIs such as cost per delivery, cost per km and vehicle utilisation.
Depending on the density of your shipments, current processes, situations and setup of your system you will see cost savings. A good transport management system will help you to identify where costs are being wasted.
Benefits to your business: Control your transport spend, utilise resources efficiently and improve your delivery margin.
- Improve Deliveries And Customer Satisfaction
Delivery reliability will impact how your customers perceive your business. If deliveries are late, appointments are missed and you can’t guarantee when they will arrive this can cause frustration.
With a transport management system you can help plan and confirm your deliveries. Orders can be organised by delivery location, promised delivery date, vehicle availability and service level requirements. Dispatchers will have a more consistent view of what has been allocated and what needs delivering.
If your system can integrate with tracking systems or carrier availability you can view important delivery milestones and identify any potential delays. This can help you to contact affected customers, change delivery times or put alternative solutions in place. With electronic proof of deliveries your process will be improved.
This will save your internal teams time as they won’t need to call as much and have more clarity on the shipments.
Useful KPIs to track include on time deliveries, first time delivery success, delivery exceptions and customer complaints. Tracking these before and after will show if your investment is helping improve service.
Benefits to your business: Improve your delivery reliability, increase transparency and build better long term relationships.
- Improve Visibility Of Shipments
A common issue with transport is having no visibility. You know your goods have left your warehouse on time but don’t have much information on where they are. You may receive updates from multiple carrier portals, messenger apps or by phone which isn’t always efficient.
A transport management system will help give you one source of truth. If your system can integrate with tracking systems you can view your transport. This could include vehicle, driver and logistics partner tracking. Depending on what integrations you have you can view shipment status, location, estimated delivery time and delivery exceptions.
This can be really beneficial if there are any issues. There could be traffic, vehicle breakdowns, bad weather, capacity issues or changes in delivery requirements. Whilst you can’t prevent these issues you can use your transport management system to identify what impact they have had, prioritise shipments and manage them.
Having your transport integrated with your order and warehousing information will also help. Warehousers can prepare goods based on your dispatch schedule, sales teams can confidently answer delivery questions and managers can look at why deliveries are consistently late on certain routes or partners.
With reliable shipment history you can review how your deliveries are performing, identify exceptions and improve handover between parties.
Benefits to your business: Improve collaboration, identify and manage exceptions quickly and make more informed decisions.
- Automate & Improve Decision Making
Transport teams can often spend a lot of time planning deliveries, inputting shipment information, allocating carriers, creating documentation, calculating freight costs and informing stakeholders. This can take up a lot of time and increase your administration. You are also increasing risk of errors.
With a transport management system some of these processes can be automated. Depending on what features your system has and what integrations you have you may be able to automatically create shipment records, allocate deliveries based on rules, calculate freight costs and capture electronic proof of delivery.
Every completed transport activity will provide you with data to analyse. This could highlight any trends in your deliveries, under utilised vehicles, expensive routes or differences between planned and actual transport costs.
You can use this to improve your carrier performance, change your delivery routes, review your service levels and improve your schedule. Some systems may have advanced features such as predictive analytics or optimisation but this should be considered based on your requirements.
Start with a few KPIs to track such as on time deliveries, transport cost per shipment, vehicle utilisation, accurate freight invoices and time to resolve exceptions. Set baselines and who will be responsible for analysing the results.
Technology will help most if you have accurate data and your staff understand the new process. Training, clear ownership and accurate data management will be key.
Benefits to your business: Reduce repetitive administration, improve consistency and make more informed decisions based on your transport performance.
- Improve Scalability, Resilience & Sustainability
As your business grows it can often be difficult to manage your transport. Adding new customers, more delivery locations, variable demand and more logistics partners can cause chaos. You may also get busy during peak seasons.
A transport management system will give you a good foundation. Having standard processes, shared information and rules for planning will help you scale. You can increase your shipment volumes or distribution locations without having to rely on manual coordination. However, make sure you check whether your system can actually scale.
Resilience is also important to consider. If you have any issues with your routes or capacity you want to have the information to help decide what is the best option. Your transport management system can help you quickly re-plan and communicate with your team if you have the right operational data.
Your transport can also help with sustainability. By having more efficient routing, better vehicle utilisation and less unnecessary journeys this can reduce your fuel use. If you want to track your environmental impact make sure your system can track the right activities, calculations and reporting.
This will depend on changes in your operations, accurate data and ongoing management.
Benefits to your business: Increase flexibility of your transport to help you scale, manage issues and reduce unnecessary resource usage.
How To Choose The Right Transport Management System
Start by looking at the issues you are currently facing with your transport. Understand how your orders are turned into shipments, how your deliveries are planned, where information is stored and what activities are causing delays or unnecessary costs. Speak to your dispatch team, warehouse managers, customer service, finance and IT.
Next decide what features are most important to you. These could include route optimisation, carrier management, shipment tracking, electronic proof of delivery, freight auditing, analytics and integration. Consider if the solution can fit your delivery model, regions, security and volumes.
Ask for a demonstration. Don’t just look at a list of features but ask to see a realistic example of shipments. Consider how easy it is to implement, train your staff, how much support you will receive, ongoing maintenance and overall cost. If possible trial the system with a controlled pilot and set criteria for success.
Conclusion
A transport management system can help you to manage your transport costs, improve your deliveries, increase shipment visibility, reduce administration and prepare for future growth. Using better data will help you make better decisions and having a more efficient plan will help improve your efficiency and customer experience.
The best reason to invest will be based on your issues and results. Choosing the right transport management system and having clear goals and good change management will help you to make your transport more efficient, flexible and valuable to your supply chain.
