Transport Management System: What You Need to Know

Implementing and operating a Transport Management System (TMS) comes with several challenges that organisations need to address.

Some of the key challenges may be integrating with the existing enterprise systems, data accuracy and consistency, adopting new TMS software, initial investment, global operations and compliance, visibility, data privacy and so on.

Let’s understand the challenges in brief…

Integration Complexity

Integrating TMS with existing enterprise systems like ERP (Enterprise Resource Planning), warehouse management systems (WMS), and supplier/customer platforms can be both complex and time-consuming. Achieving seamless data flow and compatibility across these systems is essential for optimal operational efficiency. Staying current with technological advancements, such as IoT (Internet of Things) for asset tracking and AI (Artificial Intelligence) for predictive analytics, requires ongoing updates and integration efforts to fully leverage emerging technologies within TMS.

Missing Features

A major challenge with TMS is the absence of certain critical features that may be vital for specific operations or industries. For instance, a TMS without advanced analytics for predictive routing or integration with emerging technologies like IoT may hinder its ability to fully optimise transportation operations.

Data Accuracy and Consistency

TMS depends on precise and consistent data inputs for effective route planning, load optimization, and tracking. Inaccurate or incomplete data can result in suboptimal decisions and operational disruptions. Additionally, TMS manages sensitive information about shipments, routes, and customers, making robust cybersecurity measures and compliance with data privacy regulations (e.g., GDPR, CCPA) crucial to safeguard against cyber threats and uphold stakeholder trust.

According to Gartner, poor data quality costs organisations an average of $15 million per year. Inaccurate data in transport management can lead to delays, incorrect routing, and inefficient resource allocation. 

System integration issues: Data discrepancies between different systems (e.g., ERP, GPS tracking, scheduling software).

User Adoption and Training

Implementing a new TMS requires training for staff across multiple departments, including logistics, procurement, and IT. Challenges such as resistance to change and the learning curve associated with new software can impact user adoption and initial productivity.

Cost Management

Although TMS can lower transportation costs through optimization and efficiency improvements, the initial investment and ongoing maintenance expenses can be substantial. Organisations must carefully weigh these costs against the anticipated benefits and return on investment (ROI).

Here are some of the statistics gathered on cost management:

• Fuel represents approximately 40% to 60% of total transportation expenses.

• Labour costs, encompassing driver wages and benefits, constitute 20% to 30% of total transportation expenses.

• Regular vehicle maintenance typically accounts for 10% to 15% of total transportation costs.

• Administrative tasks, such as paperwork and compliance management, can account for 5% to 10% of total transportation costs. 

• Freight costs, which generally comprise 30% to 50% of total transportation expenses, can vary significantly.

• Empty miles, or deadhead miles, can account for up to 15% to 20% of total miles travelled.

• An effective TMS can lower carbon emissions by 10% to 20% through optimised routing, load consolidation, and improved vehicle utilisation, promoting both sustainability and cost savings.

• Using a TMS can enhance on-time delivery performance by 10% to 15%, resulting in higher customer satisfaction and fewer penalty costs.

• Improved visibility and real-time tracking in TMS can reduce inventory carrying costs by up to 20% by minimising buffer stock and improving order accuracy.

• Automation through TMS can lead to efficiency gains of 20% to 30%, reducing manual errors and streamlining operations.
  
  

Scalability and Flexibility

As business needs change and transportation volumes fluctuate, TMS must be scalable and adaptable to support growth and evolving operational requirements. This includes managing peak periods, new transportation routes, and expanding supplier and customer networks.

Visibility and Transparency

Attaining end-to-end visibility across the supply chain remains challenging, especially when managing multiple carriers, third-party logistics providers (3PLs), and various transportation modes. Limited real-time visibility can impede proactive decision-making and responsiveness to disruptions.

Insufficient Information

TMS depends on accurate and comprehensive data inputs for effective decision-making. Insufficient or incomplete information about shipment details, customer requirements, or real-time traffic conditions can result in suboptimal route planning, delays, and increased operational costs.

Load Management Issues

Efficient load management is essential for maximising transportation capacity and minimising costs. TMS must accurately determine load requirements, manage weight distribution, and optimise load planning to avoid underutilizing transportation resources or encountering overloading issues that could affect compliance and safety.

Poor Interface Design

User interface (UI) and user experience (UX) design are pivotal for the adoption and effectiveness of TMS. Interfaces that are unintuitive, cluttered, or difficult to navigate can result in user errors, longer training periods, and decreased productivity. A well-designed interface should focus on ease of use, clear navigation, and accessibility to key functionalities.

Global Operations and Compliance

Managing transportation across international borders requires navigating complex regulations, customs procedures, and trade compliance requirements. TMS must support global operations by ensuring compliance with local laws and regulations while facilitating efficient cross-border movements.

Here are some of the statistics gathered on global operations and compliance:

• In 2020, the global TMS market was valued at approximately USD 7.25 billion and is projected to grow to USD 19.14 billion by 2027, with a CAGR of around 14.2% from 2021 to 2027.

• More than 60% of global trade consists of cross-border shipments, highlighting the need for advanced TMS capabilities to handle customs clearance, documentation, and compliance efficiently.

• By 2030, Global freight volume is expected to grow by 70%, driven by the rise of e-commerce and expanding supply chains.

• TMS can assist companies in meeting environmental regulations like the IMO 2020 sulfur cap by optimising routes and enhancing fuel efficiency, potentially reducing emissions by up to 20%.

Addressing these challenges requires a strategic approach involving cross-functional collaboration, ongoing training, investment in technology infrastructure, and partnering with reliable TMS providers or consultants to optimise implementation and operation.