Transportation management involves a wide variety of planning, execution, and administrative responsibilities. Firms are increasingly adopting Transportation Management Systems (TMS) as an integral part of their information technology strategy. The generalized functionality of a TMS can be described in terms of several capabilities.
Operational Management
From an operational perspective,
key elements of a TMS are equipment scheduling and yard management, load
planning, routing and advanced shipment notification (ASN), and movement administration.
Load Planning
How loads are planned directly
impacts transportation efficiency. In the case of trucks, capacity is limited
in terms of weight and cube. Planning the load sequence of a trailer must
consider product physical characteristics and the size of individual shipments,
as well as delivery sequence if multiple shipments are loaded on a single
trailer.
Movement
Administration
Traffic managers have the basic
responsibility of administering the performance of for-hire and private
transportation. Effective administration requires continuous carrier
performance measurement and evaluation. The advent of information connectivity
has significantly improved shipment reliability. The fact that most shippers
have reduced the size of their carrier base has greatly simplified administration.
Effective administration requires carrier selection, integration, and
evaluation.
Consolidation
At several different points
throughout this text the importance of freight consolidation is discussed. The
fact that freight costs are directly related to size of shipment and length of
haul places a premium upon freight consolidation. In terms made famous by the
late President Truman, the buck stops here, meaning traffic management is the
business function responsible for achieving freight consolidation. From an
operational viewpoint, freight consolidation techniques are grouped as reactive
and proactive. Each type of consolidation is important to achieving
transportation efficiency.
Negotiation
For any given shipment, it is the
responsibility of the traffic department to obtain the lowest possible rate
consistent with service required. The prevailing tariff represents the starting
point in transportation negotiation. The key to effective negotiation is to
seek win-win agreements wherein both carriers and shippers share productivity
gains.
Control
Other important responsibilities
under the control of transportation management are tracing, expediting, and
driver hours administration. Tracing is a procedure to locate lost or late
shipments. Shipments committed across a transportation network are bound to be
misplaced or delayed from time to time. Most large carriers maintain online
tracing to aid shippers in locating a shipment.
Auditing and
Claim Administration
When transportation service or
charges are not performed as promised, shippers can make claims for
restitution. Claims are typically classified as loss and damage or
overcharge/undercharge. Loss and damage claims occur when a shipper demands the
carrier pay for partial or total financial loss resulting from poor
performance.