Transportation Management Systems

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.