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Transportation management system (TMS) software holds the promise of a streamlined supply chain and lower costs through load optimization, efficient route planning and other logistics improvements. But since choosing among the many TMS options can feel overwhelming, it can help to determine your particular needs in order to whittle your choices. Start by considering these four areas.
The first transportation management system software consideration you will need to address is your company type and your transportation needs. Here are some options:
- a shipper, importer or exporter, managing your freight;
- a shipper who uses a third party to manage your physical logistics process;
- a shipper who users a third party to coordinate your transportation (a non-asset-based third party that is sometimes called 4PL);
- an international freight forwarder;
- a freight broker;
- a 3PL, fulfillment house or warehouse operator; and
- a carrier -- ocean, rail, truck or air.
Your company type will factor into determining your TMS needs. For example, let's look at the shipper types: A shipper can be domestic only, or also importing and exporting. Thus international trade functions would -- or would not -- be required. For shippers that use third parties to schedule and procure freight via 4PL, that freight might need load planning, and some schedule and tending, but bidding, evaluating routes, carriers, comparing rates, selecting carriers and so on are done by others. In that case, you would not need transportation management system software to provide such services.
Type of shipping
Another consideration you'll need to make when choosing a TMS is the type of shipping your company does. Here are a few options:
- container loads by ocean, air, truck or rail;
- pallet, carton -- less than truckload or less than container;
- bulk; and
Each of these shipping types point to different functions you'll require of a system. For example, if you are just shipping parcel, you will not need the same type of transportation management system software that a large company with multiple container loads would need.
Your freight spend will also factor into your product needs. Recently, less complicated systems have become available. Because owning and using a TMS can be a lot of data to manage, these simpler products are good news for some businesses. For example, if you're a shipper who uses the same list of preferred carriers or has a modest transportation spend, you won't need a big, complicated system. However, if your company has a lot of multi-leg, multi-stop, multi-mode needs, these must be addressed by the transportation management system software you use.
If your company ships internationally, your TMS will need more complex capabilities than what's required of those shipping only domestically. If you ship internationally, you should look for relevant trade content and software and connectivity processes for security and customs filing. Domestically, these are not needed, but those who ship internationally cannot afford to ignore this as many companies did in the past. Appropriate technical capabilities are now mandatory as part of the U.S. Customs and Border Protection modernization effort, ACE.
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