Let’s say you work in supply chain management and your boss has tasked you with finding a vendor that provides TMS (transportation management system) solutions. If you don’t have a history of working with TMS’s or other technology platforms, this could seem like a daunting to-do list item. As you start working through your research, there are numerous common terms that you’ll see on a consistent basis. Here’s a few of them:
Transportation Management System (TMS)
Although this seems obvious, it’s imperative to initially understand what a TMS is. A TMS plays a central role in a company’s logistics processes – from rate visibility and freight optimization to executing shipments and tracking them in real-time. Countless shippers still rely on spreadsheets, e-mails, and phone calls to manage their transportation operations. However, these antiquated practices no longer suffice in a freight market that is dominated by the need for better service and greater transparency.
It’s common to connect a TMS with another external system, such as an ERP (Oracle, SAP, etc.) or API (explained below) integration. This means that information can flow back and forth between the TMS and the external system that is integrated. There are multiple benefits to system integration, including a reduction in manual order entry processes, data-driven analytics, and duplicate order avoidance (no need to update two systems simultaneously. For example, if an order number is updated in an ERP system, it is also updated in the TMS.
Software as a Service
One of the most prominent buzzwords in the tech world right now is “SaaS” (software as a service). This is when software is accessed on the web via a subscription rather than installed on local computers (think of the Microsoft Office product suite). A SaaS model typically reduces IT costs and minimizes the time spent on implementation and management tasks. Most TMS solutions are SaaS-focused, where a monthly fee is paid per user.
A managed solution is a program provided to companies who wish to leverage a logistics firm to manage a single-mode, location, or their entire transportation network. This is usually coupled with a TMS platform and is especially beneficial to companies who use multiple transportation providers and have time-consuming, manual processes for tendering, building orders, and maintaining routing guides. This type of solution provides better visibility into freight operations and saves a significant amount of time.
A freight marketplace is an “elementary” version of a TMS. If a company’s primary goal is to compare live rates from a network of vetted carriers, a freight marketplace does just that. Many freight marketplaces, including Red Tech’s, also have freight booking and tracking functionality.
Electronic data interchange (EDI) is the interchange of business information that allows one company to electronically send information to another company. Shippers commonly will tender their orders over to their carrier partners through EDI, which saves a significant amount of time and mitigates errors.
API is the acronym for Application Programming Interface, which allows two applications to talk to each other. Every time you use an app like Facebook or check the weather on your phone, you’re using an API. Similar to EDI, an API integration enables the connection and exchange of vital information with internal business applications, ultimately providing better service to the end customer.
Freight optimization is a value-added service of a TMS but is most likely one you haven’t heard of often, like the more common terms of quoting or routing guide maintenance. This refers to automatically building consolidated loads and routing them efficiently, leading to cost savings and better on-time delivery performance.
If you’re read through these terms and are still confused about where to go next, sign up for a demo of Red TMS to see how our proprietary technology can help you effectively and efficiently manage your shipping needs.