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Transportation Management System (TMS) — also known as Transportation Management Software, Transportation Management Solution, or Transport Administration (TA) — is a technology that helps businesses plan, execute and optimize the shipment of goods (both incoming and outgoing).
In an e-commerce setting, a TMS “communicates” with carrier companies to do the following:
- Book shipments (which comes down to sending requests to carrier companies to pick up orders from a warehouse);
- Generate labels based on the order details;
- Fetch order tracking details from carriers responsible for the shipments;
- Ensure that each delivery is customs compliant if sending goods abroad.
The way a TMS is used depends largely on the tool stack and order volume.
Smaller e-commerce businesses (say, up to 200 orders per day) are likely to export order details from their e-commerce platform, then import them to a TMS to book transportation and print labels for every parcel.
Bigger e-commerce companies with a Warehouse Management System (WMS) to fulfill orders are likely to use the TMS integration to pass order details automatically, communicate with carrier companies, and fetch labels directly to specific packing stations.
In general, the more advanced a transportation management system is, the better its integration with other parts of your tool stack will be.
TMS solutions for online retailers
Transportation Management Systems have multiple benefits. For example:
- Increased efficiency — Smart TMS means faster operations and lower chances of making mistakes vs manual order booking;
- Improved carrier selection and transport planning — Online merchants can easily introduce automation rules to always choose the best carrier service for the job. A more advanced TMS allows for selecting the fastest, cheapest or most sustainable delivery method for all orders;
- Reduced costs — Advanced transport management means optimized resources, time, effort and delivery costs;
- No carrier shortages — Every TMS needs to have a 'fallback mechanism' and book the shipment against a predefined delivery method when something goes wrong with the assigned carrier service.
A modern TMS needs to do all this, and more, while also ensuring exceptional service, performance, and uptime.
There's no 'one size fits all' here — consideration of the key criteria should help every merchant narrow down their choices and, eventually, choose the right e-commerce TMS for their needs. Some of the best TMS solutions on the market include Ingrid Transport, nShift, Centiro, Logtrade, Sendcloud, Paazl, Shippit, and Seven Senders.