In the e-commerce realm, products and parcels are constantly on the move, carried by various means of transport around the world.
These means of transport bridge the gap between online retailers and consumers — and the ability to manage them effectively can easily make or break your e-commerce business. Especially with customer expectations regarding the delivery experience constantly increasing.
Let's face it: When buying online, consumers have to wait for hours, days, or weeks before they can experience what they purchased. They are left with the uncertainty of what the product is like, often not knowing when it will arrive, or who’s in charge of delivering it.
All of it contributes to the pre-parcel anxiety, that can only be eased by proper transport management and order tracking.
That’s precisely why staying in control of logistics is essential — both for your, and your consumers’ sake.
Luckily, Transportation Management Systems were created for that very reason.
What does Transport Management System (TMS) software means for e-commerce?
In simple terms, a Transportation Management System (TMS in short, also referred to as Transport Administration) is a software solution that helps you oversee and automate transport operations to some extent.
More often than not, a TMS allows online retailers to book transportation, print labels and freight documents, as well as monitor carrier performance.
Having access to such information can not only help you achieve more efficiency but also make more informed decisions about carrier selection, estimated delivery times, and costs.
To do so, traditionally, companies had to purchase on-premise licenses and deploy transportation management systems on their own servers. Nowadays, however, cloud-based SaaS (Software as a Service) solutions are much more common.
The reality is, that cloud-based TMS solutions offer great features at reduced prices, without the need of having a dedicated team for the system’s maintenance. This has opened the door for all e-commerce merchants, regardless of the size of their operations.
The benefits of a Transportation Management System for online retailers
In case you're wondering who uses a TMS, the truth is: every online merchant needs a transportation management system after reaching a larger order volume.
When this happens, transportation management becomes too complex to handle without a dedicated system. It’s practically impossible to keep communicating with carrier companies to book shipments, or — even worse — still take all orders to a carrier’s parcel shop yourself.
If that’s not entirely convincing, here’s what benefits transportation management systems can offer your business:
Smart transport automation means faster operations and lower chances of making mistakes when booking shipments. There’s no need to rely on manual order booking anymore, let your TMS do it for you.
Improved carrier selection and transport planning
You can easily introduce automation rules to always choose the best carrier service for the job. With more advanced TMS systems, you can even choose to select the fastest, cheapest, or most sustainable delivery method for all orders — depending on your business goals.
Streamlined carrier integrations
One of the biggest advantages of a TMS is having hundreds of carrier products at your disposal. This way, you can offer multiple delivery options to your customers, and keep scaling your business with the right carrier partners.
Insights on carrier performance
The more carriers you partner with, the harder it gets to monitor their performance. The transportation management software will help you keep track of your deliveries and use data insights to plan transportation accordingly.
No carrier shortages
Even with multiple automation rules set, a TMS should always have a "fallback mechanism" and book the shipment eventually — even when problems arise with the pre-defined delivery method. This allows you to act quickly when something goes wrong with the assigned carrier service.
There's no denying that advanced transportation management means optimized resources, time, effort, and costs. In fact, a TMS Market Research Study from Arc Advisory Group showed that the majority of companies using such systems report an increase in freight savings.
Improved delivery experience for your customers
Transportation management allows for more accurate delivery plans, estimated times, and order tracking, which ultimately affect the online shopping experience. Don't do it solely for yourself — do it for your customers, too. Research from Shopify shows that consumers are increasingly open to supporting brands if, and only if, they provide accurate information about expected delivery time and its current order status. Let that sink in for a moment.
How does a Transportation Management System work, exactly?
Imagine keep copy-pasting hundreds of address details per day, and then taking all these parcels to your local parcel shop... It’s clear to see that technology offers benefits that manual transportation management just can’t.
But how is this possible? In an e-commerce setting, a TMS “communicates” with carrier companies to do the following:
- Booking shipments - in simple terms, it sends a request to a carrier company to pick up orders from your warehouse
- Generating labels - based on the order details, a TMS generates labels for every parcel that can later be printed
- Fetching order tracking details - a TMS gets a tracking number and a link from the carrier responsible for the shipment
The way a TMS is used depends largely on your tool stack and order volume, though. Smaller e-commerce businesses (up to 200 orders per day, let's say) are likely to export order details from their e-comm platform, and then import them to a TMS to book transportation and print labels for all parcels.
For bigger e-commerce operations with a Warehouse Management System (WMS) in place to fulfill orders, the TMS integration allows for accessing order details automatically, communicating with carrier companies, and fetching labels directly to specific packing stations.
The more advanced the transportation management system, the better the integration between the different parts of your tool stack. When order details are validated, processed, and exchanged smoothly between the systems, setting up automation rules, booking the right carrier services, and keeping your customers informed are much easier.
Features of a Transportation Management System
As already mentioned, the main features of TMS software for e-commerce include shipment booking, label printing, and order tracking.
Depending on your needs and the software you choose, there are at least a few other features and advantages of transportation management systems you can leverage. Including:
- Automated booking rules — when booking shipments, you can set automated rules to choose the best carrier product for the job (the least expensive, the most reliable, the fastest, or the most sustainable delivery option, for example).
- Carrier connectivity — a TMS should support various carrier integrations to book shipments and fetch tracking details. Some systems offer to add carrier products for free, while others might set a limit or charge you for any new additions.
- Shipment history & reporting — a proper TMS should let you access and analyze relevant data insights on order deliveries, carrier performance, and associated costs.
- Shipment consolidation — some TA systems let you consolidate several shipments into one in order to save transportation costs, or when it’s required at any point of the parcel’s journey.
- Handling returns — TMS software assists in order returns by generating freight documents and labels that can be easily forwarded to customers who want them.
Choose the right Transportation Management System tool for your business
Transportation is said to account for up to 50% of the total logistics costs. With the current economic outlook, the emphasis on transport management and associated costs is greater than ever before.
Especially since shipping your products while holding on to the delivery promise is key to successful e-commerce operations.
To offer (and manage) a wide range of delivery options that consumers expect today, every online merchant needs to have a TMS that simplifies complex processes like carrier integrations and continuously assists in optimizing resources.
A modern TMS needs to do all this, and more, while also ensuring exceptional service, performance, and uptime.
Ingrid Transport, as well as competing TMS solutions like Logtrade, nShift and Centiro, are just a few examples of such transportation management systems you can look into. If you’re already using one, it might be high time to have another look at it. What value does it add? What are you being charged for, exactly?
"When you think about it, tasks like generating labels or uploading EDI files are not very complex. Lower value should mean lower costs — if that’s not exactly the case, ask your Transportation Management System (TMS) provider for a business case that justifies what you pay for it."
Anders Ekman, COO & Co-Founder at Ingrid
If you're curious, book a demo to see it in action.