What Is a Transportation Management System (TMS) And What Does It Do?

Managing your business’s transportation network can often feel like trying to solve a Rubik’s Cube blindfolded. With so many moving pieces—freight, carriers, real-time tracking, multiple modes—keeping tabs on each component without slowing down performance or blowing up costs is a major juggling act. That’s where a transportation management system (TMS) comes in. 

You’ve likely heard the term, but may have some questions. Like what is a TMS system exactly and what does it do? Who can use it and how does it differ from other logistics systems like enterprise resource planning (ERP) and warehouse management systems (WMS)? This article will answer all your burning questions.

What Is a TMS?

A transportation management system (or TMS) is a software platform specifically designed to streamline and optimize end-to-end transportation and logistics operations. In simpler terms, it’s like the command center for your entire transportation network. Think of it as the behind-the-scenes powerhouse that helps you plan, execute and monitor the movement of goods—by land, air and sea.

A TMS solution gives your business a bird’s-eye view of its supply chain network, enabling you to make smarter, data-driven decisions to improve shipping efficiency and reduce costs. From carrier management and freight rate analysis to tracking shipments in real time, a TMS provides the visibility and control you need to keep goods flowing, costs low and customers satisfied, all while balancing sustainability needs.

Within a TMS, you can compare rates, organize shipments and track their journey to delivery. You might be shipping raw materials or finished goods, either way, a TMS keeps track, whether inbound or outbound, domestically or internationally.

How Does a Transportation Management System Work?

By automating and improving the movement of goods, a TMS enhances business efficiency and reduces overspending. It can be broken down into a few essential functions. Here’s a quick overview of what goes on under the hood:

• Order Management Integration: Order management integration (OMS) is the starting point of any TMS journey. This is where the software pulls in shipment details from systems like ERP, ensuring all transportation activities are in sync with broader supply chain processes. This includes customer orders, purchase orders or inventory transfers, laying the groundwork for streamlined planning.

• Carrier Management: A TMS manages relationships with carriers and logistics providers, offering you insights into carrier performance, cost metrics and service levels. It automates the booking of shipments, allowing you to compare and select carriers based on cost-effectiveness, reliability and speed so that each shipment is handled by the most suitable partner.

• Route Planning and Optimization: A fully integrated TMS uses advanced algorithms to identify the best routes and transportation modes, considering factors like distance, historic traffic conditions, delivery timeframes and cost. The system quickly analyzes data to choose the most efficient routes, select carriers, consolidate shipments and plan routes—saving you time and fuel costs.

• Freight Cost and Rate Management: Freight costs are a significant part of any logistics budget. A TMS solution reconciles freight bills with the actual services provided and enables your business to manage, track and compare freight rates across carriers. This automated process reduces errors and flags discrepancies. With real-time visibility into costs, you can ensure accurate payments, saving time and reducing the financial risks associated with manual audits.

• Execution and Tracking: After planning, an advanced TMS takes charge of dispatching shipments and generating the required documents. Here, you have a clear view of the movement of goods and end-to-end visibility of your shipments in transit, their estimated arrival time and details of any delays or reroutes. Your logistics team can then monitor delivery progress, anticipate delays and adapt quickly to disruptions.

• Reporting and Analytics: Finally, the best TMS systems provide robust analytics and reporting capabilities, helping you identify trends by giving insight into metrics like cost per mile, carrier performance, on-time delivery rate and fuel usage. These analytics enable data-driven improvements, helping you optimize your transportation network over time.

When all these components work together, a TMS system can transform your transportation management into a proactive, efficient and transparent operation. It reduces costs, enhances operational efficiency and improves customer satisfaction by ensuring goods are delivered on time and as expected. With a TMS, your logistics professionals will feel prepared and ready to handle any situation.

Who Can Use TMS Software?

The good news is that TMS isn’t just for mega-sized corporations. Businesses of all sizes across a range of industries—from logistics providers and fashion brands to food and beverage organizations, manufacturers and beyond—are discovering the benefits of TMS software for their transportation operations.

Small and mid-sized businesses can use TMS to stay competitive by optimizing routes, tracking shipments with accuracy and improving cost management. While larger organizations can benefit from huge economies of scale, significantly reducing costs and simplifying complex supply chains. In short, whether you're moving small parcels or large freight, a TMS provides the flexibility to support your transportation needs.

So, let’s break down what types of businesses can benefit from a transportation management system and who within your organization will be using the software.

Types of Businesses That Can Benefit From TMS

Basically, a TMS can benefit any business involved in moving goods across a supply chain. It’s particularly valuable for industries such as:

• Manufacturing: To coordinate the transport of raw materials and finished goods across multiple locations, manufacturers rely on TMS solutions to streamline shipping, manage carrier selection, ensure on-time, in-full (OTIF) delivery and reduce transportation costs.

• Retail and E-commerce: TMS facilitates complex distribution networks for fashion and retail businesses, enabling faster response times to market demands like same-day and next-day delivery—all while maintaining efficiency despite high order volumes.

• Food and Beverage: Implementing a TMS system here ensures fresh, safe and timely delivery of consumables and in-demand goods with optimized route planning and visibility, while maintaining strict regulatory compliance and accurate records.

• Third-Party Logistics (3PL) Providers: 3PLs and companies managing fleets or carrier networks utilize TMS to optimize routes, select cost-effective carriers and improve delivery accuracy. TMS also aids in reducing fuel consumption, providing shipment tracking and supporting multi-modal transportation planning while seamlessly integrating with client systems.

• Distribution and Wholesale: These businesses typically manage high volumes of goods on complex delivery schedules. Therefore, a TMS is pivotal to enhance coordination between suppliers, warehouses and customers, ensuring timely and cost-effective deliveries that adhere to retailer requirements.

Types of Users Within Your Organization

Who within your organization is likely to be using this software in their day-to-day role? Well, a TMS is a versatile tool and supports a variety of functions including:

• Logistics Managers: Responsible for overseeing the entire transportation network, these professionals use TMS to plan, monitor and optimize shipping operations.

• Supply Chain Directors: They rely on TMS to ensure the alignment of transportation with broader supply chain strategies.

• Transportation and Dispatch Coordinators: Often on the front lines of managing shipments, these team members use TMS for execution and tracking.

• Finance and Procurement Teams: These groups analyze TMS data to track transportation costs and negotiate better rates with carriers.

• Customer Service Representatives: With real-time visibility into shipment statuses, customer service teams can provide accurate updates and resolve issues quickly.

• Business Leaders and Executives: These teams can leverage a TMS to analyze data, view performance metrics and optimize costs to evaluate the performance of transportation functions and plan strategic improvements for the business.

By providing accurate, accessible data and meeting the needs of multiple users across your business departments, TMS solutions create a unified approach to transportation management. So, you can say goodbye to disparate systems, communication silos, data inaccuracies and laborious manual processes, and instead say hello to automated workflows, increased collaboration, end-to-end visibility and improved efficiency. All of which empowers you to deliver better customer service for lower costs.

TMS vs. ERP and WMS: Key Differences

Your company may already have an enterprise resource planning (ERP) system or a warehouse management system (WMS) in place. So, where does TMS fit into the picture? While it’s a powerful tool for transportation, it’s often confused with other systems like ERP and WMS. Here’s how they differ:

Integrating TMS, WMS and ERP

As you can see, each system plays a distinct yet complementary role in managing your business operations. When integrated, ERP, WMS and TMS work together to provide an end-to-end supply chain solution. By sharing data and standardized documents, they ensure each step of your supply chain is optimized and efficient.

For example, when your TMS shares delivery updates with your ERP and WMS systems, your business can track goods in transit all the way from production to customer delivery. And when you align inventory levels in your WMS with sales forecasts in your ERP, you can maintain stock accordingly and reduce holding costs, making significant savings across your supply chain. You can even ensure on-time delivery of goods through TMS route optimization informed by WMS order readiness data so that ETAs are consistently met.

Together, these systems create a robust and comprehensive supply chain solution, with each system handling different tasks. If the thought of capital expenditure and implementation timelines for all three makes you pale in fear though, don’t worry. Each system delivers great benefits alone, allowing you to add to your overall tech stack as you progress through your digital transformation—unlocking additional benefits as you integrate each new piece.

Do I Need Both TMS and Routing and Scheduling Software?

This is a question that comes up frequently when organizations are evaluating logistics software as on the surface it seems both systems do similar things. The short answer? Yes. For many companies, transportation needs extend beyond core TMS capabilities so if you want to boost your optimization and gain full control over your logistics operations, it’s worth adopting software extensions.

Choosing the right mix of TMS and routing solutions can give your transportation network the best of both worlds: broad oversight and granular route optimization. For this reason, you should partner with a vendor who can provide a full suite of transportation management solutions with advanced features—just what you need for managing all your complex logistics requirements. Complementary tools for your TMS software include:

• Routing and Scheduling: Advanced route optimization capabilities are particularly useful for businesses managing their own fleet as well as using carriers—they allow you to efficiently plan delivery routes and schedules in alignment with customer demands and logistics constraints. This software helps minimize fuel costs, reduce delivery times and improve customer satisfaction.

• Live Routing and Execution: Live routing solutions enable you to monitor what’s happening on the road and adapt to real-time changes in route requirements, ensuring that unexpected delays, closures or priority changes are managed instantly. This flexibility is key for businesses handling dynamic and complex delivery scenarios.

• Proof of Delivery: Having proof of delivery capabilities allows drivers to capture digital signatures and photographic evidence upon delivery. This feature enhances accountability and improves record-keeping, enabling efficient resolution of any delivery issues. Combined with a TMS, it gives you visibility until the delivery is in your customers' hands.

These logistics solutions are designed to meet your diverse and evolving transportation needs and with these functionalities in your arsenal, scaling operations, optimizing routes and enhancing delivery reliability is made easy.

Why Implementing a TMS Matters for Your Business

If you’re looking to reduce transportation costs, boost operational efficiency and improve customer satisfaction, implementing a TMS is one of the smartest moves you can make. The benefits of streamlined carrier management, real-time shipment tracking and improved route planning all add up to cost savings and operational resilience.  

With Aptean as your partner, you can achieve all this and more. Our TMS system will position your business to scale effortlessly, with the ability to add carriers, transportation modes and routes as needed—all without sacrificing your operational efficiency. What’s more, our dedicated support team and panel of experts deliver innovative product developments and offer lifetime support to ensure you’re getting the most from your software—so your business always stays ahead of the curve. 

If your organization is ready to improve its transportation operations and gain greater visibility and control over logistics, Aptean’s advanced TMS software solutions are invaluable tools in achieving those goals. From our core multi-carrier and multi-modal TMS system to our best-in-class routing and scheduling software, we’ve got everything you need to accelerate growth and profitability in your transportation operation.

Are you ready to take control of your transportation network and unlock cost-saving potential? Contact Aptean today and discover how our TMS solutions can elevate your supply chain to the next level.