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Benefits of Transport Management System – Why Use Them?

May 26, 2018

The global trade volume is growing each day with logistics networks getting complicated and growing in volume as well. The cost of shipping extends way beyond shipping costs. Furthermore, shipping doesn’t only include the cost aspect. If you are looking to gain a competitive edge in the market, it is essential to shorten the time-to-market, which can be achieved through a quicker logistics network. A transport management system (TMS) can help companies move freight from the origin to destination reliably, efficiently, and cost-effectively. Leveraging a transport management system helps companies to maximize the revenues based on process enforcements, optimizations, and analytics. A transport management system can help companies save on freight costs and perform better in service levels. So how does a transport management system actually benefit a company?

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Increased Customer Service

A transport management system offers reporting and analytics capabilities that analyzes the effects of business decisions on the logistics network. Shipping carriers can be chosen based on various criteria ranging from cost, transit time, and insurance limits. Companies choose multiple carriers depending on the requirement they have at that particular moment. A transport management system with a thorough reporting capability can show a detailed report on which carrier got the product to the customer on time reliably. This way they can choose carriers based on their efficiency without compromising on customer service.

Increased Warehouse Efficiency

It would be confusing at the first sight on how a transport management system can help improve warehouse efficiency. However, it is evident that if a company can fully trust its logistics network, they can operate with lower inventory. Additionally, using a transport management system decreases time on freight management, which can then be used for other warehouse duties. Furthermore, a transport management system decreases data entry errors and improves warehouse efficiency to further cost savings.

Cash Flow Improvements

In a traditional freight management system, a lot of expenses are incurred in terms of invoicing costs, which could be as high as $11 per freight invoice. Employing a transport management system can reduce the overall cost to just a fraction of that by using freight accounting, auditing, freight payment, and consolidation services. Companies can save costs further by employing an outsourced provider of freight accounting services.

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Reduction in Inventory

With a transport management system in place, you can be confident that your customers receive the shipments on time. This would allow you to plan your inventory on hand more effectively. Gaining an accurate forecast of your inventory can essentially allow the company to operate with lower inventory.

New Delivery Capabilities

A proper transport management system offers companies with the ability to optimize shipment options. For instance, a company may want to pool distribution points or setup inbound programs between multiple locations, which increases the efficiency and cost.

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