Transportation Management Software Development – A Detailed Analysis

A transportation management system, also known as TMS, is a set of software tools that facilitate the smooth functioning of the transport business as a whole. With TMS, transportation and logistics companies can handle their business operations, user acquisitions, and provide unparalleled customer satisfaction through the best possible customer service. With TMS, technological features such as goods tracking, estimated time to deliver parcels, fuel efficiency, vehicle health checks, and other essential tasks can be automatized.

The transportation industry market is composed of several types and services including roadways, airways, waterways, transit and ground passenger transportation, railways, warehouse services, parking management, traffic management, and the like. According to DatamIntelligence, the transportation industry market scope is promising as it is growing at a CAGR of 5.4% for the forecast period 2023-2030 reaching from US $7.1 trillion in 2022 to US $11.1 trillion by 2030.

Since there are many entities and operations involved, there has been always a strong demand for transportation management software development. With the advent and advancement of mobile and web technologies, most transportation companies are equipped with cutting-edge transportation management systems to automatize their internal and external business processes and operations to improve their precision, and productivity while reducing human inputs and, therefore, possible errors.

In this guide, we shall see why you need to invest in transportation management system development, its features, and types, and how to create one to lessen your business’ operational burden.

Why invest in transportation management system development?

Investing in a Transportation Management System (TMS) can significantly improve the efficiency and reliability of your logistics operations. A TMS can streamline your logistics operations as it offers a strategic edge in transport activities coordination. By integrating a TMS, you can optimize myriad operations and processes in your business such as shipping routes, vehicle allocation, and automate freight bill auditing.

LMS can overall improve your logistic operational workflows to support cost management and modernize the supply chain processes to dynamic market changes and customer demands. TMS is a critical tool for all transport businesses looking to thrive in a modest global marketplace.

Here is the bifurcation of the transportation management software benefits –

Reduced transportation costs

A TMS can help transport and logistics companies to find the most cost-effective vehicles and routes which leads to lower transportation expenses. This is achieved through optimizing carrier selection, route planning, and load consolidation.

Reduced operational costs

A good transportation management system can automatize most of the business processes and operations. Hence, companies need minimum human intervention which results in saving costs from operations and deploying the human workforce.

Improved business efficiency

As companies automatize their tasks through customized transportation management systems, they improve in all directions of customer services. From providing real-time tracking to the most efficient routes and time to commence for destinations, every service and approach is improved. Manual tasks such as freight quoting, booking a shipment, and documentation are taken care of by TMS ultimately improving business efficiency.

Enhanced customer service

A healthy transportation management system can offer on-time delivery updates and proactive communication. TMS can help transport and logistics companies offer a better customer experience. The latest trend in TMS is AI in logistics. You  can leverage AI services to install AI enabled chatbots can provide 24/7 customer services to those who need assistance at any hour of the day or night. Ultimately, it builds trust and loyalty.

Increased business visibility

Transportation Management System is known to provide a central repository of all business data which allows companies to gain valuable insights to make the best strategic decisions. Logistics and transportation companies can track the latest market trends and identify gray areas to improve their services. They can also analyze data to optimize their business strategies and roadmaps ultimately contributing to their brand improvement and visibility.

How does the Transportation Management System work?

A Transportation Management System serves as a central nervous system for a logistics and transportation company’s shipping operations. We can divide the functionality and mechanism of TMS into four major steps:

1. Connecting the dots
2.  Smart routing
3. Efficiency boost
4. Accurate/transparent tracking

Step 1: Connecting the dots

What is at the core: integration with SCM, ERP, and CRM

The first step is integrating the TMS with the existing business systems such as CRM (customer relationship management), ERP (enterprise resource planning), and SCM (supply chain management). The integration helps TMS pull crucial data to perform better actions:

• SCM: the TMS gets information about inventory levels, production scheduling, and the location of suppliers.
• ERP: from ERP, the TMS can get details about customer information and billing data.
• CRM: the CRM helps TMS know the purchase history of the customer as well as preferred delivery options.

The result: by combining these data, the TMS gets a holistic view of your supply chain and allows it to make an informed decision in the next steps.

Step 2: Smart routing

What is at the core: data collection for optimization

With the data collected from step 1, the TMS starts working on optimizing the routes.

• Traffic patterns: the TMS considers real-time and historic traffic situations to identify the congested routes.
• Delivery timeframes: the customer-specified delivery window and order urgency are taken care of.
• Overall profit boost: the TMS considers the size and weight of shipments, matches with proper vehicles, and saves fuel costs considering routes.

The result: through this, the TMS generates optimized routes and minimizes travel time, fuel consumption, and overall expenses.

Step 3: Efficiency boost

What is at the core: automated document generation

After the optimal routes are finalized, the TMS automates the process of document generation to save time and reduce human errors.

• Bills of lading: known as BOLs, these documents contain shipment details and are automatized to reduce manual data entry and human-prone errors.
•  Packing slips: packing slips are created along with itemized lists to ensure that shipment contents are accurate.
• Customs documentation: custom is an essential part of this business; international shipments custom documents are generated automatically by TMS.

The result: The automation of these all processes streamlines the shipping process and frees up staff to focus on more valuable tasks.

Step 4: Accurate/transparent tracking

What is at the core: order tracking and shipment status updates

The TMS can provide real-time tracking of shipments to offer total transparency throughout the order-and-deliver cycle.

•  Precise knowledge: all the stakeholders including vendors, shipment providers, and receivers have perfect knowledge of their goods.
• Monitoring: selected authorities can monitor the location and status of the shipments in real time. This allows proactive action on issues, if any.
• Customer communication: the TMS can be integrated with other tools related to customers. This allows customers to track their orders and get automated updates with accuracy and timeliness.

The result: the level of business transparency increases which results in customer satisfaction and loyalty.

Types of Transportation Management System

The transportation management system tools come in varieties to meet ever-evolving business needs. Primarily, there are three types of TMS – on-premise TMS, cloud-based TMS, and finally Software as a Service (SaaS) TMS. They all have different approaches and functionalities based on the transportation business requirements –

On-premise TMS solutions

These solutions are deployed locally within the organization’s infrastructure. They grant total control over customization and data management. Transportation and logistics companies that require strict security measures or specific integration requirements opt for such on-premise TMS solutions.

Cloud-based TMS solutions

Cloud-based transportation management solutions are accessed through the Internet. They offer the best flexibility and scalability so that businesses can access their system from anywhere and anytime. Such solutions are sought by organizations with distributed operations or those that want swift deployment without investing in hefty infrastructure.

Software as a Service (SaaS) TMS solutions

These are cloud-based systems that are availed through subscriptions. With SaaS TMS transportation and logistics businesses can benefit from the features and functionalities of cloud computing like lower upfront costs, stringent security, and automatic updates. Such models are the best fit for small and medium-sized transportation companies that want to manage their operations without heavy IT resources.

Must-have features of Transportation Management Software

The features of TMS should provide essential functionalities to users through which they navigate and access needed information. Since TMS has many stakeholders, it is essential to include holistic features that can make everyone use your system with ease and without hesitation. Here are some of the must-have features of transportation management systems –

Broadly, TMS features can be divided into 5 categories.

1. Transporation planning
2. Transporation execution
3. Process optimization
4.  Administrative tasks
5.  Third-party integrations

Transportation planning features

Transportation planning includes route planning and optimization, vessel or fleet capacity, and necessary digital documentation to make the process legal and fair. Some of the transportation planning sub-division features you must have in your TMS include:

• Order management: it streamlines order processing, tracking, and fulfillment within the TMS to get you efficient logistic processes.
• Tendering: it automatizes the processes that involve requesting and receiving bids from carriers to customize freight procurement.
• Shipment fare management: this feature helps owners manage and negotiate freight charges to ensure cost-effective transportation solutions.
• Load planning: using this feature, one can optimize the loading of vessels by utilizing their maximum capacity so to bring down transportation costs.
•  Documentation: documents are essential parts of logistics. With this feature, you can digitally store, sign, and share transport-related documents like invoices and compliances.

Transportation execution features

Transportation execution includes the operational aspect wherein you can manage the movement of goods from source to destination. The entire process includes jobs like vehicle selection, load tendering, route optimization, and tracking of the shipment to make sure that the goods are delivered safely, timely, and at the right place.

Some of the TMS sub-division of features in this section include:

• Dock scheduling & yard operations: this feature helps you streamline dock appointments and manage yard actions with efficiency and accuracy. You can also optimize resource allocation to make operations smoother.
• Real-time tracking: an advanced GPS tracking for transportation and logistics business can monitor shipment movements and freight locations accurately. You can enhance visibility and enable proactive decisions to reduce delays.
• Communication: communication features through various channels can facilitate a perfect sync among users such as stakeholders, carriers, drivers, warehouse staff, and even receivers for timely updates of all kinds.

Process optimization

The features of process optimization focus on improving efficiency and effectiveness within the transportation landscape. The objective here is to minimize cost and reduce lead times while maximizing resource usage.

Here are some of the most essential process optimization features –

• BI: the business intelligence feature is the most powerful tool to utilize data analytics and gain deep insights into the transportation business. Identify trends and make strategic decisions using the BI feature.
• Route optimization: one of the most essential TMS features is route planning in which you can get the most efficient routes with information on traffic, tolls, distance, and delivery schedules.
• Fleet management: through this feature, you can monitor and manage all vehicles in the transportation business. You can also customize this feature to include drivers and other assets plus schedule maintenance and regulatory compliances.
• Event management: in this feature, you can track and manage all transport-related events like delays, mishaps, and changes in shipment status – everything in real time. This helps improve overall fleet efficiency.

Administrative functions features

The administrative functions are the backbone of any transportation and logistics business. The features for this task can be customized further to handle myriad back-office tasks and ensure smooth business processes and compliances.

The subset of features for this section is as below –

•  Settlement: settlements are the part of transport and logistics business. With this feature, you can streamline the payment process with carriers in a timely and accurate manner.
• Invoices: the feature to generate, manage, and process invoices is helpful to verify charges and ensure accuracy in fiscal transactions.
• Claim management: another feature under admin functions is claim management wherein you can handle and resolve vessel claims easily. It ensures fair compensation for any loss or damage during transit.
• Reports: reporting is a crucial feature of a transport management system. Through this, you can generate comprehensive reports on transportation KPIs, performance metrics, and expenses to make decisions based on evidence and data.

Third-party integrations

Your transportation management system should have a provision to include or integrate third-party APIs or tools. Though you can have these as an integral part of your own TMS software, a more convenient option is to have them as an API. These external bits of efficient tools can augment your TMS efficiency and flexibility.

You can think of AI in logistics to empower your TMS with relevant features and functionalities. Ask your developer to build customized algorithms of AI and ML to integrate into your software solution to enhance its overall functionalities.

Here are some of the most essential third-party integrations you must think to have in your TMS –

• Supply chain management systems: you can integrate your TMS with the SCM platform. it helps you sync the transportation process with overall supply-chain processes. Ultimately, it improves visibility and coordination.
• Enterprise resource planning software: the ERP can seamlessly link the transportation data to have optimum resource planning, finance tracking, and inventory management.
•  Warehouse management software: connect your TMS with WMS and optimize all inventory to improve order fulfillment with accuracy and pace.
•  Accounting software: including accounting tools in your TMS will help you automatize billing, invoice, and finance reconciliation operations.
• Data analytics with BI: you can also integrate data analytics powered by BI with your TMS to get an in-depth analysis of the current market trends, consumer demands, and performance monitoring throughout the system.
• Logistic service provider marketplace: add power to your TMS by having this feature to access a wider network of carriers to boost your business. You can also streamline your rates and enhance your freight procurement ability.

How to create a transportation management software from scratch

Building a market-leading transportation management system asks for strategic planning where in you need to gauge every step taken toward software solution development. Having an in-depth knowledge of the domain of transportation and logistics is essential. You can refer to the guide on software development methodologies to discuss various models with your tech partner and keep vigilance for the best end product outcome.

Here is a step-by-step guide to creating TMS from scratch –

Define your business goal and needs

Before you go full-fledged into TMS development, you need to make business objectives clear. Jot down all the core requirements and objectives that include roadblocks, technical and market challenges, and the like.

In-depth analysis

Once the goal is defined and clarified, the next step is to build a transport management system to analyze the existing business on the ground. You should evaluate the physical processes of the present transportation business operations. The shipment, geographical limitations, and diversity of the fleet are essential to keep in mind while preparing for the analysis.

Build a system architecture

The project goal and analysis of the business on the ground are followed by building a design architecture and keeping it scalable so as to house any change in the future. your system architecture should be flexible enough to handle enormous amounts of queries, data, and other changes in business processes, regulations, and the like.

Craft an intuitive UI

The real making of a transportation management system begins with the step of creating an intuitive user interface. Your UI designers need to mind the ergonomics, user needs, and technicality while creating the user interface. The UI components should go in line with the transportation landscape and symbolically represent your business.

Make UI work through development

The next essential step after creating the best user interface is to make its component functions and respond to user inputs and queries. This is the backbone of any software development phase – programming. The coding is done to make UI components function as per the objectives and predefined actions. The transportation management systems can be augmented with the latest AI/ML algorithms in this development phase to make your system omnipotent.

System integration

The transportation management system is then integrated with other business systems such as warehouse management systems, content management systems, supply chain management systems, enterprise resource planning, and the like. The purpose of including these all with TMS is to enhance its productivity, efficiency, and ease the usability.

Support and maintenance

The transportation management system development does not end with the deployment of the tool on a specific network or platform. You need to fix the deal with your software development partner to support and maintain the TMS at your premises. This helps keep your product up and running flawlessly. It also includes regular updates and bug fixing, if any.

Tech stack for transportation management software development

When you want to build a feature rich and objective oriented TMS, you need to have a perfect tech stack in place. This will help software developers to build a customized solution that is not just scalable but also easily maintainable. These are the tools and technologies you need:

Databases:

• PostgreSQL
•  MongoDB

 Backend Frameworks:

• Node.js
• Django

Frontend Technologies:

• React
• Angular

Integration Tools:

• Apache Kafka
• RabbitMQ

APIs – as necessary

•  Cloud Services:
• AWS
• Azure

DevOps Tools:

• Docker
• Kubernetes

Advanced technologies in Transport Management System

Modern transportation management systems have been witnessing a revolution driven by contemporary technologies. These advancements can empower your transportation and logistics business to streamline its operations and optimize resource allocation while improving customer service throughout the supply chain.

Here are some of the advanced technologies you can integrate into your TMS:

• AI/ML: AI and ML algorithms can analyze historical data to predict traffic patterns to show faster deliveries. Also, it can optimize routes for more efficiency and proactively act before delays occur.
• Chatbot: Chatbots can provide 24/7 customer support. These can be developed smartly to answer frequently asked questions, schedule deliveries, and offer real-time shipment tracking.
• IoT: Another latest technology is the implementation of the Internet of Things. IoT in logistics and supply chain management is making its way into all modern solutions as it can connect vehicles, cargo, and infrastructure through advanced sensors. As a result, you get real-time tracking of location and condition to ensure improved shipment.
• Cloud: Advanced technology integration in TMS could be also a cloud-based solution. It can offer on-demand scalability to manage fluctuating transportation demands. Cloud solutions are known for their data security with encryption and access controls.

The Cost of Developing Transportation Management Software

One of the most commonly asked questions is about the transportation management application development cost. There cannot be a ballpark figure to quote because it depends on various factors.

To build a customized TMS, you need to consider several factors such as how many features you want to have, what is the size of your tool, what all complexities it will house, the security level and intensity, what tech stacks you are using, and top of all where are you outsourcing the transportation management system. A transportation management software development company can help you figure out the budget; nevertheless, it may cost you ranging from US $50000 to US $300000.

Want to build a bespoke Transportation Management System for your business?

Now that you are completely aware of the entire lifecycle of building TMS, you can think of having a comprehensive solution to smoothen all your business operations. You can find a tech partner to build logistics software development solutions customized to your business needs and project scope.

You can further explore the latest technologies such as AI trends, ML algorithms, and blockchain technology to make your LMS more secure, user-friendly, and future-proof to accommodate changes that the market demands in the future.

Ketan Chavda

With in-depth knowledge in International Business Management and Information Technology, he can effectively craft business enhancement strategies and can skillfully untangle technical complexities. This has laid the path for him as the Co-Founder and MD of Prismetric . Writing about the new age technology and sharing his thoughts on the continuously evolving business trends keep him content.