The Role of Transportation Management in Supply Chain

August 10, 2022

The Importance of Transportation Management in a Supply Chain

The term “supply chain disruption” has become too common. Both suppliers and customers often have to wait to receive materials and goods as planned. So, they have to delay their projects which, in turn, delays other projects along the supply chain.
The constant, fluid movement of materials and product – from one point to the next – keeps a supply chain functioning.
Transportation management, then, plays a critical role for companies seeking to create a resilient, agile, and sustainable supply chain.

Benefits of Transportation Management in Supply Chain Management

Here are seven benefits that highlight the role transportation management systems (TMSs) play when they are integrated with other supply chain management systems:

Reduced Costs

Because transportation can represent over half of a supply chain’s operational budget, reducing costs is one of the main reason for investing in a transportation management system (TMS).

When it comes to managing transportation costs, shippers have to deal with many challenges, including:

  • Rising fuel costs —Volatility in fuel prices means shippers must further optimize loads and routes to remain profitable.
  • Carrier capacity—Shippers need to build reputations as “shippers of choice” with their preferred carriers. They are then first in line with carriers who may have limited capacity due to a small fleet, driver shortages, and consolidation through mergers and acquisitions.

Ability to Overcome Geographical Barriers

A supply chain has many physical locations, even around the world. Transportation management makes it possible to overcome these geographical barriers by optimizing loads by transportation mode, such as truck load, less than truckload, and rail.

Increased Supply Chain Visibility

Resiliency and agility requires a level of supply chain visibility only available to transportation managers using the best web-based TMS software. Transportation managers need to know where their freight is at all times. A TMS that integrates well with a company’s enterprise resource planning (ERP) system and other systems gives them this view deep into the supply chain network. It also allows them to make changes when necessary due to changing conditions caused by weather or traffic.

 Ability to Segment Shipments Based on Priority

Not all materials and goods need to be shipped at the same time and the same rate. So, shippers can use a transportation management system to segment cargo and prioritize the order in which they ship items within the supply chain.

Minimized Risk

The many moving parts of a supply chain means it’s easy for changing conditions to disrupt the timely distribution of materials and products. A transportation management minimizes the risk involved in managing a supply chain by increasing the likelihood of on-time pickup and delivery. 

Increased Customer Satisfaction

Customer service levels increase when shippers match demand with on-time delivery of goods.

Transportation management contributes to improved customer satisfaction in the following ways:

  • Develops long-lasting relationships with preferred carriers
  • Allows for a long enough lead time to fully optimize loads and routes
  • Creates flexibility when scheduling pickup and delivery windows

Create & Maintain Sustainable Supply Chains

Companies want to engage in sustainable practices to benefit their triple bottom line – profits, people, planet. This means they need to reduce waste wherever possible. Transportation management software allows them to substantially cut waste from carbon emissions. The result of doing this is that they also increase fuel efficiency and cut costs while building goodwill with the people they serve.