Outbound Logistics: Do you need a Transport Management System (TMS) or a Route Optimisation Solution?


In the past, you couldn’t have your cake and eat it too. Automation of logistics administration and financials was only available via a TMS, but optimising routes and loads to ensure compliance, cost savings and customer service was only available via a Route Optimisation Solution. Integrating the two systems was possible, but often complicated by lack of integration capabilities on the TMS side and overlapping functionality for execution flows.

Stick to Excel or choose to outsource

This meant that shippers had to choose one or the other, or use the old-fashioned combination of Excel and a whiteboard, or outsource the whole challenge to a 3PL. To make this decision, shippers traditionally asked themselves the following question: “Are the fleet resources dedicated to my fleet/company?” If YES, then a Route Optimisation Solution made sense. If NO, then a TMS was needed.


Think differently about your fleet

However, the line between TMS and Route Optimisation Solutions has become even more blurred recently. Some TMS solutions claim to include route optimisation functionality. And now some Route Optimisation Solutions claim to include rating engines and carrier execution modules. So, which approach is best for your company?

We propose that shippers ask a slightly different question about their fleet: “Are most of the loads dedicated to my company?” If the answer is YES, then a Route Optimisation Solution with some TMS capabilities is likely the best solution. If the answer is NO, then a TMS, or possibly even no solution, is the best answer.


A new way forward

In recent years TMS advancements have been focused on providing ERP/back office capabilities for transport providers. TMS solutions that claim routing optimisation generally support only very basic functionality that is not fit for purpose in Australia.

Recently ORTEC started a project with a large Australian timber company. This project includes route optimisation functionality to optimise routes, but also includes:

  • Rating engine in support of self-invoicing carriers and assessing cost to serve by customer ship-to address
  • Driver smartphone mobility app to capture actual times in support of re-planning on the day of execution, better understanding of bottlenecks, and better customer service (the status/ETA of the order is always up-to-date and available in the CRM)
  • Driver smartphone mobility app to capture POD signatures and store them with the order, to support quick settlement of “the goods never arrived” disputes
  • Embedded Load Building to confirm feasibility of optimised routes and provide a loading suggestion to the forkie that will ensure a legal load.

ORTEC’s Routing and Dispatch solution combines ORTEC’s world class route optimisation functionality with traditional TMS capabilities.

It seems that now you CAN have your cake and eat it too.

Relevant links

Questions? Contact Richard Simpson directly via email.

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