Industrial-wholesale

Transportation Management Software vs Freight Management Software

At Freight Controller we’re discussing supply chain software systems with our customers all the time. And we’ve noticed that some people will say they are looking for a Transportation Management Software (TMS) System and others say they are looking for a Freight Management Software (FMS system), but they are essentially referring to the same thing. So, whilst there is definite overlap in functionality between these supply chain systems, (depending on the ways that different vendors have built up their systems over time), we thought we’d write a short article on the differences between them.

Freight Management Software System

A Freight Management Software system typically is used for managing your third-party carriers; your outsourced freight suppliers. As this implies it offers a centralised system for managing multiple carriers, hence it is often also referred to as a ‘multi-carrier’ system.

To earn the ‘M’ for Management in FMS means the system is more than a mere freight or dispatch system. They usually offer central quoting for least cost carrier selection of all your carriers and central tracking of said carriers’ shipments. Also, some form of basic reconciliation of carrier invoices against the historic freight data is offered within the system, along with other centralised freight reporting.

An FMS system becomes crucial if you have more than one carrier, as juggling between carrier systems to get quotes and to track lost / late freight becomes time consuming, plus you can’t merge data from all of your carriers for reporting purposes. It can also be helpful with just one carrier if you have a need to integrate with other systems, e.g., ERP or WMS, as if you ever have to re-integrate because you want to change carriers that is time consuming and costly, presenting a hurdle to overcome.

Transportation Management Software System

A Transportation Management Software system includes your own employee and subcontracted drivers as well as third-party carriers. Often an FMS system will also offer functionality for this type of transport work as well so it can be confusing. Where the difference, (and we’re talking about the Australian market here), really lies is with capabilities for assisting with loading and routing optimisation of your own ‘internal’ vehicles.

An FMS system may have some basic capabilities for organising Run Sheets and assigning consignments to different internal drivers and some, (like ours) will also have mobile Sign-on-Glass with delivery options e.g., ATL, split deliveries, photo required, etc., etc. So, again there is a blurring of capabilities with these systems, but larger transport and some 3PL companies are best off with a TMS for the extra capabilities.

If you are looking for a freight system to integrate with your ECommerce system that has Inventory Management capabilities, then most likely a cloud based TMS system will be where you need to focus your research. These systems will usually manage your Inbound Freight as well, which usually distinguishes it from a typical FMS system, which focusses on outbound.

A sophisticated TMS may also assist with pick and pack; wave orders; and even optimising freight packaging. They tend to integrate with an online shopping website via APIs to streamline the online shopping process for shippers’ customers.

Saas and Portal Aggregators

SaaS – Software as a Service – refers to a system that shippers can log on to in order to access a service. In this article we are focussing on the transport / freight services, and as such it typically comes preloaded with carrier rates from the Freight Forwarding or Broker vendor. Some are hybrid systems where you can BYO your own rates alongside rates supplied by the vendor of the system. In that way you can compare and select on a consignment level basis the best carrier for your needs either economically or based on ETD – Estimated Times for Delivery.

A Portal Aggregator is similar but usually just housing the supplier’s rates and they can be quite slow to load consignments and print labels as they are browser-based and may have low tech hardware capabilities for printing. This is fine for low volume users who cannot command competitive rates and do not need to prioritise speed for processing their sales orders into shipping orders.

These systems are typically used by small ECommerce / Retail businesses and for office shipments of documents and small parcels. However, if a business is aiming to scale their business, they might be better suited to a TMS with ECommerce and some Inventory Management capabilities.

Conclusion

As you can see there’s a certain amount of crossover between the various systems that assist businesses with managing their freight. A business looking to implement such a system to automate and control their processes needs to carefully research their requirements to get a good match to their current and future needs.

Freight Controller has the expertise to assist with this review process and our software systems have wide-ranging capabilities to meet the needs of ECommerce, Retail, Office, 3PL and Manufacturing, Wholesale & Distribution organisations, so please feel free to set up a meeting to tap into our knowledge in this area when scoping out your RFP requirements for automating your distribution systems.

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