The transportation industry faced tremendous pressures caused by the pandemic: as a result of a spike in online sales, delivery schedules became much tighter amid rising carriage costs. The Russia-Ukraine war and growing inflation further increased fuel prices and disrupted supply chains.
Embracing digital technologies is essential for transportation businesses to face future uncertainties in a world that is becoming increasingly unpredictable. Digitization fosters innovation that revolutionizes operations, improves efficiency, and enhances customer experience.
By adopting transportation management systems, your business can stay competitive, meet evolving customer expectations, and navigate the rapidly changing industry landscape. You shouldn’t question whether to embrace it, but rather determine how, where and when to implement it.
In this article, I’m delving into the fundamentals of a transportation management application development: its key benefits, essential and competitive-edge features as well as the steps involved in transportation management application development tailored to your business needs.
Let’s start with the basics.
What is a transportation management system?
A transportation management system (TMS) is a software application that helps businesses effectively manage their transportation operations. It streamlines processes involved in the movement of goods and optimizes transportation networks end-to-end.
As such, the system can benefit various stakeholders involved in transportation and supply chain operations:
- shippers and manufacturers
- carriers and freight forwarders
- third-party logistics providers (3PLs)
- retailers and e-commerce businesses
- distributors and wholesalers
- logistics managers
- supply chain managers
Transportation management system vs logistics management software: key differences
We’ve previously written about developing a logistics management software, so you may be wondering how it differs from a transportation management system. In essence, these are two types of software solutions that serve different aspects of supply chain management. They are indeed related and often intertwined, however, there are notable differences between them.
Transportation management system focuses primarily on managing transportation operations and optimizing the movement of goods from one location to another. It includes functionalities that streamline processes such as order management, carrier selection, route planning, load optimization, freight tracking, reporting, etc. TMS helps businesses improve transportation efficiency, reduce costs, enhance visibility, and make data-driven decisions in their transportation operations.
In contrast, logistics management software encompasses a broader scope and focuses on managing the entire logistics and supply chain operations. It includes various activities beyond transportation: inventory management, warehouse management, procurement, order fulfillment, demand planning, etc. LMS provides a comprehensive solution to streamline and optimize end-to-end logistics processes, from the procurement of raw materials to the delivery of finished products.
In practice, TMS and LMS are often integrated or used in conjunction with each other to create a comprehensive logistics management solution that addresses both transportation and broader logistics needs. This integration allows businesses to have end-to-end visibility and control over their supply chain, from procurement to last mile delivery.
Key benefits of a transportation management application development
A dedicated TMS can help future-proof your business for unforeseen challenges. Here are some of the advantages that a dedicated platform can unlock:
Improved operational efficiency
Transportation management application development automates various manual tasks and processes, making your transportation operations more efficient. It eliminates paperwork and reduces manual data entry, giving your employees more time for critical and complex tasks. With a TMS, you also gain greater visibility into business-critical data, which means that you’ll be able to make informed decisions and coordinate transportation operations across the supply chain more effectively.
Cost savings
As TMS enables you to optimize transportation operations, you will generate savings. An ARC Advisory Group survey indicates that businesses can save an average of 7% in freight expenses by implementing a TMS. Consolidating shipments, optimizing routes, and selecting the most cost-effective carriers will help you reduce transportation costs. Transportation management application development can also help you identify and eliminate inefficiencies, such as empty backhauls or unnecessary detours.
Increased supply chain visibility
With a TMS, you also gain real-time visibility into business-critical data, which means that you’ll be able to make informed decisions and coordinate across the supply chain more effectively. Functionalities like tracking shipments, monitoring performance and identifying bottlenecks can help you improve overall transportation planning and execution.
Enhanced customer service
With real-time tracking, businesses can provide accurate and up-to-date information to customers regarding the status and estimated delivery times of their shipments. Additionally, you’ll stay informed about delays or route changes, which means you’ll be able to inform your customers about them promptly, minimizing their dissatisfaction.
Route optimization
TMS optimizes routing and planning processes, by considering factors such as delivery time windows, load constraints, carrier capacities, and real-time traffic conditions to determine the most optimal routes. This means your business will become more productive.
Risk management
Transportation management application development helps businesses ensure compliance with transportation regulations and industry standards. It assists in generating necessary transportation documentation, managing customs requirements, and adhering to safety and security protocols. By automating compliance processes, companies can mitigate risks, avoid penalties, and maintain regulatory compliance.
Reduction of human errors
By eliminating manual data entry and providing real-time information, a transportation management application development reduces errors and improves data accuracy. Instead of relying on paper-based processes or manual input, a TMS integrates with various data sources and automates data capture.
Scalability
Transportation management systems can handle increasing volumes of shipments and adapt to changing business needs. The system can accommodate adding new carriers, warehouses, and distribution centers as you expand your business. Scalability also extends to handling fluctuations in demand and seasonal peaks. With a scalable TMS, you can efficiently manage transportation operations while maintaining consistent service levels and minimizing disruptions.
Improved collaboration
In essence, a TMS acts as a centralized platform for collaboration, enabling efficient communication between shippers, carriers, and customers. It provides shared access to information such as shipment details, delivery status, and documentation. Stakeholders can exchange messages, share documents, and resolve issues in real-time. Additionally, a TMS may include features like automated notifications and alerts to keep stakeholders informed about critical updates.
When to invest in a custom TMS system?
Investing in a custom transportation management application development can be advantageous in certain situations where the specific needs and requirements of a transportation company cannot be adequately addressed by off-the-shelf options. At the same time, in a number of scenarios it may be more advantageous to make use of the options already available on the market. Here are some scenarios where investing in custom transportation management application development can be a wise move:
Unique business processes
If your company has unique or highly specialized business processes that are not easily accommodated by standard TMS solutions, a custom-built tool can help you solve them. A custom-built solution allows you to tailor the system to align precisely with your workflows, operational requirements, and industry-specific processes.
Scalability and growth
If you’re planning to scale in the future or experiencing rapid and unexpected growth, a custom-built TMS will provide the flexibility needed to adapt to changing business needs. You can incorporate new functionalities, integrations with other systems, and accommodate increased transaction volumes as your business expands.
Integration requirements
If you rely on systems or external partners that have to be seamlessly integrated with the new TMS solution, a custom-built option can offer advantages. It allows you to develop the necessary integrations and APIs tailored to your specific requirements.
Competitive advantage
If you identify a unique business opportunity or have a strategic vision that requires differentiated capabilities, developing a custom transportation business software may help you leverage them. Developing proprietary features, innovative functionalities, or specialized modules can be included in a custom TMS to help you gain a competitive edge in the market.
Regulatory compliance
If your transportation company operates in an industry with stringent regulatory requirements, a custom-built TMS can be advantageous. It allows you to develop compliance features and reporting mechanisms specific to the regulations you need to adhere to.
The transportation management system market size is projected to surpass USD 46 billion by 2032 from a market size of USD 12.4 billion in 2022, expanding at a compound annual growth rate of 14.5% from 2023 to 2032, according to GlobeNewswire.
Note that investing in a custom-built TMS will incur significant upfront costs, and may also require an extended development timelines as well as ongoing maintenance and support. We advise companies interested in transportation app development to first conduct a thorough cost-benefit analysis, assessing the requirements, and evaluating the feasibility of customization against off-the-shelf options. Here are some scenarios in which building a custom transportation business software may create further challenges instead of solving them: you may benefit from a ready-to-use solution:
- Budget constraints: implementing a custom TMS can be an expensive endeavor, involving transportation app development, testing, maintenance, and ongoing support costs. In contrast, a legacy transportation business software might be a more cost-effective option, especially for small or medium-sized businesses with limited budgets.
- Time constraints: building a custom TMS from scratch can be time-consuming. It involves gathering requirements, designing, coding, testing, and deployment. If there's a pressing need to implement a TMS system quickly, opting for a legacy transportation business software that is readily available may be a better choice.
- Industry standards and compliance: most legacy TMS solutions often have a long-standing presence on the market and have adapted to meet regulatory requirements. If your business operates in a highly regulated industry where compliance is critical, a legacy transportation business software may already have the necessary mechanisms in place.
- Advanced features and integrations: solutions that are already available on the market will likely offer a wide range of features and integrations, as they have been evolving over time. Leading players may e.g. offer advanced analytics capabilities powered by AI and machine learning. Leveraging existing features can help you save a lot of development time and effort.
- Vendor support and updates: off-the-shelf solutions typically come with support that includes regular updates with bug fixes, security patches and others. With that, your TMS remains up to date and secure without requiring your team to handle all the maintenance and updates themselves.
While legacy TMS solutions have their advantages, it's essential to consider the specific needs of your organization. Custom-built solutions can offer tailored functionalities and scalability, making them advantageous in scenarios where unique requirements or a competitive edge is crucial.
What are the MVP features of a custom transportation management software?
If you’re about to embark on a journey of transportation management application development, consider the basic features you will have to include in the MVP version of your new solution:
Order management
This core feature allows you to efficiently create, manage, and track transportation orders, including order details, pickup and delivery locations, scheduling, etc.
Carrier selection
A TMS has to streamline the process of selecting carriers. A dedicated feature offers visibility into available options, as well as cost and expected transit time.
Route optimization
This component allows you to determine the most efficient routes for every shipment. By leveraging AI and machine learning, this feature can take into account variables like distance, traffic conditions, delivery deadlines, and load constraints for maximum efficiency.
Load consolidation
With a dedicated transportation business software, you can optimize load planning by consolidating multiple shipments into cost-effective and space-efficient loads. This also allows you to save up on transportation costs.
Freight tracking
A transportation management system must offer real-time tracking of shipments. This dedicated feature provides visibility into the movement, estimated arrival times, and potential delays.
Documentation and compliance
A built-in assistant for generating transportation-related documentation is an indispensable feature of a transportation business software. It’s necessary to create bills of lading, shipping labels, customs documents and others. It’s also necessary to ensure your business remains in compliance with regulations.
Reporting and analytics
This feature enables comprehensive reporting and analytics capabilities. It’s what allows you to gain insights into transportation costs, performance of carriers and delivery processes, as well as the overall supply chain efficiency.
Integration capabilities
Seamlessly integrate with other systems like ERP, WMS, and EDI for data exchange and collaborative workflows.
Features that will future-proof your TMS
Staying ahead of your competitors and future-proofing your business for potential challenges requires a combination of advanced technologies and data-driven insights. Focus on improving overall supply chain visibility, efficiency, and customer experience.
Advanced analytics and predictive insights
AI-powered predictive analytics can help you accurately forecast demand, optimize transportation planning, and identify potential bottlenecks or risks in the supply chain. We’ve written a separate article on the potential of AI in logistics forecasting if you’d like to find out more about this topic.
Mobile access
The adoption of mobile technologies continues to proliferate, so developing a mobile app or investing in responsive web interfaces would be a wise move. It will enable users to access TMS functionalities and obtain operational visibility on smartphones and tablets.
Sustainability features
Again, leveraging AI can support your sustainability efforts, such as optimizing routes for reduced fuel consumption, emissions tracking, or reduction of carbon footprint. You can consult one of our earlier articles if you wish to know more examples of AI use cases that contribute to greater sustainability of the supply chain.
Intelligent automation
Automating your operations can greatly improve the overall efficiency of your business. You can include features that automate manual tasks like order processing, carrier selection or generating documents while also reducing errors resulting from manual inputs. AI has a great potential with regards to automation of supply chain and transportation operations.
Customer experience enhancements
Depending on the industry in which you’re operating, you may want to enhance the user experience for your customers. You can provide self-service portals, real-time notifications that will increase customer satisfaction and loyalty, or leverage AI technologies for more personalized experiences.
How to build a transportation management system in 7 steps?
Transportation management application development requires a systematic approach. By following specific steps, you can create a powerful transportation management software that streamlines logistics operations and maximizes efficiency, ultimately benefiting your businesses and customers alike.
Step 1: Conduct market research
Begin with a thorough market research to identify existing transportation business software solutions and evaluate their strengths and weaknesses. This research will help you understand the competition, familiarize with customer needs, industry trends, and potential gaps in the market that your software can address. You should also engage with stakeholders, including logistics managers and potential end-users, to gather detailed requirements.
Step 2: Define the objectives and product scope
Next, you’ll have to clearly define the objectives and scope of the project (a dedicated product workshop can help you at this stage). Determine the specific features and functionalities the software should offer (in addition to the basics, such as order management, route optimization, carrier selection, freight tracking, and reporting) and consider some of the features you’ll have to include to future-proof your solution.
Step 3: Design your TMS
Based on the gathered requirements, design the system architecture of the transportation management software. Define the components, modules, and databases required to build a scalable and reliable solution. Consider factors such as maximizing security, data storage and real-time processing.
Also, make sure you invest in designing an intuitive and user-friendly interface. Incorporate industry best practices for usability and accessibility and include an onboarding process that will allow users to easily navigate the system, input data, and access relevant information.
Step 4: MVP development
Start building your transportation management system with MVP development, following an agile development approach. Begin with the core functionalities, including order management, carrier management, shipment tracking, and reporting.
You will also have to identify the suitable technology stack for the transportation app development process. Commonly used technologies include Java and React.
Step 5: Integration with existing systems
Transportation management software often needs to integrate with various external systems, such as warehouse management, fleet management or dispatch systems. Develop robust integration modules or leverage existing APIs and protocols to enable seamless data exchange between the software and these external systems.
Step 6: Testing
Next, conduct comprehensive testing and quality assurance procedures to ensure the software meets the defined requirements. Perform unit testing, integration testing, system testing, and user acceptance testing to identify and resolve any bugs, errors, or performance issues. Make sure the app can run up to the required speed.
Step 7: Deployment and maintenance
Once the software has undergone thorough testing and quality assurance, deploy it in a production environment. Provide necessary training and documentation to users for effective utilization of the software. This step will also require establishing a maintenance plan to address bug fixes, software updates, and enhancements to ensure the software remains reliable and up-to-date.
Transportation management application development with RST Software
As demonstrated, the transportation app development of a logistics management software is a multifaceted undertaking that requires technical proficiency and expertise in logistics software development. Additionally, it requires a deep understanding of the intricacies and specific requirements of the transportation industry.
We have a dedicated team that can offer extensive expertise acquired over two decades of collaborating with prominent logistics platforms such as Trans.eu, the second-largest in Europe, as well as startups like Bussr and BetterTaxi.
With our comprehensive capabilities, we are well-prepared to assist you in developing your TMS. For any inquiries, please reach out to me directly at magda@rst.software, and I will be happy to assist you further.
People also ask
What are the leading transportation management systems available on the market?
There are several leading TMS solutions available on the market, each offering unique features and capabilities. Here are a few notable ones:
- Oracle Transportation Management: Oracle's TMS is a comprehensive solution that provides end-to-end visibility and control over transportation operations, including order management, planning, execution, freight payment, and analytics. It offers advanced features such as AI-driven automation, real-time visibility, and collaborative capabilities.
- SAP Transportation Management: SAP TM is a powerful TMS solution that enables businesses to optimize and execute transportation processes across all modes of transport. It offers functionalities such as carrier selection, route planning, load optimization, freight tracking, and compliance management. Integration with other SAP modules provides a seamless end-to-end solution.
- BluJay Transportation Management: BluJay Solutions offers a cloud-based TMS that supports multi-modal transportation management, including parcel, LTL, TL, and international shipments. It provides features like carrier selection, optimization, track and trace, freight audit, and analytics. It also offers a collaborative platform for shippers, carriers, and suppliers.
- MercuryGate Transportation Management System: MercuryGate TMS is a scalable and flexible solution that supports the planning, execution, and optimization of transportation operations. It offers features such as order management, carrier selection, rate management, visibility, and analytics. It can be customized to specific industry requirements.
- JDA Transportation Management: JDA TMS provides end-to-end visibility and control over transportation operations, enabling businesses to optimize their logistics processes. It offers capabilities such as order management, planning, carrier selection, optimization, freight audit, and reporting. JDA TMS can integrate with other JDA supply chain solutions for comprehensive supply chain management.
- C.H. Robinson TMS: C.H. Robinson offers a TMS platform called Navisphere that enables organizations to manage their transportation processes. It includes functionalities such as shipment visibility, load optimization, carrier management, and business intelligence.
- Descartes Systems Group: Descartes provides a comprehensive suite of logistics and supply chain management solutions, including a TMS. Their TMS offers features like route planning, carrier connectivity, freight consolidation, and analytics.
- Manhattan Associates TMS: Manhattan Associates offers a TMS that optimizes transportation operations and enhances visibility across the supply chain. It includes features like carrier management, routing, scheduling, yard management, and reporting.
These are just a few examples of leading TMS solutions in the market. It's important to evaluate and select a solution that aligns with specific business requirements, industry verticals, scalability needs, and integration capabilities.
How much does it cost to develop a transportation management system?
The cost of developing a Transportation Management System (TMS) can vary widely depending on several factors such as the complexity of the system, the desired features and functionalities, the development approach, and the development team's location and expertise. It's important to note that building a TMS is a significant investment and typically requires a dedicated team of developers, designers, and project managers. Here are some cost factors to consider:
- Development Team: The cost of hiring a development team or engaging a software development company will depend on factors such as their location, experience, and expertise. Rates can vary significantly between regions and individual developers or companies. It's important to carefully evaluate the expertise and track record of the team or company to ensure they have the necessary skills and experience in developing complex logistics software.
- Features and Functionalities: The cost will depend on the specific features and functionalities required for the TMS. A basic TMS with core features such as order management, shipment tracking, and reporting will have a lower cost compared to a comprehensive TMS with advanced capabilities like route optimization, carrier management, integration with other systems, and advanced analytics. The complexity and depth of functionality will impact development efforts and costs.
- Customization and Integration: If you require customization or integration with other existing systems such as ERP (Enterprise Resource Planning) or WMS (Warehouse Management System), the cost may increase. Integrating with external APIs, implementing specific business rules, or tailoring the TMS to your unique business processes can add to the development complexity and cost.
- Maintenance and Support: Consider ongoing maintenance and support costs for the TMS. This includes bug fixes, updates, infrastructure costs, and technical support to ensure the system remains functional and up-to-date. Maintenance costs are typically calculated as a percentage of the initial development cost per year.
- Infrastructure and Hosting: Depending on your preferred hosting options, there may be costs associated with infrastructure setup, cloud hosting, or server maintenance. Cloud-based hosting can provide scalability and cost savings compared to managing your own infrastructure.
It's challenging to provide an exact cost estimate without a detailed analysis of your specific requirements and project scope. It's recommended to consult with software development companies or experts in logistics software development to get accurate cost estimates based on your unique needs.
