What is a transport management system?

Against a backdrop of constantly rising freight costs and globalised supply chains, companies in the industrial and trade sector with their own vehicle fleets, as well as logistics service providers, are now more than ever reliant on high-performance transport management systems. These aim to put users in a position to determine the transportation needs exactly from a quantitative and qualitative perspective, as well as the aim was to develop appropriate strategies with regard to the distribution of resources, running times, capacity, and monitoring. In parallel, cost savings potentials are to be identified and taken advantage of constantly.

Which tasks does a TMS system cover?

A modular and scalable transport management system comprehensively covers the entire transport process - from order capture through to planning, tendering, scheduling, and processing. It includes monitoring, freight cost calculation, and billing. The synchronised interaction of a transport management system (e.g. SAP TM) with warehouse management and material flow control (e.g. SAP EWM/MFS) makes possible effective, automated formation of order-based picking waves and transportation units, therefore providing reliable notification and delivery for shipments.

At the same time, the prerequisites for the direct integration of gate planning (loading/unloading) and yard management, as well as time slot booking are created. Central control of shipping is carried out in the SAP environment using the shipping cockpit in SAP EWM and the loading status in SAP TM. At the same time, the best possible distribution of freight onto trucks, freight trains, ships, and freight aircraft is ensured. Processes can be standardised, costs as well as CO2 emissions that are damaging to the climate and environment can be significantly reduced.   

How important is ERP integration?

Communication with self-contained transport management systems is generally only possible via complex interfaces. Integrated solutions, on the other hand, are part of the ERP environment, which means that all of the data and information required for the planning, control, control, and optimisation of the transport processes are available transparently and uniformly in a single system. Users can work more flexibly and are able to react even to conditions that have changed in an unplanned manner.

The further the overview of the transport or supply chain extends, the easier it is to localise any issues at an early stage. In order to maintain an agreed service level, appropriate countermeasures need to be introduced, for example by avoiding alternative routes, methods of transportation, or inventories. Integrated transport management of this kind also creates the prerequisites for meeting the requirements of Logistics 4.0.

Transport planning and monitoring

Proper and efficient planning and control of transport and logistics networks depends on a large number of variables. For example, in the run-up to the actual shipments, the time required for the picking, packaging, and delivery of the goods must also be determined. It is also necessary to clarify which resources are available for processing, how the capacities of possible means of transport, such as trucks and trains, can be used as in the best possible way, and, if necessary, combined with each other. In addition it is possible to hand the shipping order over to external logistics companies or CEP service providers. All of this is also always a question of costs.

An integrated transport management system decreases this work. In doing so, the processes for the planning, tendering, execution, tracking, and billing of shipments are supported without any compromises. In addition, the data exchange with customs systems (for example SAP Global Trade Services), as well as a track & trace system (for example, SAP Event Management) are integrated.

An optimal interaction between the system will create clarity relating to question such as:

  • How much weight and volume is transported per contingent?
  • How many load carriers, for example containers, are located within a specific transport relationship?
  • How high are the average transportation costs?
  • How reliably do shipping agents, forwarders and/or recipients work?
  • What is the percentage of dangerous goods transported compared with the total number of shipments?
  • What are the distances between the destinations (warehouses, distribution centres, etc.) and the recipients?
  • How is the time expenditure for the performance of individual transports arranged on average?Wie hoch sind die durchschnittlichen Transportkosten?

What functions does an EMS cover?

Determination of needs
The orders stored in SAP ERP, including all necessary data and documents, are automatically transferred for the purpose of the determination of transportation needs. Analysis, evaluation, and interpretation.

Transport planning and tendering
In the next step, the pending transports are planned and optimised using graphical representations and special drag-and-drop functions, also taking into account various factors such as costs and capacities. On the basis of the planning, freight bookings, and freight orders can ultimately be generated, which in turn are used as a basis for the tender.

Tracking and control
Once the load has been loaded by truck, train, ship, or plane, you can track the stations that it is passing through between loading and unloading via mobile end devices and a web-based user interface. In the course of this, unexpected events are also documented, which may delay the delivery. This can be delays or vehicle damage. In this way, continuous monitoring of the current status in each case is ensured. This process is also supported by document, customs, and compliance management that is also integrated in TMS.

Freight cost invoicing
Freight cost accounting on the basis of agreements filed in TMS is also automated. Here, cost allocation of individual transport costs based on header data single transport costs up to the HU level, as well as distribution to various internal and external cost centres is also possible. The data determined is also finally transferred to the ERP system and is processed further there.

Transport management vs. telematics

In case of transport management systems or transport planning systems such as SAP TM, this is a business-oriented software solution for determining freight requirements, costs, and revenues. It manages, monitors, controls, and optimises the entire transport processing, ensures efficiency in goods movements and interacts with the higher-level ERP system.

Telematics, on the other hand, describes the use of devices in passenger and commercial vehicles for the purpose of determining position data via the internet. A standard application in the area of this information and communication technology is, for example, GPRS (General Packet Radio Service), mobile radio technology that enables data transmission on the basis of connection-free, packet-oriented transmission technology in the GSM network (GSM = global system for mobile communications).

Interaction between SAP TM and SAP EWM

IGZ facilitates optimal transport processes with the efficient combination of SAP Transportation Management (SAP TM) and SAP EWM (SAP Extended Warehouse Management).

With a well thought out software solution in the transport process, you can standardise processes and tap into savings potentials in single and double-figure percentages.

Quantitatively speaking, freight costs can be reduced while at the same time increasing the transparency of the courier services. This allows, on the one hand, the possibility to select the carrier with the best price and, on the other hand, puts you in a better negotiating position for carrier contracts.

SAP Transportation Management (SAP TM) supports you in the following areas:

  • Freight tenders/freight cost simulation
  • Freight capacity optimisation
  • Transport planning (multi-modal)
  • automated carrier selection
  • optimised freight cost shipping (depending on the agreed freight volume)
  • Tendering
  • Event management
  • etc.

In synergy with the SAP warehouse management and the processes within the warehouse, it also facilitates an improvement in the notification and preparation of goods as well as the time slot booking and yard management.

IGZ combines the proven modules SAP Transportation Management (SAP TM) and
SAP Extended Warehouse Management (SAP EWM), providing a fully integrated solution for efficient and transparent monitoring of single or multi-tier supply chains. The optimisation begins in the warehouse; external transport management systems are no longer required. Interfaces, dependencies, and costs will be significantly reduced.

You also benefit from the additional advantages of a full SAP integration:

  • System-supported route planning optimised with regard to time and route.
  • Parallel planning of incoming and outgoing goods shipments
  • Cost monitoring including mapping of framework agreements
  • Strategic analysis and simulation of freight costs
  • Transport tender with manual or automatic allocation
  • Automated carrier selection
  • Condition management (also for managing large quantities in freight agreements)
  • Functions for freight capacity optimisation
  • Real-time tracking of deliveries and storage status in distribution centres
  • Feedback on the delivery status via apps on mobile end devices
  • Real-time transparency through integration of radio data transmission and GPS
  • Automated freight cost invoicing