Transportation Management Software
Transportation management software is a broad term. Large shippers and carriers began developing transportation management software in the 1960’s when mainframe computers became more widely available and affordable. Large LTL carriers such as Roadway Express and Red Ball were pioneers in the field. It is a little known fact that the freight industry created E. (electronic data interchange) during this time frame. Early transportation management software was custom built and run on company mainframes at the large carriers and shippers. As with so many other fields, transportation management software for small or medium sized companies did not begin to materialize until after the introduction of the I. personal computer in 1980. Transportation management software can be as simple as software used to calculate point-to-point mileage or complex enough to manage virtually all shipping functions of a carrier, broker or shipper. Modern transportation management software has standardized into basic functional groups based on the needs of shippers and carriers/brokers. Much of the available transportation management software is sold with these functions as modules that can be purchased separately. Which modules are purchased is usually driven by the size of the company looking for the transportation management software. Transportation management software as applied to shippers can be part of the much larger field of supply chain management or more narrowly focused on supply chain execution. Supply chain management can be defined as the application of information technology to economic order quantity theory. It encompasses virtually every function within a company that deals in tangible products and is usually best preceded by ERP. Enterprise Resource Planning is the company getting its data house in order. It can then think in a more focused way about supply chain management and execution.
Transportation management software as it applies to shippers is most often associated with supply chain execution. The main functional groups here are the preparation of goods for shipment and the effective management of transportation vendors. The preparation of goods for shipment is a function of warehouse management software. The warehouse must stock the products that will later be shipped, pick the products that have been ordered and package or unitize those products for shipment. Management of transportation vendors is an important function of supply chain execution software. Shippers usually need a number of vendors to cover their territory or find it beneficial to have vendors competing for business. Vendor management software uses objective measures to point out the best vendor for any given shipment based on price and service accomplishment. The best supply chain execution software allows for effective communication with vendors throughout the shipping process. Transportation management software as it applies to trucking or broker companies has standardized into three basic functional groups; dispatch operations, equipment management and accounting. Much of the available trucking software is sold with these functions as modules that can be purchased separately.
Which modules are purchased is usually driven by the size of the carrier or broker looking for the trucking software. Very small carriers and brokers can manage dispatch and or equipment on paper. Accounting functions at this level are well served by software packages such as QuickBooks or Peachtree. Carriers that grow beyond 10 so trucks and brokers with 20+ loads per month or can usually begin to see the value of having one or more of the transportation management software modules. Transportation management software designed for the accounting functions is the least likely of three to be offered as a stand-alone product since it depends upon the others for data. Payroll functions can be derived from dispatch operations data such as which driver went where. Invoicing and receivables are also derived from dispatch operations data as in which customer sent what where. Equipment expenses are derived from equipment management functions. Transportation management software designed to integrate with the over the counter accounting packages such as QuickBooks can ease the transition for many small carriers and brokers. Equipment management functions of transportation management software revolve around fuel and maintenance costs.
Fuel, tires, periodic maintenance, and repairs are all important costs to be managed by every trucking company. This type of software can get very complex but is essential to larger carriers and can be a good value to smaller companies. The availability of fuel cost data on the internet has given carriers a new tool to manage those costs as in where and when and how much fuel to buy. Transportation brokers do not have these concerns. Transportation management software designed for dispatch operations is the most likely of the functional groups to be offered as a stand-alone product. It is also arguably the most important of the three functional groups. It is the most important because it can have the greatest impact on customer service. Freight brokers in particular should recognize that this software can give them a competitive advantage. Equipment management and accounting functions are internal; dispatch operations touch every customer the carrier or broker has in one way or another.