For many, ERP seems to be a perfect solution to all business disruptions and challenges. It centralizes processes while increasing productivity and providing end-to-end visibility across a company. ERP system manages business information, invoicing, orders, and various other data efficiently. However, organizations still seek another solution to deal with their processes. Why is that so? More often than not, companies that are majorly focused on the supply chain are not able to reap all the benefits of ERP. It lacks the proficiency to handle complex transportation requirements as there are no sufficient tools to meet the goals. Although ERP effectively takes care of human resources, accounting, customer relationships, and more, it is mainly equipped to handle core business functions that do not include external operations. This especially refers to transportation and ERPs are often not designed for this purpose.
Similarly, Transportation Management System (TMS) is one of the most widely used logistics software solutions that streamlines and simplifies transportation processes, reduces costs, minimizes shipping errors, and ensures customer satisfaction. It helps companies perform logistics management functions, such as tracking, rating, booking, and more. Also, its ability to accomplish numerous supply chain functions hassle-free makes it stand out from other software solutions. With ERP integration, TMS can share data between internal systems and shippers can configure the right software for business.
We can clearly say that companies need to consider ERP and TMS integration as when both the technologies are combined, it results in reliable infrastructure that comprehensively manages business requirements. The collaboration between the two allows enterprises to create data from both the systems and make informed decisions, keeping trends and other factors in mind.
Let’s explore ERP and TMS integration more and the benefits your business can derive from this:
Why is ERP Not Enough?
As we mentioned earlier, despite being an effective and helpful tool, ERP lacks various capabilities for supply chain and transportation management. However, there are mainly three reasons that ERP is not enough alone and needs to be integrated with TMS solutions. Find out more about them:
Lacks supply chain management capability
There have been a lot of anecdotes and incidents that clearly imply that ERP lacks the adequate ability or power to serve the supply chain. This is not something that we are learning now and has been a major concern for years. However, to support this argument, we have authentic data collected from various studies and surveys. As per a report, 86% of respondents agree that their ERP system doesn’t offer supply chain management. Yes, this data doesn’t conclude that transportation management solutions are what they need but it is clear that businesses need to implement a third-party system in addition to ERP.
TMS provides the fastest ROI
When we invest in software solutions to get value-driven software solutions, we expect something that can deliver a higher and faster return on our investments. This is exactly what TMS software can do as it has been found that this system tops the list when it comes to offering benefits equal to the cost invested. There are varied reported time lengths until they achieve ‘break-even’ but the median point was less than a year. Talking about other systems, they need at least 18 months or more to reach that point, thereby making TMS a cost-efficient option among all.
ERP Doesn’t Measure Efficiency
ERP lacks capabilities and features to track and measure the performance of freight carriers. However, TMS comes with a logistics key performance indicator function to allow you to monitor their work regularly. As soon as the shipment is tendered out, the logistics team can use TMS to track the shipment through several methods and reports. Using employee self-service software integrated with TMS, you can identify the carriers that are lagging behind their delivery time or schedules. Its electronic integration and advanced tools give you access to a customized portal so you can easily monitor workers and staff while carriers can report their processes along the way using the same system.
TMS ensures increased capability
In a survey, when asked about the most important feature to increase SCM capability, 92% of respondents named transportation management. Apart from supply chain visibility, warehouse management, and e-commerce, TMS was the most popular feature. This clearly shows that it is not only a crucial part of the supply chain but also an integral piece of the ERP system.
Benefits of ERP and TMS Integration
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Now, let’s take a look at how integrating ERP and TMS can address business challenges and offer various benefits to your enterprise:
TMS solutions offer a higher degree of automation in the supply chain which it accomplishes with automatic carrier selection. It allows you to easily enter information once rather than repeating it again and again. A cloud-based ERP system integrated with TMS makes communication smooth and optimized whether you want to share invoices with clients or monitor shipment locations. Also, it provides you with an interface to work with shippers using real-time and up-to-date data for complete accuracy and visibility. During bid analysis, TMS forecasts to inform users how a particular carrier will impact their business finances so they can determine and select the best carrier for transportation.
Moreover, ERP integrated with TMS also offers automatic order processing to reduce day-to-day manual work. Leveraging the benefits of EDI and other advanced technologies, the team no longer has to enter data manually and the information is processed without human intervention, mitigating errors and risks associated with it.
Although ERP offers a great level of visibility into operation across a company, it fails to provide detailed information related to the transportation chain. Therefore, one significant feature offered by TMS and not by ERP is fleet management that allows managers to monitor and oversee their workforce and track their schedules, dispatch, and in-transit communications. With real-time data available readily, businesses can make informed decisions timely and also experience improved agility and responsiveness. Hence, resulting in better inventory control and accurate forecasting. This means that there will be no more added stress and headaches due to unreliable data.
The system also automates driver assignment partially by listing their availability and skills and suggesting the right driver. Fleet managers can conveniently track the location of drivers via mobile devices and make sure that shipment is delivered with the committed time. Through TMS solutions’ transportation intelligence, they can get detailed reports across the supply chain and keep transportation metrics tuned for varied industries, such as the number of late shipments, fuel trends, etc. It offers a better understanding of operations than standard ERP, identifying blind spots with end-to-end visibility.
Better Customer Experience
ERP system consists of customer relationship management tools but integrating it with TMS enhances customer experience significantly, taking it to another level. Transportation management attains this by:
- Scheduling pickup so users can specify location and time for delivery.
- The software also tackles shipment disputes that arise due to conflicting delivery schedules, potential damage to products, and other issues related to goods handling.
- It also allows users to set up appointments via a smart platform which reduces errors in communication and any dissatisfaction.
- TMS also offers a collaboration tool so users can update freight charges and accurately highlight a mistake made during shipment.
ERP without TMS integration restricts your view of the transportation chain. It doesn’t give your real-time access to data which further limits you to address issues before they become major problems for your company. So, why do you face these challenges when ERP is not connected with TMS? There are many factors for this:
- Data may exist only on spreadsheets that require manual input and data entry, hence prone to errors and omissions.
- The transportation data is distributed over several ERP subsystems so there is no centralized system.
- ERP system is not compatible with nor supports all modes of transportation.
- You have access to a small portion or selected part of available carrier data.
- ERP is not available or accessible outside the network which makes real-time communication impossible.
Well, you can overcome these problems by integrating modern TMS and ERP as it provides a complete view of the entire transportation network. Thus, offering several benefits, including:
- Identifying and addressing issues as soon as they arise.
- Delivers predictive data analytics.
- Cloud technology makes communication seamless between you and your carriers.
- You can view transportation activity in one interface.
Supports multiple modes of transport, ensuring value and efficiency.
Comprehensive Transportation Planning
By collaborating ERP and TMS, you get quick access to improved analysis and reports which contribute to better and well-defined planning. A reliable and powerful TMS allows users to consolidate shipments while considering all the factors, such as capacity and route optimization. Furthermore, this reduces the overall costs of shipping and increases the profitability of your business. It handles multimodal shipments which enables businesses to plan the transportation mode that is the most cost-efficient at any point during the entire process.
Also, both ERP and TMS are unable to execute freight management on their own, integration offers added benefits and capabilities of the resources. It unifies all the functions across the organization and provides explicit detailing and information that are required for seamless and smooth transportation. Managers can classify multiple locations in different cities based on various compliance parameters when products are loaded automatically from both TMS and ERP.
In a nutshell, ERP and TMS may have some great features but alone they are not efficient enough to give desired results. Integrating both systems can be an asset to your company as it combines their benefits and helps organizations attain peak capabilities.
So, if you still haven’t given a thought to this, it’s high time that you integrate transportation management and ERP systems to take your business to new heights.
Author’s Bio: Alicia works with the editorial team of A3logics, a leading company offering Big Data Consulting and software solutions. Exploring the latest technologies, reading about them, and writing her views have always been her passion. She seeks new opportunities to express her opinions, explore technological advancements, and document the details. You can always find her enjoying books or articles about varied topics or jotting down her ideas in a notebook.