Transporters are starting to recognise the need for technology to improve efficiency and productivity in the face of the rising popularity of e-commerce and consumers’ demand for speed. The increased automation and accuracy is great for both transporters and consumers alike. To the transporter, it translates into greater capacity and a higher delivery fulfilment rate. For consumers, they are able to obtain their items faster and with less hassle. Having moved past the initial deciding process of whether to adopt new technology, many transporters are faced with the next difficult question: What type of software do I need? Which software do I choose?
With so many software systems in the market today, it is understandable that one might feel slightly overwhelmed with which to choose and what benefits each individual system may bring – especially if one is on a tight budget.
So, where does one start? A good starting point would be establishing the objective of adopting the software. In other words – what are your goals? This would form the basis of your decision. Many struggle to choose between a fleet management system (FMS) and a transport management software (TMS), due to the difficulty in differentiating these software. While both are involved in the management of last-mile fulfilment, they focus on different aspects of it.
Fleet Management System
An FMS is a software that allows for information exchange between a fleet of vehicles and a central authority. While specific FMS features may vary, its core value is to gather, store, process, monitor, report on and export information on the vehicle fleet. A constant stream of data is collected in a vehicle itself (via an installed GPS box or an OBD II dongle) and sent over a 2G or 3G network.
Depending on how advanced it is, a typical FMS can:
- Track the physical location of the vehicles
- Perform vehicle diagnostics
- Manage the replacement and monitor the lifecycle of a vehicle
- Improve security and control by immobilising vehicles if they’re stolen
- Perform other additional functions including geo-fencing, keeping track of data parameters in real time, battery levels and tax and insurance dates.
Transport Management Software
On the other hand, a TMS is an operations planning software that optimises pickup/delivery routes, automated dispatching of tasks, and provides real-time visibility on job fulfilment statuses. Most TMS are equipped to handle four important operations of transport management which are planning, execution, post-processing and reporting metrics.
- PlanningTMS are usually equipped with powerful route optimisation algorithms (based on certain specified parameters set by the user such as time-window constraints, maximum laden weight or volume capacity) to aid the planner. The route optimiser outputs optimal routes for each vehicle in the fleet, based on these constraints.
- ExecutionAutomated dispatch to drivers, shipping documentation, vehicle/driver tracking, and electronic Proof-of-Delivery via the driver’s mobile companion app (typical of a modern TMS) enables the operations and ground teams to execute efficiently.
- Post-processingAs all operations data is captured on the TMS, it helps to automate any physical or administrative work relating to: billing, invoicing, consolidating documents and payroll matters after jobs are completed.
- Reporting MetricsA live dashboard and automated key performance indicator (KPI) reports for operations, customer service, and account managers help them make more informed decisions for them to work effectively.
Thus, a key difference between a TMS and an FMS is that TMS solves planning, execution and post-processing (mostly day-to-day ops processes), while FMS focuses solely on fleet telematics and providing visibility on the movement of vehicles.
An FMS is more suitable for companies with asset management issues, e.g. in big countries, where it is not uncommon for vehicles to be stolen or when there is a need to monitor the precise locations of the vehicles, and especially so for long-haul, cross-border or inter-state transportation.
A TMS, on the other hand, is more suitable for companies with planning issues, managing customers’ expectations, consolidating and tracking orders. This is particularly relevant for companies with aim to optimise order fulfilment rates and complete more jobs in a shorter period of time.
It is important to note that TMS and FMS are not mutually exclusive. In fact, they are typically used in combination, working hand-in-hand to meet the increasing demands of last mile delivery. Being able to track the locations of the vehicles via the FMS enable operators or transport managers to better assign tasks or plan delivery routes for drivers based on their known locations, fulfil ad-hoc tasks and maximise resources using the TMS. An FMS bridges the gap in knowledge of vehicle whereabouts, while a TMS addresses the information asymmetries between operators and drivers.
Both TMS and FMS are tools that empower operators to make better-informed decisions, to increase the efficiency of delivery operations. Acknowledging the fact that the role of technology in logistics will be indispensable and that there are operational inefficiencies still waiting to be addressed is a large step towards improving one’s productivity. The next step would be choosing a software that best meets your needs and hopefully, our article has brought you closer to that.
(Do note that the terms FMS and TMS may be used in a reversed fashion in some countries like the US.)