What is a Transportation Management System (TMS)? A Complete Guide

However important technology’s role may be in transport management, it remains relatively new to the supply chain industry. Transport was being managed manually even until 2010. Despite the existence of tracking systems for several decades, the visibility of consignments remained a challenge.

This complex optimization challenge is known as the vehicle routing problem (VRP) and it involves finding the most optimal routes and schedules for fleets while minimizing costs. By solving this problem, businesses can optimize their logistics processes, save money, and ensure timely deliveries, ultimately leading to happier customers.

The advent of smartphones has significantly changed this landscape by providing cost-effective and accessible applications. This shift has led to a revolution in vehicle routing and optimization. To understand the evolution of vehicle routing, we can divide it into the following key components:

Static or Predictive Routing

The first phase of technology following the era of manual planning was led by Computerized Vehicle Routing and Scheduling Systems or CVRS. Details of the route could be determined with the help of forecasting techniques by studying historical data. Static routes, printed maps, and electronic reports enabled businesses to do all dispatch-related planning for drivers and other assets. This was far from being a completely automated system, but it made manual planning easier by introducing a feedback loop.As expected, CVRS became hugely popular as they quickened the planning process, leading to better utilization of vehicles. A basic map interface support helped bring route-building capabilities as well. This did not mean that there were no drawbacks to the system. Dedicated personnel was required to operate the system and generate plans, and it took a long time to break even due to expensive system installation and implementation. Small businesses could not afford it.

Dynamic or Reactive Routing

Supply chains turned more global and complex around the year 2005. Satellites and cell phones came into the picture, and dynamic routes helped businesses come up with more flexible logistics models. The planner and the driver could now communicate with each other, and the Global Positioning Technology (GPS) system was newly introduced.CRVS were still pretty expensive with long implementation cycles, and not everyone could afford them. Traffic, demand fluctuations, and operational constraints would often render static routes obsolete. There was a need for routing systems to be less predictive and more reactive when handling business constraints. Around this time, Software-as-a-Service (SaaS) based models started emerging that provided vehicle routing solutions even for small fleet owners.

End-to-End Visibility, Real-time Tracking, and Dispatch Execution

Close to 2010, the mandate about the Electronic Logging Device (ELD) fell into place, and electronic devices for trucks were in demand. Real-time tracking and telematics took over, and GPS-based live fleet tracking, proof of deliveries, idle-time recorder, and real-time data transfer came into play. Live dashboards helped view real-time Expected Times of Arrival (ETA), any traffic deviations, and the weather conditions. This was also the time when TMS came into existence which changed the route planning process forever.

Artificial intelligence

As the e-commerce boom happened, the consumer turned king. Omnichannel fulfillment came into the picture, direct-to-consumer distribution and crowdsourced logistics changed the all-mile distribution game. Transport modeling capabilities were brought about by AI-based algorithms, 3D load building, and packing engines. Dynamic rerouting, automatic correction of delivery addresses, more accurate calculation of transportation lead times, and ETA are all a result of sophisticated AI-based algorithms.