What a Freight Management System (FMS) Does for Logistics

This article is about what freight management is as an operational activity and how those activities feed into Freight Management System technologies to bring all the great features and benefits of a cloud-based SaaS system to a logistics business.

freight management

As technology and associated complexities grow, Freight management systems (FMSs) are becoming an established standard for digitalized supply chains. Many companies now view them like you would iOS for your iPhone or Android OS for Samsung. Your freight management OS could be considered an FMS as it digitally integrates various logistical components —from inventory and warehousing to transportation and delivery. 

The advent of FMSs has shifted the logistics paradigm of freight management from a support function into a strategic, competitive differentiator. However, some are still on the fence about adopting this technology. And many haven’t taken the time to consider its advantages thoroughly.

Let’s look more closely at freight management systems, how to choose and implement one, and their impact on your logistics activities.

What is freight management?

Freight management is the meticulous coordination of the shipping process. This process begins with the consignor (shipper) and ends with the consignee (receiver), involving several complex steps such as carrier selection, route planning, and documentation. It's about getting goods from Point A to Point B as efficiently, economically, and safely as possible.

Carrier selection is a pivotal activity that sets the tone for how smoothly the shipping process will unfold. This involves scrutinizing multiple carriers based on criteria like cost, reliability, and transit time. Companies might use a tendering process to compare bids from various carriers to secure the best rates and performance guarantees. It's a balancing act of optimizing for cost while ensuring service levels meet the required standards.

Route planning is the next critical step. It involves choosing the shortest path and analyzing road conditions, congestion, fuel consumption, and even geopolitical factors in the case of international shipping. Advanced applications and GIS (Geographic Information System) technology are often employed to calculate the most efficient routes, considering these multiple variables.

Documentation is the legal backbone of the shipping process, making it one of the most intricate elements of freight management. Bills of lading, shipping invoices, and customs forms are just a few examples of the documents involved. Each document must be accurate and compliant with regulations, as even minor errors can result in shipment delays, fines, or legal issues.

ship with docks

What is a freight management system? 

A Freight Management System (FMS) is a software suite designed to digitize and streamline the various tasks involved in freight management. While freight management as an activity involves manual operations, paperwork, and multiple stakeholders, an FMS automates these processes to a large extent. 

It provides a centralized platform where all data converge, from inventory levels and shipping rates to delivery times, significantly reducing the scope for human error and inefficiency. 

Though there are many, let’s look at three notable areas of impact FMSs have on freight management activities. 

Check this out for a closer look at a leading FMS for shippers

Automation: an FMS enables automated workflows that cover everything from task assignments to workflows and report generation. Automations streamline freight management operations, reducing time and financial overhead—and ultimately increasing profitability.

Real-time data and analytics: An FMS comes equipped to deploy these capabilities in an environment where real-time decisions can make or break your logistics performance. Your business moves from reactive management to proactive and even predictive management. 

The FMS filters through the noise to provide actionable insights that inform decisions and lead to quicker transit times, lower costs, and greater stakeholder satisfaction.

Single source of truth (SSoT): An FMS aggregates and stores essential information from communications to legal compliance and invoicing. Storage, timing, and accessibility are key hallmark impacts of an FMS on general freight management. 

In addition, an FMS also integrates with other enterprise software systems like an ERP or a WMS, contributing to a holistic tech stack that optimizes your supply chain operations.

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Key module features of an FMS

It's important to understand the core features and modules of a Freight Management System (FMS) to extract maximum value from it. These key components represent the capabilities of a fully deployed FMS:

  • Automated workflow management: Centralizes all workflow processes, from booking to billing, allowing seamless operational cohesiveness.
  • Carrier management: Offers a platform for evaluating, selecting, and managing relationships with carriers, complete with real-time tracking capabilities.
  • Rate management: Consolidates shipping rates from various carriers for easy comparison and optimal selection, usually with the capability to integrate with your ERP system.
  • Route optimization: Advanced algorithms calculate the most efficient routes, factoring in variables like fuel costs, road conditions, and regulatory constraints.
  • Real-time tracking and visibility: Enables GPS tracking of freight and provides real-time updates, thereby enhancing decision-making capabilities.
  • Inventory Management: Synchronizes with warehousing solutions to offer a unified view of stock levels, reducing instances of overstocking or stock-outs.
  • Billing and invoice management: Streamlines the financial processes by automating invoice creation, approval workflows, and settlement procedures.
  • Analytics and reporting: Comprehensive dashboards deliver real-time insights and KPI tracking, empowering proactive decision-making and performance benchmarking.
  • Compliance management: Ensures adherence to regulatory standards by automating compliance checks and generating necessary documentation.
  • Integration capabilities: Built to integrate with existing enterprise systems, such as ERPs and WMSs, for a balanced tech stack that manages intricate supply chain operations.

Understanding an FMS's features and modules is non-negotiable for any logistics business aiming to evolve from manual, disparate, or on-site systems to an integrated, automated, and analytics-driven paradigm.

What Does a Freight Management System Do? 

At its core, a Freight Management System (FMS) is engineered to significantly elevate the operational efficiency of your logistics process. It accomplishes this transformation through four critical avenues: automation, real-time data and analytics, central information storage and sharing, and seamless integrations. Each serves a distinct yet interconnected role in ensuring your logistics operations are as streamlined and effective as possible.

Automation

Consider the cumbersome task of carrier selection. This would involve sifting through mounds of data, negotiations, and contractual agreements in a manual environment—a process prone to human error and inefficiency. An FMS automates this entirely. With pre-set criteria such as cost, delivery speed, and reliability, the system automatically sifts through an extensive database of carriers, presenting the most optimal choices for your specific needs. This level of automation streamlines the decision-making process and ensures that it is backed by data-driven accuracy.

Real-Time Data and Analytics

Imagine a shipment delayed due to unexpected road closures. This information might not reach you in a traditional setting until too late. However, an FMS equipped with real-time tracking and analytics will instantly inform you of this delay and provide alternative routes to minimize downtime. The system can predict disruptions before they occur, allowing for preemptive action. This immediate access to actionable insights is pivotal for maintaining operational efficiency.

Central Information Storage and Sharing

Managing logistics documents—from bills of lading to customs forms—can be an administrative nightmare. An FMS acts as a single source of truth by centralizing all documentation and information. Any stakeholder can quickly retrieve a document, verify its accuracy, and even update it in real-time, ensuring that everyone is on the same page and compliance is consistently maintained.

Integrations

Take billing and invoice management as an example. An FMS can integrate with your existing financial systems, automating the flow of invoicing data. This ensures that billing is timely and error-free, contributing to a more streamlined financial operation and enhanced cash flow.

These four pillars—automation, real-time data and analytics, central information storage and sharing, and integrations form an interconnected framework that makes an FMS indispensable. An FMS transforms logistics operations through these mechanisms, making them smarter, faster, and more reliable.

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How to Implement/Deploy an FMS in a Logistics Company

Implementing a Freight Management System (FMS) is a strategic maneuver that demands careful planning and execution. Incorrect or rushed deployment can have immediate and long-term ramifications on your logistics operations. Here’s a detailed guide on methodically rolling out an FMS in a logistics or supply chain setting.

Preliminary assessment

Gap analysis: Before selecting an FMS, conduct a comprehensive analysis to identify the gaps in your current logistics management system. This could be as broad as overall inefficiencies or as specific as issues with carrier selection.

Requirements mapping: Post-gap analysis, define your requirements clearly. Are you looking to automate processes, centralize information, or improve real-time decision-making?

Vendor selection

Request for proposal (RFP): Once you clearly understand your requirements, create an RFP detailing your needs and circulate it among potential vendors.

Due diligence: Scrutinize vendor proposals against your requirements, remembering to consider factors like scalability, customer support, and future software updates.

Deployment preparation

Internal team alignment: Get your in-house teams ready for the upcoming change. This often involves training sessions and creating user documentation.

Data migration: If you're moving from another system, plan and execute the data migration process meticulously to prevent data loss or integrity issues.

Pilot testing: Before full-scale implementation, run a pilot test on a smaller subset of your operations to identify potential pitfalls.

Implementation

Phase-wise rollout: Implement the system in phases, starting with non-critical operations. This allows you to fine-tune the system as you go along.

Carrier selection and route optimization: Configure the FMS to automatically handle carrier selection based on your chosen parameters like cost, reliability, and transit time. Similarly, set up the system to optimize routes based on real-time data and pre-defined constraints.

Feedback loop: Set up mechanisms for collecting user feedback and making continuous improvements.

Post-implementation

Monitoring and analytics: Utilize the FMS's analytics tools to monitor key performance indicators and ensure you are getting the intended benefits from the system.

Continuous improvement: The logistics industry is ever-evolving. Your FMS should not be a 'set it and forget it' tool. Regularly update the system and make necessary adjustments based on analytics and changing market conditions.

By approaching FMS implementation systematically and phased, you ensure a seamless transition while laying a robust foundation for logistics operational excellence.

logistics storage warehouse

Choosing the Right FMS

Selecting the appropriate Freight Management System (FMS) is pivotal to achieving your logistical and business objectives. This decision must be both data-driven and strategically aligned with your long-term goals. 

First, assess the automation capabilities of the FMS—how well it can automate manual tasks like workflow management and report generation and how adaptable these features are to your specific requirements.

Another crucial factor is the system's ability to provide real-time data and analytics. Make sure it can offer actionable insights into various aspects of logistics performance, such as route optimization and carrier reliability, which are vital for informed decision-making.

Scalability is also a major consideration. Choose an FMS that will grow with your business. This means it should adapt to increased shipment volumes, potential geographic expansions, or even the addition of new features.

Integration should be seamless. The FMS must easily dovetail with your existing enterprise software like ERP or WMS systems. This ensures consistent data flows and establishes a single source of truth across your organization.

Do not overlook security and compliance. Your selected FMS should adhere to industry-standard security protocols and be compliant with relevant regulations, especially if your operations span multiple jurisdictions.

Remember to factor in the total cost of ownership, which goes beyond the initial setup cost. This includes ongoing operational costs, training, maintenance, and any customization that might be needed. 

Lastly, evaluate the vendor’s reliability. Investigate their track record, customer reviews, and case studies to understand their quality of customer service and dependability.

Check out these 5 tips for freight procurement systems from a leading supply chain SaaS provider. 

Use these criteria to create a weighted comparison matrix, evaluating each potential FMS against your unique requirements. The exercise will give you a quantifiable perspective, reducing untested opinions and aligning the selection process with your strategic objectives.

GoRamp's Freight Management Solution

GoRamp stands out as a top-tier solution in the freight management SaaS marketplace. Backed with industry expertise and an impressive record of client success, GoRamp delivers a comprehensive suite of essential user-centric features

GoRamp’s FMS platform thrives on its ability to empower you with actionable insights through real-time data and analytics, lowering the time needed for decisions to all-time lows. Its advanced automation capabilities cover the full range of logistics activities in any modern supply chain logistics setting.

GoRamp also differentiates itself through its seamless integration capabilities. The system is built to work flawlessly with existing enterprise platforms, offering genuinely unified experiences. Moreover, its emphasis on data security and regulatory compliance makes it a reliable choice for organizations operating in regulated industries or multiple jurisdictions. GoRamp is an agile solution that grows with your business, ensuring your investment is future-proof.

The right FMS will provide invaluable insights, robust data security, and scalability that align with your operation’s growth model. Given its rich feature set, integration capabilities, and 20+ year-long track record, GoRamp is the compelling choice for those serious about optimizing their logistics and supply chain ops. 

Consider your options carefully, but know that with GoRamp, you're making a decision backed by performance, reliability, and industry acclaim. Book a demo to get started.

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