TMS vs. ERP: Understanding The Differences And Choosing The Best Fit For Your Business

There is a lot of confusion surrounding the terms TMS and ERP. We get it. Most of the generic explanations online create more questions than they answer. That’s why we’ve taken it upon ourselves to break it down so that you are not left with any more doubts on the topic. 

Our ultimate aim is to ensure that you have a clear understanding of both the systems and how they can benefit your business. Whether you’re a logistics-focused enterprise considering logistics tracking software or a multifaceted organization in need of an ERP, this blog will help you find the best fit for your needs.

What is a TMS?

First things first. What is a TMS and how does it work?

A TMS or Transportation Management System is a system that manages the transport of goods. To put it more elaborately, a TMS helps plan and optimize the physical movement of goods. This movement can refer to any mode of transport like air, water, and land. If the primary focus of your company is transportation and logistics management, a TMS can offer you substantial benefits. 

Some of the key benefits that a TMS can offer include:

• Route optimization 
• Carrier management
• Real-time tracking
• Reduced manual errors
• Cost efficient
• Automates many transportation processes

What is an ERP?

An ERP or Enterprise Resources Planning system offers broad, integrated solutions. Simply put, it is a platform that integrates various core business processes. This results in the comprehensive management of multiple business functions. If your company requires a comprehensive solution to manage multiple core functions, ERP software is your best choice.

Some of the key benefits of an ERP are:

• Integrates multiple business functions
• Improves coordination across departments
• Centralized data and real-time analytics
• Optimizes resource utilization across departments
• Enhances customer satisfaction
• Boosts productivity 
• Cost-effective

Which Should I Choose? A TMS or an ERP?

There is no single answer to this. Which system you choose should depend on the type of company you run and its requirements. 

Any enterprise with complex operations that span multiple departments should choose an ERP system. Many companies in the manufacturing, retail, and healthcare sectors have multiple business functions like finance, human resources, production, and inventory management. These companies would benefit from an ERP system. 

On the other hand, any enterprise that specializes in transportation and logistics operations should choose Transport Management Software. Freight forwarders, third-party logistics providers, and large-scale distributors that need freight management services are examples of companies that would benefit from a TMS. These enterprises would benefit from the specialized logistics management features that a TMS provides. 

In short, enterprises with complex, multi-departmental operations should choose an ERP, while those focused on transportation and logistics should opt for a TMS.

A Better Solution – ERP and TMS Integration

Instead of trying to decide which is the best choice for your company, why not get the best of both worlds? You can take advantage of the transportation-specific functionality of TMS while integrating other core business functions. 

Think about it. A good ERP like Fetche can manage the overall business data of your company. This might include data across multiple departments like finance, procurement, and inventory. Meanwhile, your TMS can manage all your transportation data. By integrating the two you get a comprehensive solution that ensures the continuity of your supply chain. Daily workflows will improve and operational efficiency will be enhanced. The end-to-end visibility will also aid you in making informed decisions.

TMS vs ERP-TMS Integration

To better visualize the upside of an ERP-TMS integration, we have created a tabular comparison. This compares an enterprise that uses only TMS against a company that uses an ERP-TMS integration.

TMS Only

TMS Integrated into an ERP

Limited to transportation and logistics data. Visibility into shipments, carrier performance, and transportation costs. Enhances only transportation processes. Only provides customers with timely shipment information. Only supports transportation-specific decision-making. Only scales with transportation needs. Only enhances collaboration within the logistics team.

Transportation data is integrated with other business functions. End-to-end visibility across the entire supply chain. Enhances overall business efficiency. Provides customers with order status, inventory availability, and better response times. Supports more informed decision-making across the business. Scales with the business, integrating additional functionalities as needed. Enhances collaboration across all departments.

FAQ

1.How does an ERP work?

An ERP system functions as a central control panel or database that connects various business processes. Different departments of your business like finance, accounting, human resources, manufacturing, and supply chain management are integrated into one platform. 

2. What is a TMS workflow?

A TMS workflow refers to the processes involved in the management of transportation operations. A TMS workflow usually includes order management, route planning and optimization, execution, carrier management, and customer communication.  

3. What is the benefit of a TMS?

The benefits of TMS include reduced costs, route optimization, carrier management, real-time tracking, reduced manual errors, and automation of transportation processes.

4.How many types of ERP are there?

There are three types of ERP:

• On-Premise – Installed locally on a company’s own servers.
• Cloud-Based – Hosted on the vendor’s servers and accessed via the Internet.
• Hybrid – Combines elements of on-premise and cloud-based ERP systems. Critical applications and data are maintained on-premise and other functions are hosted on the cloud.

5. What are the three main modules of an ERP?

The three main modules of an ERP are finance, warehouse management (WMS), and procurement module. 

Conclusion

While TMS and ERP systems serve distinct purposes. A TMS offers benefits like route optimization, real-time tracking, and cost efficiency. These benefits make it an indispensable tool for companies focusing on transportation and logistics. On the other hand, an ERP system integrates multiple business functions into a single platform. This enhances collaboration, productivity, and customer satisfaction. 

Choosing between a TMS and an ERP depends on your company’s specific needs. However, integrating the two systems can give you maximum ROI. This is because a TMS-ERP integration provides you with unmatched efficiency and visibility. It ensures proficient management of transportation alongside other core business functions. This will result in improved workflows and better decision-making. Now that you understand the unique advantages of a TMS and ERP system you can make a choice that aligns with your operational needs.