Companies use transportation management systems (TMS) and enterprise resource planning (ERP) software in various ways. These two types of solutions are often confused with each other -- but they're not the same thing, and knowing the differences between them can help your company choose the right solution for its needs. We'll explore those differences here, starting with a simple explanation: TMS helps you optimize your transportation strategy in the short term, while ERP helps you plan for the future.

TMS and ERP are two types of software that help companies manage their supply chains. Both tools are designed to optimize efficiency, but they differ in their focus and scope. TMS focuses exclusively on transportation execution, while ERP also covers long-term planning and forecasting.

TMS is focused on one part of a company's supply chain -- transportation. It's the software that helps you manage your transportation operations, and it includes features like:

• Managing the movement of goods from point A to point B
• Managing the resources used in this process (such as drivers, carriers, etc.)
• Maintaining visibility into all shipping activities

ERP, by contrast, manages multiple areas of a supply chain.

Although ERP is sometimes called a “supply chain management” tool, this is not entirely accurate. ERP systems are used for all kinds of business functions—accounting, sales and marketing, human resources and more. However, in contrast to TMS software (which manages the transportation portion of a supply chain), ERP systems are much broader in scope and capabilities.

ERP software is used by companies that operate in multiple locations across multiple industries—from manufacturing plants to retail stores to call centers—because it helps them manage their entire operations. For example, an ERP system might allow you to track:

• How many products have been shipped from your warehouse each day over the last three months
• Which customers bought what product on which date at which location (if you sell online)
• What inventory levels are like throughout your different warehouses around the world

A TMS is a software solution that helps you optimize your transportation strategy in the short term. It’s focused on the execution of transportation and logistics processes and comprises several modules.

Here are some examples:

• Route Planning & Optimization: Helps you plan and optimize your routes by using established algorithms and mathematical models. For example, it can help you find an optimal route for your fleet based on factors such as road conditions or legal regulations. The result is an optimized transport plan with real-time data that can be used to monitor deliveries online or via mobile device.

ERP, by contrast, is used for long-term planning and forecasting. ERP is used for accounting, finance, and human resources. It can also handle supply chain management, customer relationship management, and business intelligence. ERP systems are often the main information system for large organizations with multiple divisions or branches.

ERPs have a broader scope than TMSs because they're designed to help you manage your entire organization rather than just one department's goals. The goal of an ERP is to provide a single source of truth across all departments so you don't end up with conflicting data or incomplete information—which would inevitably lead to mistakes that could negatively impact productivity.

In addition, TMS is typically cloud-based while ERP can be on-premises or cloud-based. TMS is a subset of ERP and it focuses on the planning component of an organization’s operations. This could include forecasting and inventory management.

The main takeaway: TMS software helps you optimize your transportation strategy in the short term, while ERP helps you plan for the future. Takeaway: To optimize your transportation spend, choose an integrated TMS solution with optimized routing and freight procurement tools to deliver greater cost savings across your entire shipping network

If you're thinking about choosing a new TMS or ERP solution, the main takeaway is this: TMS software helps you optimize your transportation strategy in the short term, while ERP helps you plan for the future.

If you're looking for more information about TMS and ERP solutions, we've got plenty of other resources on the subject. For example, if you want to learn more about TMS in particular, check out this article where we answer common questions about transportation management systems. If you're ready to start investigating your options for either system -- or both! -- we'd love to help. Click below to get started with a personalized demo of CargoPlanning and see how our transportation solutions can work for your business.