Supply chains face mounting pressure to boost efficiency and transparency. Many organizations have turned to transportation management systems (TMS) as part of these initiatives, but conventional options aren’t always ideal. Logistics companies that truly want to capitalize on digitization must use cloud-based TMS solutions.

TMS software provides a single platform to view, plan, adjust and execute shipments. Cloud-based transportation management systems do the same but run on the cloud instead of locally on businesses’ on-premise hardware. While this distinction seems simple, it has several key benefits.

1. Real-Time Visibility for All Parties
One of the biggest advantages of cloud-based TMS is the ability to access it from anywhere. Because the whole system is on the cloud, employees don’t need to be in the office to monitor or adjust schedules, bills, orders or other factors. All they need is a username and password.

This remote accessibility extends to all authorized parties. As a result, it becomes much easier and faster to resolve once-complicated transportation issues. Everyone can see the same, up-to-the-minute records from anywhere, anytime, removing confusion and enabling quick responses.

Only 6% of companies today have full visibility into their supply chains. Part of the reason is that conventional management systems are too inefficient to share enough information in real time. The cloud removes that barrier.

2. Seamless Collaboration
Visibility and accessibility make it easier to collaborate with people worldwide. When everyone can access the same resources around the clock, conventional time and place barriers to communication are no longer a significant issue.

Remote collaboration is becoming more valuable as organizations embrace home-based and hybrid work. Almost 40% of employees in 2023 worked some or all of their hours from home. These setups are typically more productive, but traditional collaboration approaches don’t work with them. Cloud TMS lets supply chains capitalize on their potential.

Similarly, cloud management systems let partners in other time zones and countries access and manage the same resources. Everyone uses the same network updating in real time instead of sending multiple copies back and forth, so this global collaboration is more efficient and less likely to produce errors.

3. Support for AI
A less obvious advantage of cloud-based transportation management systems is that they enable more AI and automation adoption. Many cloud solutions come with built-in automated features. Even if they don’t, they’re more AI-ready because they don’t have the same hardware limitations as conventional, on-premise setups.

AI and automation are powerful — reducing up to 97% of manual back-office work — but are computationally intense. Businesses’ on-premise hardware may lack the computing resources to run these advanced programs locally. Running them in the cloud instead provides the power they need.

Cloud computing gives organizations access to larger, cutting-edge data centers. They can also scale up almost immediately if they need more power. Consequently, the cloud makes it easier to implement advanced AI applications.

4. Lower IT Costs
Cloud TMS solutions also lower IT costs compared to conventional transportation management systems. That may seem hard to believe at first, as newer technologies often come at a premium. However, the cloud is more cost-effective at scale thanks to consolidation and waste reduction.

Cloud platforms often include multiple apps and functions under a single umbrella. That way, logistics companies only have to pay for one all-inclusive solution instead of multiple separate ones. Today’s businesses spend a collective $4.7 trillion on IT, $9 billion of which goes toward software, so this app consolidation leads to significant savings.

Cloud TMS solutions also reduce costs by removing the need for expensive hardware and installation fees. Similarly, cloud users only pay for the resources they actually use, eliminating wasteful spending on unneeded IT infrastructure.

5. Increased Scalability
Because cloud-based TMS is more cost-efficient, it’s easier to scale. Supply chain demands are growing rapidly as global trade and e-commerce increase, so transportation must be able to expand alongside them. That can be difficult with on-premise TMS solutions but not with the cloud.

In an on-premise environment, businesses must buy newer equipment, switch their systems over to it, install it and get rid of the old infrastructure. That’s a time-consuming and expensive process, so much so that it can’t keep up with current supply chain growth.

By contrast, expansion in the cloud is as simple as paying for a higher tier of service. Teams instantly get access to more space, computing power and features. That way, transportation companies can keep up with the growing pace of change throughout the supply chain.

Modern Supply Chains Need Cloud-Based TMS
Transportation management systems are important for tracking shipments, reducing costs and streamlining reporting. However, these benefits alone aren’t enough to sustain transportation businesses as supply chain pressures increase. These solutions must also be fast, scalable, AI-ready, collaborative and cost-effective.

The cloud enables these crucial advantages. Switching from on-premise TMS to cloud-based transportation management systems enables supply chains to achieve the agility and accuracy they need to survive in a fast-moving, interconnected world.