What Does TSM Stand For? And Other Freight Terms to Know
Supply chain management has changed throughout the years. Some of the most noticeable developments are related to technology, including the evolution of data science and artificial intelligence.
Inevitably, as the field continues to advance, the terminology serving as the foundation of the freight and logistics industry also changes. It can take a lot of work to keep up with the latest acronyms and technical jargon. Refer to the following guide to learn what TSM stands for and other freight terms.
Trax is a leading logistics IT provider that aims to help businesses of all sizes gain visibility over their supply chain. With a proven track record in driving efficiency, Trax offers insight into freight audit and payment systems and the technology necessary to achieve transportation spend management maturity.
One acronym that has made its way into mainstream supply chain management is TSM, which stands for transportation spend management. To better understand what transportation spend management entails, it helps to focus on the impact of transportation costs on the supply chain.
Supply chain management encompasses everything from sourcing, manufacturing, transporting, storing, and selling. The area of the supply chain that deals with the movement and storage of items is known as logistics. According to the US Department of Transportation, 63% of total logistics costs are driven by transportation.
Transportation spend management is a data-driven approach to analyzing the performance of a logistics network, which involves reducing transportation costs and increasing transportation-related revenue.
Trax Transportation Maturity Model
Trax empowers enterprises to strive for transportation spend management maturity. The Trax transportation maturity model focuses on bringing a company from a reactive approach to transportation spend management towards a more proactive, optimizing, and eventually leading role in the industry.
The proactive stage involves enhancing freight data management, data compliance, and freight audit and payment (FAP). Next, to further optimize logistics processes, companies improve visibility by integrating data from what were once disparate sources. The goal is to streamline operations and allow them to become risk-averse.
Finally, when a company reaches the highest stage of transportation maturity, enterprises can control supply chain operations and stay ahead of the competition by continuously producing innovative solutions.
TSM is crucial in supply chain management but isn’t necessarily the first step toward transportation maturity. The next section reviews other freight terms to build your knowledge around freight management, transportation, and supply chain.
Other Freight Terms to Know
- Procurement - includes all aspects of sourcing and obtaining the goods needed for a company to function. For instance, companies conduct a needs analysis in procurement logistics to understand the type and amount of raw materials required. When procurement is mismanaged, companies face critical issues like shortages and dead stock.
- Warehouse Management System (WMS) - Comprehensive software that enables companies to track materials in the warehouse, track merchandise, and streamline processes related to picking products and packing orders. The benefits of a reliable WMS include reduced labor costs, more efficient operations, and more accurate inventory tracking.
- 3PL vs. 4PL (Third-Party Logistics Provider, Fourth-Party logistics provider) - A 3PL partners with a company to handle all aspects of logistics, while a 4PL focuses on the entire supply chain. The main difference between a 3PL and 4PL is the amount of control and accountability the provider undertakes. For instance, a 3PL focuses on fulfillment, including warehousing and shipping, while a 4PL is considered a complete solution to all things related to the supply chain, including daily operations.
- Inbound logistics vs. Outbound logistics - Inbound logistics includes everything related to supplies and materials coming into a business. In contrast, outbound logistics takes care of the processes required to move products to the customers.
- Demand Planning - Supply chains need to forecast and predict product demand. Demand planning involves finding the balance between having enough inventory to fulfill orders without having a surplus.
- Reverse Logistics - Sometimes goods need to be moved from the customer back to the supplier or manufacturer. Reverse logistics is important when handling customer returns or even customer disposal of products. The goal of reverse logistics is to retain value from the product or dispose of it efficiently, ultimately improving customer loyalty and reducing losses related to returns.
- Bill of lading - A carrier issues the bill of lading (BOL) as the receipt for the shipped cargo. The document contains information relevant to the shipment, including product type, quantity, and destination.
- EDI - Electronic data interchange handles the electronic exchange of business documents between the carrier, shipper, and other parties involved in the logistics process. The goal of EDI is to transfer data quickly, efficiently, and accurately.
- Landed Cost - To calculate the landed cost of a product, a company must sum all expenses incurred to create the product, transport it, and have the customer receive it. This includes things beyond manufacturing and shipping costs, such as customs and import duties, insurance and compliance, and payment processing fees.
- Waybill - Similar to a bill of lading, a waybill includes key information about a product, shipper, sender, and destination. However, a waybill is not a legally binding contract. Rather this non-negotiable document is intended to inform, not act as an official receipt for goods.
Intermodal Transportation - This involves moving freight by two or more modes of transportation, allowing shipments to move seamlessly between trucks, trains, and cargo ships.
- FCL/LCL - Full container load (FCL) involves purchasing the entire container for a shipment. In contrast, less than container load (LCL) uses only a portion of a container for a particular shipment.
TSM Masters - Find a Logistics Partner in Trax
Trax understands the difficulties associated with remaining up-to-date on the appropriate terms related to the supply chain. As a well-established leader in transportation and logistics, Trax works with its partners to comprehend all aspects of supply chain management, including TSM.
Contact Trax today to begin the journey toward transportation spend management maturity.
Trax is the global leader in Transportation Spend Management solutions. We partner with the most global and complex brands to drive meaningful optimizations and savings through industry-leading technology solutions and world-class advisory services. With the largest global footprint spanning North America, Latin America, Asia, and Europe, we enable our clients to have greater control over their transportation performance and spend. Our focus is on your success.