Excel or TMS in a transport company? Which is really more cost-effective?

In many transport companies, spreadsheets have long served as the primary tool for managing operations. They help plan orders, control costs and prepare basic reports. Initially, this solution works quite well, particularly in small organisations where the number of orders is limited and the team consists of just a few people. However, problems arise when the company starts to grow. At a certain point, Excel ceases to be a convenient tool and becomes an operational bottleneck. It is therefore worth stating clearly that spreadsheets are a great analytical tool, but they were not designed to manage transport processes. Unlike Transport Management Systems.

Excel as a transport management system: where the risk begins

In many transport companies, spreadsheets eventually cease to be merely a support tool and begin to function as the central enterprise management system. It is here that all information regarding orders, vehicles, costs and documents appears, as well as data for invoices and payment statuses. On the surface, everything may appear to be working correctly. The problem, however, is that as the company grows, processes begin to become more complex.

Order planning in spreadsheets

Transport planning in spreadsheets often involves entering data manually. In practice, this leads to information and organisational chaos.

What are the risks of planning orders in Excel?

• The emergence of multiple versions of files circulating among employees and stored locally on computers.
• The risk of working on an out-of-date version of the document.
• The risk of errors occurring when entering data manually into spreadsheets.

Above all, the biggest problem with this approach to order planning is the lack of a centralised database from which to create accurate documents and plan work effectively. 

Monitoring transport using spreadsheets: is this possible?

Monitoring order fulfilment without a TMS system is carried out in a decentralised manner. It requires staff to manually update spreadsheets based on information gathered from several channels: updates from the driver via phone, text message, email or other messaging apps, and from GPS panels where route data is collected. All this information must be collected, processed appropriately and only then entered into the spreadsheet, which carries the risk of errors and involves a significant amount of work.

Document management without a TMS

Another key element of effective order management is the proper storage of documents, such as CMRs, licences, confirmations or invoices. Typically, in companies that use spreadsheets, documentation is stored both on local company drives and in paper form. This makes finding the right files and checking the completeness of documentation much more difficult, as the required data is scattered and often unavailable when an employee needs to process it.

Invoicing in an Excel-based model

Invoicing for services rendered using Excel is also not the most convenient process when the scale of the company’s operations is already relatively large. This involves manually generating invoices based on data from spreadsheets, manually entering data from spreadsheets into accounting systems, and the risk of errors due to inconsistencies in the company’s database. 

Reporting in Excel

Reports created in spreadsheets can undoubtedly be detailed, yet clear and helpful, but they have a very serious drawback. Preparing and updating such reports involves manually transferring data, which means that key decisions regarding orders, as well as the company’s strategic moves, may be made with significant delays and based on outdated data.

What are the most common problems with an Excel-based model?

The most common problems encountered in the described model of running a business using spreadsheets are:

• the lack of a single version of files and data,
• the need to manually transcribe data,
• the possibility of errors in formulas that affect the correct interpretation of information,
• the lack of data validation mechanisms,
• lack of access control,
• difficulties arising when the team expands or tasks are handed over to other staff members.

It is worth emphasising that Excel is not the problem. It is a very useful and reliable tool for data analysis. The problem arises when the spreadsheet begins to act as the main management system in a transport company.

How does a TMS differ from Excel?

A TMS (Transport Management System) is a solution designed specifically for transport companies and the processes that take place within them. First and foremost, this system is based on a centralised and unified database that collects all information about the company’s transport operations: from loads and orders, through planned and executed transport routes, data obtained from GPS and other channels of communication with drivers, to invoices and settlement information. 

In practice, this means that a single system contains interconnected information on:

• freight,
• transport orders,
• vehicles,
• drivers,
• contractors,
• transport costs,
• invoices and settlements.

Automatic data validation in the TMS system

TMS systems have built-in validation mechanisms that help minimise errors. This reduces the risk of issuing incomplete documents or filling them in incorrectly to zero. 

Examples of how validation mechanisms work include:

• the inability to issue an invoice without a complete set of data,
• checking the consistency of route or cost information in the order.

Data is entered into the system only once; for example, information about a specific vehicle entered into the database is automatically loaded into the order once a specific vehicle is selected from the list.

TMS integration with other systems

Modern TMS systems are integrated with, or allow integration with, many tools used in transport companies. Among these external solutions are:

• GPS telematics,
• financial and accounting systems,
• freight exchanges.

As a result, data within a specific scope and in specific situations is automatically transferred between the integrated tools and the TMS system, eliminating the need for manual data entry.

Process automation thanks to the system for transport companies

Thanks to the TMS system, many tasks can be performed automatically. Some of these, which do not require additional user supervision, are carried out entirely without human intervention, such as report generation. Others, including invoicing or importing orders with the help of an AI assistant, require review and approval by the person responsible for the process after the system has automatically prepared them. 

Examples of process automation in the TMS system

• Automatic generation of invoices based on a completed order
• Generation of up-to-date reports based on information fed into the system in real time
• Updating vehicle odometer readings based on automatically transmitted GPS data

The key differences stem from the completely different operating philosophies of spreadsheets and transport management systems.

Category	Spreadsheets	Transport management systems
Purpose	Data processing and information analysis	Comprehensive transport management system
How it works	Manual data entry and processing	Automatic data linking
Data organisation	Data scattered across multiple sources and versions	Central database

Cost of ownership: the licence is not the whole story

When comparing spreadsheets with TMS systems, many companies focus solely on the cost of the licence. However, in practice, the licence cost is really just one component of the total cost of implementing and using a given solution.

Spreadsheet-based model

At first glance, Excel appears to be a very cheap tool. The licence cost is low, and in the case of open-source solutions, such a solution is available for commercial use even free of charge. However,this does not mean that choosing a cheap or free programme entails low operating costs. 

Hidden costs may arise in the following areas:

• administrative work, including data entry and document archiving,
• issuing invoices and issuing corrections,
• transport monitoring based on constant phone calls and emails,
• reporting based on scattered data sources that are not updated in real time, 
• decision-making based on outdated and delayed reports.

A model based on a transport management system

A TMS system usually involves higher direct costs. On-premises systems entail not only the need to pay for licences, but also expenditure on expanding the company’s infrastructure (servers, computers, access to a faster network). Cloud-based TMS systems, on the other hand, usually involve only subscription fees. Regardless, TMS systems enable significant savings in other areas.

What can be reduced by implementing a TMS system?

• Administrative costs
• Operational costs, e.g. fuel or vehicle wear and tear
• The number of human errors associated with the direct processing of orders
• Effective days waiting for payment, thanks to a reduction in the number of corrections to issued documents

That is why it is always worth considering the overall costs of running a business in the context of how much money switching to a TMS system will save, as well as how many hours of work can be recovered on a monthly or weekly basis through task automation. 

Scalability: when Excel is no longer enough

Spreadsheets can work well for very small transport companies with up to 5 vehicles. However, as the scale of operations grows, limitations begin to emerge, primarily related to the number of hours that must be devoted to ensuring the smooth and profitable running of the business. That is why companies with a fleet of more than 5 vehicles should look for a transport management system that will help them organise their business more effectively.

Challenges facing a growing transport company

As the company grows, so does:

• the number of orders handled,
• the number of drivers employed,
• the number of documents to be processed,
• financial responsibility,
• the need for accurate and up-to-date reports.

Ensuring smooth operations without a centralised transport management system is, in such cases, very difficult and costly.

When should you consider switching to a TMS?

It is worth considering implementing a TMS system if:

• you need to expand your fleet,
• the number of orders is growing faster than the team,
• there are frequent invoice adjustments,
• there is a lack of up-to-date information on profitability,
• regular reporting is becoming a necessity,
• the company’s growth is starting to cause chaos.

Summary: when to use Excel, and when to use a TMS system?

Excel remains a very good analytical tool. In many transport companies, it will continue to be used for data analysis or report preparation. However, it cannot be equated with a TMS system. It serves a completely different function, as it is, by design, a transport company’s operational system that brings together contractors, orders, vehicles, costs, documents, invoices and reporting in one place.

The difference between these solutions is not solely a matter of the number of functions. Of key importance are:

• the ability to control processes within the company,
• the scalability of the solution as the company grows,
• the consistency of information regarding contractors, vehicles, orders and invoices.

Therefore, in companies that have more than 5 vehicles or are growing rapidly, the question should not be which of these solutions – Excel or TMS – is better, but how much it will cost to delay the implementation of a transport management system. 

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