An effective freight logistics program is the foundation for ensuring products are delivered on time and in the right condition. However, standing up and managing a transportation & logistics program is a complex and time-consuming process.
Despite the obvious and important role supply chain management plays for businesses, investment into logistics programs often gets placed lower in the priority list, especially in small, mid-size and growing companies. Traditional methods for managing logistics involves an individual or team establishing a network of freight brokerages and carriers, and they will then bid out their shipments to find the lowest rate.
While this may drive the lowest cost for a particular shipment, on a particular day, the reality is it is highly transactional, difficult to manage and not a strategic approach to managing logistics. Think about it this way – If you were utilizing the same shipping lane 40 out of 52 weeks per year, would you rather negotiate a lower rate for the year or would you chase the lowest price each week? The answer might be obvious, but often times the resources required to make informed business decisions like this one aren’t always afforded to logistics departments.
Here are some of the challenges we commonly see with traditional logistics programs:
Limited Bandwidth & Resources: Stretched resources means employees do not have the capability to be strategic and get out of the day- to-day. Most of the time is spent managing transactions of freight through manual entry, which is time consuming and leads to human error. In many cases, logistics programs are managed though spreadsheets.
Lack of Technology: Limited resources make it challenging for businesses to identify technology requirements that strategically support their logistics programs. Even if technology requirements are identified, it is difficult to vet if the tech is the right solution and even harder to implement and manage across a business. A Transportation Management System (TMS) does aid logistics departments plan and execute their transportation programs. The reality is though a TMS is more of a starting point versus a complete platform solution.
Lack of Visibility to Data: Because logistics departments are managing networks of freight brokerages, data becomes fragmented and decentralized amongst providers. Many logistics teams find themselves managing their business in spreadsheets. Without the right technology in place, visibility to shipment tracking and financial data becomes extremely difficult. This leads to unnecessary over-communication and departments functioning in silos.
Lack of visibility to data also has downstream effects. For example, when it comes to bidding & scheduling freight, the carrier wants to understand the full scope of the freight volume and spend. Without a full understanding of the data, the shipper loses their ability to negotiate the best possible rates.
Lack of Tools for Sourcing & Bidding: In addition to limited technology resources, logistics teams may also be operating without tools that aid with sourcing carriers and bidding freight. A few examples of these include bid tools, carrier directories and TMS. As a result, businesses have a challenging time growing their carrier networks and streamlining their bidding process.
Lack of sufficient business intelligence leads to organizations being unable to make better-informed decisions regarding their logistics programs. Organizations that want to more strategically manage their logistics often find that the amount of time, manpower, and technology required for implementation is not feasible. That is a where a Managed Transportation Solution comes in.
What is Managed Transportation?
Managed Transportation Definition: Managed Transportation (MTS) is a partnership where shippers improve their logistics and supply chains through increased operational efficiencies, lower logistics network and organizational costs, improved communication with all supply chain stakeholders. A managed transportation solution provides the client with end-to-end management of their transportation needs. This service is designed to outsource, centralize and strategically manage all transportation operations by providing dedicated resources and technology.
How Does Managed Transportation Work?
With a managed transportation solution, the customer outsources the entirety of their logistics management to a third-party service provider. The Managed Transportation Provider (MTP) will act on the behalf of a logistics department and provides dedicated people and technology resources that plan, execute and monitor on all aspects of transportation. This includes carrier selection, rate negotiation, shipment planning, execution, and tracking. As a benefit, the client is provided access to advanced technology that enables real-time visibility and control over their logistics and transportation business.
What are the benefits of a Managed Transportation Solution?
Cost Savings: By outsourcing transportation and logistics management to a Managed Transportation Provider, companies can save costs by leveraging the provider’s expertise, technology, and carrier networks. The MTP can negotiate better rates, optimize routes, and consolidate shipments, resulting in lower transportation costs.
Improved Visibility: A Managed Transportation solution provides real-time visibility and control over the transportation process. This enables businesses to be able to track all end-to-end operational and financial aspects of their shipments. This visibility improves supply chain visibility across all departments, reduces risk, and improves customer service.
Scalability: Managed Transportation solutions can be customized to meet the changing needs of a businesses. Managed Transportation providers can augment its services to meet a business’ needs as they grow or evolve. Scalability and expertise enable businesses to take control of their logistics programs, which in turn allows them to make better-informed business decisions and improve the execution of their logistics operations.
Increased Efficiencies, Happier Employees: A Managed Transportation solution delivers increased efficiencies, which in turn translate to cost savings. Increased visibility to data provides the service provider and customer control tower visibility, which in turn allows strategic evaluation of the logistics program. The net result is better cost control, streamlined operation and enhanced service levels. These improvements lead to happier employees managing well run logistics teams and increased client retention. Because of the enhanced service levels, shippers are able to improve relationships and retain their clients.
Managed Transportation services are a valuable solution for businesses that want to optimize their transportation operations and reduce costs. By outsourcing transportation management to a Managed Transportation Provider, businesses can focus on their core competencies while leaving transportation management to the experts.