Cost reduction and increase in efficiency are two prominent reasons why businesses – small and medium – choose to outsource. Outsourcing allows organizations to extract value from the competitive advantages and economies of scale offered by companies that operate exclusively in the respective field. Therefore, it’s no surprise that 90% of the Fortune 500 companies have outsourced at least some of their logistics to managed transportation services providers.
Businesses are slowly realizing that logistics, just like IT, requires specific skillsets, dedicated resources, and advanced technologies. While organizations can put together these prerequisites, they would be competing directly against logistics businesses for them. Managed transportation services merely apply the age-old axiom, “Why fight them when you can join them?” to shipping.
Most organizations naturally avoid reliance on a third party to fulfill what they consider to be their core competency. However, they are slowly realizing that a logistics business can offer them significant value in terms of freight costs, efficiency, and customer satisfaction.
This post offers you a crash course on managed transportation services and brings you up to speed on why it’s high time your business took it seriously
What are Managed Transportation Services?
Managed transportation completely outsources the transportation aspects of your supply chain to an experienced third-party logistics company, which employs a mix of expertise, experience, and technologies to deliver highly streamlined transportation services to businesses.
In practice, managed transportation services sit between the organization’s ERP systems and warehouse management systems and deliver a seamlessly integrated transportation service optimized to improve performance, reduce transportation costs, and deliver superior customer satisfaction.
The businesses that offer managed transportation services are called third-party logistics (3PL) carriers or sometimes, logistics service providers (LSPs)
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Who Benefits from Managed Transportation Services?
Managed transportation services offer a tremendous variety of benefits (which we’ll discuss shortly), to businesses but that doesn’t mean that they’re the best fit for everyone. The advantages they offer are realized by only those businesses that have the scale of operations to benefit from enhanced efficiency, flexibility, and visibility.
If the supply chain arm of your business is ballooning into an overwhelming challenge, what with all the mounting paperwork, complexity, emails, phone calls, audits, carrier selections, hiring, and so on, then, managed transportation services can be the answer for your organization.
Typically, businesses with a significant-sized logistics department, although logistics is not a core aspect of their operations, stands to benefit from managed transportation services.
Benefits of Managed Transportation Services.
Almost every large business with a significant logistics presence has outsourced its transportation requirements to 3PL carriers. Here’s why:
1. Cost Reduction
3PL carriers save money for shippers in several crucial ways. Firstly, the fruits of their investments into technology, labor, and equipment are spread across multiple clients. The economies of scale resulting from this make transportation services far more cost-effective.
Secondly, established 3PL carriers use best-in-class technology for route optimization, reporting, total network optimization, capacity utilization, and so on, which streamline logistics for their clients and save them costs along the way.
2. Access to Capacity
3PL carriers have several active carriers under contract with them, and they have access to all their capacities. They can utilize this access to fetch the best prices for their clients on their shipments routinely.
3. Risk Management
Shippers can offload the risk and liability of handling the shipment onto the 3PL carrier by structuring their managed transportation services agreement that way. By continually ensuring that your shipment is legal and insured, they also ensure that you do not attract any undue fines or penalties.
Outsourcing does not translate to giving up control or visibility in managed transportation services. You get unprecedented visibility into your freight under management. With advanced transportation management systems (TMS), your LSP can give you access to an incredible amount of data on your shipments – the planning, quotes, invoices, compliance data, daily executions, real-time shipment locations, advanced analytics, and more. All this data can help you make better strategic decisions.
5. Unified Operational Control
Managed transportation services bring a higher degree of transparency, accountability, and flexibility to businesses. Organizations can upload their existing shipping partners and their rates onto the 3PL’s systems, allowing them to compare rates, services, real-time capacities, and more, to assign shipments to achieve the best results. Many LSPs brand their technology platforms for their clients, so that the clients’ customers get a seamlessly integrated single source of truth for all shipment details.
6. Strategic Decision-making
Optimization is the name of the game in the logistics industry. Optimizing your logistics to complement your business goals – freight spends, revenues, customer satisfaction, or others – requires a deep dive into your logistics data. Your need advanced IT tools, and specialized talent to mine valuable, actionable insights from your raw logistics data.
LSPs typically offer cutting-edge TMS solutions with built-in analytics capabilities. They can generate specialized reports, perform goal-oriented analysis, and give you answers to specific questions that will help you optimize your logistics entirely. You can do all of this without a dedicated IT team, hardware, or software for analyzing your data.
These advantages and several more like them make managed transportation services the best option for businesses with significant logistics needs.
Finding the Right Managed Transportation Services Provider
The decision to outsource your transportation needs is not an easy one. You must find an LSP with the right infrastructure, service features, technologies, network, and expertise to meet your unique needs.
Here are some factors you can consider when evaluating a 3PL carrier for outsourcing your transportation needs:
- Operational Experience (years in business)
- Industry Reputation (customer service quality and reputation among carriers)
- Technologies Under Use
- Audit Process
- Operational Processes
- Reporting and Analysis
- Speed of Payments to Carriers
- Pricing Structure
Top Managed Transportation Services Providers in Business
Many 3PL carriers offer managed transportation services to businesses of various sizes, but they are not all equal. They vary in several ways, as discussed in the previous section. However, here are the top 10 3PL carriers that offer managed transportation services:
- TMC – A CH Robinson Company
- Ryder Logistics
- Penske Logistics
- BlueJay Solutions
- XPO Logistics
- Schneider Logistics
Easy Logistics is a legacy agency owner of GlobalTranz. With a dedicated managed transportation department, we have the right experience, expertise, and industry partnerships to take over your transportation needs and offer you cost-effective, efficient, and superior results in every way that matters to you. See additional Managed Transportation Services we offer.
Want to know how we can revolutionize your logistics for you? Get in touch.