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Transport management strategy has numerous benefits, such as saving time and cost, streamlining processes, and improving operations.
FREMONT, CA: In recent years, transportation management has become increasingly important as supply chains have become more complex and new transportation challenges have emerged. Leaders in supply chain and logistics have had to rethink their transportation operations and weigh the pros and cons of managing operations internally versus outsourcing.
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Technology vendors offering transportation management software (TMS) make compelling arguments for maintaining in-house. Many companies have used the software successfully to manage internal processes with a positive return on investment. Companies that have outsourced their transportation operations to 3PLs or managed transportation services have similar success stories.
A number of factors have been cited by supply chain organizations as reasons to bring logistics services in-house, including performance, resiliency, and financial benefits. Other reasons for which organizations debate whether to outsource transportation operations include the following:
Access to and affordability of technology: In the past, TMS technology was often prohibitively expensive for small and mid-sized shippers. There has been a surge in the variation and capabilities of TMS solutions available in recent years. Based on their level of complexity and transportation use cases, companies can find and select a "best fit" solution from a variety of options.
Meanwhile, TMS solutions moved to SaaS and cloud-based solutions. As a result of this shift, some of the higher upfront costs have been removed, and solutions can be implemented in less time. As a result, ROI has improved. Unlike traditional on-premise upgrades, organizations will receive new capabilities and functionality regularly.
Wavering trust: Many leaders cite a lack of transparency with their chosen managed transportation provider as transportation costs continue to rise. Some of this can be explained by a lack of strong SLAs at the start, but many executives feel the exchange of data and information is lacking. In the current environment, they feel that the reporting their partners provide is not dynamic enough or does not capture the organization's key performance indicators accurately.
Relationship ownership with carriers: Shippers are seeking to take back or increase their level of ownership of their carrier relationships as transportation capacity challenges continue. There is a growing disconnect between them and their primary transportation providers. It has become a major topic of discussion for shippers to become "shippers of choice" and gain more capacity commitments from their preferred carriers. The leaders of organizations worry that if they rely on an outsourced partner, they will miss out on cultivating long-term relationships with carriers.
The right path for the organization should also take into account factors such as skill and talent availability, IT resources, and senior leadership views on transportation.
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