Domestic Managed Transportation is a holistic strategy across a company’s transportation operations inclusive of truckload, less-than-truckload (LTL) and sometimes other modes like parcel or drayage to create a comprehensive strategy with contracted rates from carriers.
Often this will involve a Transportation Management System (TMS) to provide visibility and allow for optimization opportunities like load consolidation, multi-stop shipments and more.
What is included in a managed transportation strategy?
Managed Transportation involves a range of functions that are managed by the 3PL provider. The core functions typically include:
- Carrier sourcing and procurement
- Freight carrier optimization
- Shipment planning and execution
- Freight bill audit and payment
- KPI (Key Performance Indicator) reporting and analysis
By partnering with a professional logistics service provider organization, shippers can improve their logistics and supply chains through increased operational efficiencies, lower logistics network and organizational costs, speed up the order-to-cash cycle and improve communication with all supply chain stakeholders.
Why combine Managed Transportation with a TMS?
With a combined Managed Transportation and TMS solution, shippers have complete visibility into their entire supply chain, from the point of origin to the final destination. This allows for better tracking and monitoring of shipments, which can help reduce the risk of delays or lost shipments. It also pre-loads carrier rates, determines optimization opportunities and can create more complex moves.
What are the benefits to Managed Transportation?
- Cost savings: Cost savings are typically the main catalyst of why people explore Managed Transportation solutions through a 3PL. Cost savings are realized a number of ways.
- Carrier Procurement: Oftentimes, the 3PL can negotiate better rates than a shipper with their contracted carrier base. 3PLs can also leverage their visibility into the hundreds – if not thousands – of supply chains they manage every day to share best practices that increase savings.
- Freight Optimization: By looking at the shipper’s network or using technology, 3PLs can find different ways to look at how shippers are moving freight and find cost savings.
- Eliminating Internal Resource Time: Through transportation planners managing shipments to Freight Bill Audit teams within a 3PL, shippers can eliminate some of the headache of having to build loads and benefit from things like a consolidated invoice for all transportation that is GL coded based on the shipper’s specific requirements.
- Capacity: The 3PL provider has a network of carriers and can help shippers find the right carrier for their specific needs. This can be especially helpful during peak shipping seasons when capacity is tight. Oftentimes, these carriers are vetted through rigorous processes and ongoing carrier scorecards.
- Risk management: By working with a 3PL provider, shippers can reduce the risk of supply chain disruptions and delays. The 3PL provider can help identify potential risks and develop strategies to mitigate them.
- Improved Service KPIs: Shippers typically can improve their service KPIs by reducing transit times, improving on-time delivery rates and reducing the number of claims and disputes.
Managed Transportation solutions are not one size fits all, so it is important to clearly state goals with a potential 3PL partner to achieve the best results.
Ultimately, by outsourcing transportation to a 3PL provider, shippers can focus on their core competencies and business objectives while realizing cost savings, ensuring capacity, mitigating risk and delivering a better service to their end users. To learn more about our collaborative approach to Managed Transportation click here.