Driving Cost Savings with Managed Transportation Solutions
Nov 16th, 2018
By: David Commiskey, Vice President, Customer Solutions, GTZ
Transportation leaders today are faced with increasing buyer delivery demands, capacity challenges, government regulations, fluctuating rate markets and the overall digitization of supply chains. At the same time, they are pressured with managing day-to-day transportation processes, usually without specialized staff or an adequate number of internal resources, while trying to control or reduce transportation costs.
Many transportation leaders utilize freight brokers and logistics service providers to help them manage their transportation operations and access a network of providers. But transportation managers are increasingly hungry to take their logistics operations to the next level. They are looking for more consultative partnerships rather than transactional relationships in search of additional value-add. They’re looking for solutions that consider the unique nuances of their business, products and customers; solutions that drive efficiency and control costs, especially in today’s dynamic logistics market.
That’s where managed transportation services come into play.
Transactional Services vs. Managed Transportation Services
At a high level, managed transportation services include the outsourcing of all or part of a company’s internal logistics operations throughout the order-to-cash lifecycle. The typical asset-based or transactional-based logistics services provider relationship consists of a planner at the shipper telling the provider the mode, lane, and details about the shipment in search of cost or service fulfillment, then the provider executes that shipment.
In a managed transportation arrangement, the shipper’s planners are employed by the logistics services provider, who receives a feed or download of shipments from a shipper’s enterprise systems, performs all planning – rating, sourcing, consolidation, optimization, etc. – and then executes the loads.
Managed transportation service utilizes a consultative approach beginning with an in-depth discovery process and needs analysis to identify client business goals and define success measurement benchmarks. Based on a company’s specific supply chain needs, a customized transportation roadmap and design is developed, then executed by the logistics services provider. All operations – from rate negotiation to freight payment and auditing are outsourced to the logistics provider.
From the technology perspective, the foundation of a successfully managed transportation relationship is the integration of all applicable business systems based on client requirements, including ERP, WMS, order management and more. The higher the level of integration, the greater the opportunity for a logistics service provider to reduce a company’s manual efforts and increase their efficiency.
Managed transportation technology services include the combination of a leading edge TMS and business analytics to provide client stakeholders with a pulse on their business (i.e. KPI’s, self-service and custom reporting, heat maps, etc.). Additional optimization tools for network analysis and design are used to look at Macro level supply chain opportunities.
Managed transportation is truly an integration of people, processes and technology dedicated to shippers’ specific supply chain needs.
With managed transportation services, a team of consultants will get to know your business from all aspects. They configure solutions to reflect your growth path or specific needs.
When one of the largest telecom providers asked GlobalTranz to help them transform their logistics function from a decentralized model to a centralized model, we helped them understand the current state of their supply chain and developed a customized multi-year roadmap toward a centralized function.
A true consultative managed transportation partner won’t pull a solution off the shelf or stuff your business into a box. They’ll develop custom solutions based on the maturity of your company’s supply chain function, freight spend, headcount, volumes, business goals and other considerations specific to your business. It’s truly a mutually beneficial partnership.
Look Beyond Rates
Given the tight capacity and rising rates in today’s market, it’s no wonder that shippers are looking for any way to drive down costs. Shippers are starting to realize they can’t buy transportation based on rates alone. Managed transportation services help drive efficiencies and best practices into supply chains to reduce costs over the long term.
Managed Transportation Services combined with advanced TMS technology help shippers make their logistics operations a competitive advantage. Shippers can utilize managed transportation partners for strategic planning, such as determining if their hub and spoke distribution model works, the most efficient location for a new distribution facility or where to source products based on total landed cost.
Do You Need Managed Transportation?
Growing complexity in the supply chain demands innovative and consultative approaches to logistics management. If you are a transportation leader looking to drive cost savings, efficiency and visibility, focus on your core competencies rather than logistics operations, and leverage logistics as a competitive advantage, it’s time to consider managed transportation services.