5 Reasons Outsourcing Transportation Management Will Improve Your Logistics Operation
Is your logistics department ready for growth? Optimizing your transportation operation involves much more than moving freight at the lowest price. To drive real innovation and long-term value for customers, many shippers have turned to Managed Transportation services and seeing great success.
So how can outsourcing to a qualified third-party logistics provider (3PL) help keep you moving in the right direction?
Get greater flexibility and technology
3PL partners give customers access to their resources, which means you’ll benefit from a more extensive technology and logistics operations infrastructure. As one significant example, top 3PL providers are already invested in a Transportation Management System (TMS) or have developed their own to support a shipper’s logistics operations. This gives their customers access to logistics technology most could not afford on their own.
Focus on other parts of the business
With Managed Transportation, customers get the best of all possible worlds. You gain access to knowledgeable, experienced supply chain professionals with specific areas of expertise around industry regulations, modes, carriers, and more. Resources and time once spent trying to do everything can now be spent on production, marketing, establishing customer relationships, and developing new ideas. In other words, leave logistics to the professionals so your people can focus on building and running your business.
Minimize overall costs
You might think outsourcing is more expensive than hiring and attempting to handle all logistics functions internally. But companies can lower overall costs by leveraging the capabilities of a 3PL. This ROI can come from the provider’s expertise at optimizing transportation planning, sourcing capacity, negotiating more favorable rate agreements with carriers, and reducing workload for employees through process automation. Armed with the latest technology, 3PL providers can leverage the power of analytics and reporting to understand drivers of transportation spend to be able to spend smarter. 3PL providers can also help reduce infrastructure investments otherwise necessary in software, personnel, equipment, and facilities.
Enjoy economies of scale
On their own, many shippers typically don’t have much negotiating leverage with carriers—at least not on the scale of a 3PL. With a Managed Transportation partner, shippers should expect to benefit from their collective buying power because the 3PL can secure not just lower rates, but capacity at crucial times when the market is tight. Confident knowledge of the market and its daily fluctuations, consistent freight prices, carrier qualification, and technology to improve carrier communications (such as real-time track-and-trace capability) are some of the other ways 3PLs can leverage their own scale to reduce costs and ensure greater capacity for the benefit of their customers.
Improve customer service
Since every shipper’s main goal is a high level of service for their end customer, this too needs to be a focus for any 3PL they work with. An experienced 3PL will build and execute a strategy to help overcome the challenges of delivery speed, information flow, visibility, and delivery accuracy. This can extend to service reporting and the availability of data analytics for use in tools like Key Performance Indicators (KPIs) and vendor performance scorecards.
As more shippers lean on logistics service providers to deliver quality, value, and customer service, 3PL partnerships are built on lifelong strategy, rather than a short-term fix. Doing your research and hiring the right Managed Transportation service provider will help you get more things done and raise customer satisfaction, drive higher profit margins, and fuel the growth of your business.