Vigilant management of transportation and finding the most optimal movement for their shipments is something manufacturers and retailers need to think about today more than ever. In order to work with partners to switch away from prepaid to collect freight terms, they must have a process in place to manage these shipments. This generally means investing in a Transportation Management System (TMS), which is used to calculate the scheduled inbound shipments and build out a trailer.
But taking it a step further is the Managed TMS model, which combines the benefits of Software as a Service (including a small or even no capital investment, quick deployment and flexibility to scale services up or down, a pay-as-you-go model and use of best-in-class technology), with the ability to ensure ongoing cost savings and performance improvement.
"We have seen a growing willingness to use hosted services or a SaaS model from a logistics service provider," research firm Aberdeen Group noted in a report titled, Best Practices in Transportation Management.
The managed TMS model differs from traditional 3PL outsourcing in that shippers still retain control of carrier selection and carrier management. It looks like a win-win because companies also need flexible transportation management systems that are not capital intensive and deliver real returns in relatively short timeframes. Shippers can't afford to be encumbered by unwieldy technology that requires a lot of investment and lengthy implementation when it comes to ever-changing markets.
But how to select a TMS or managed TMS provider? Every shipper has its own set of operational requirements and must choose the combination of TMS capabilities that best meets its tactical and strategic goals. The type of TMS a shipper selects often depends largely on what it deems to be its core competency. For shippers who view maintaining control over their carrier relationships as critical to their success, it seems a managed TMS service offers a compelling alternative.
Use cases have shown that companies have realized savings, decreased the amount of delivery delays and in-transit shipment damage and met service performance goals with the managed TMS approach.
For shippers looking to strike a balance between tactical and strategic control, a managed TMS solution can be an ideal fit. Shippers maintain their role as strategic network managers and use embedded business intelligence tools to help improve service excellence. Vendors maintain that the technology eases the shipper's tactical burden in areas including the monitoring of on time delivery, invoicing and running a load plan after the transportation strategy has been laid out.
Staying competitive is tied to a willingness to innovate. An ever-changing competitive landscape, the growth of global freight networks and the constant arrival of new technologies require that shippers consider taking a look at managed TMS.