Freight Management Services Bring Enterprise Value
The concept of Transportation Management continues to evolve and is now at a place where it provides tremendous enterprise value, yet there are so many still holding back because they feel they are giving up control. Maybe all of us in the industry have confused the matter by the various names put on the service: Supply Chain Management, Transportation Under Management, Transportation Management Center (TMC), Transportation Management, Inbound Freight Management, Freight Management, Managed TM and TMS, which as my kids shared with me has a whole other meaning on twitter. Whatever the name given to the concept of outsourcing the transportation function, freight management continues to grow to be something well beyond the centralization of the transportation department.
Below is a visual representation of all the activities, functional areas impacted, IT systems involved and various touch points that are addressed in a comprehensive freight management solution.
As the above helps to illustrates, a freight management solution is the merging of technology, organization and processes that establishes a set of services leveraging the scale and efficiency of consolidated network planning, procurement and unified metrics with the agility of localized execution.
The freight management solution provides a set of services that leverage the visibility afforded by a centralized execution and view of all business activities that come from the movement of raw materials and final product deliveries in the order-to-cash cycle. Through a freight management solution, companies go beyond traditional transportation planning activities to include value-add services such as network modeling, centralized procurement and more analytics than could be imagined through what is typically a cloud based technology. Overall, a freight management solution provides the resources and tools to beat the crisis of the day by better planning, cross-functional visibility and modeling for exponential supply chain improvements that go beyond just freight savings.
While there is incredible value to be had in a freight management solution, the idea of outsourcing the inbound and outbound freight movements can be scary for some organizations because they feel they are handing over the keys, giving up control and outsourcing their own jobs. If the thought of outsourcing transportation activities for freight cost savings and treating the solution provider as a vender versus a partner, then there will be problems. If the solution comes through a partnership, then the keys stay in the company's hands and they gain more control and pick up the tools necessary to not only drive savings, but will give them more time to focus on what drives their market success over their competitors. Imagine driving a car without a steering wheel, accelerator, brakes, speedometer or mirrors. To frame this thought think of the business as a car where the steering wheel provides direction … what direction does the management team want to take the company; the accelerator … how fast do they want to get to their goal; the brakes … adjustments will be needed along the way to address issues up ahead; the speedometer … a measurement tool to make sure the process is within tolerances; and the mirrors … the management tool to see how they’ve done and what might be sneaking up from behind. With the car analogy in mind, how many of us are driving our company’s supply chain without the basic tools to make the best decisions for the company and its order-to-cash cycle.
Also, if freight management solution is thought of as a just another way to manage the transportation spend, then the significant value will be shortchanges. As the initial diagram illustrated, a tier one freight management solution is intertwined with many functions in an organization. Getting back to the car analogy, it’s like using 6 cylinders of your V-12. The velocity a company can move itself forward in its supply chain execution can dramatically affect its overall competitiveness in the marketplace.
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