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What Does It Mean to Outsource Logistics?

August 26, 2022 Kevin Baxter

Outsource Logistics

The term "outsource" can have justifiably negative connotations in certain situations, but when it comes to logistics, outsourcing can offer a competitive advantage businesses would otherwise miss out on. To outsource logistics means working with an expert partner to handle specific pieces of freight operations like certain routes and/or products, or under a managed transportation model having that partner handle most if not all day-to-day logistics operations - typically incorporating TMS (transportation management system) software solutions as well. It really depends on an individual business's needs. So who is that partner who can help with any or all of these logistics operations? A third party logistics company (3PL), also sometimes referred to as a logistics service provider (LSP). However you refer to them, the right 3PL will learn the ins and outs of a business and its logistics needs, then offer solutions that incorporate their own expertise, technology and freight partnerships that can not only relieve stress on the company, but also improve operations and even reduce costs.

Should you outsource logistics?

There are a number of reasons why a business should outsource logistics, including

  • Bringing in expertise the business lacks
  • Taking advantage of the latest technology
  • Improving industry connections
  • Streamlining operations
  • Reducing stress
  • Saving money

All of these reasons boil down to a competitive advantage for businesses that outsource logistics operations to the right 3PL partner. While larger companies may have the bandwidth to keep logistics operations in house, they may turn to a 3PL to handle a key product or shipping lane, or to get an advantage over competitors with that partner's access to more robust technology and industry connections. On the other hand, smaller businesses with shipping operations may benefit most from largely turning over operations in a managed transportation scenario to have more time to focus on other aspects of their business, knowing that logistics operations are well taken care of. Especially in times of stressed supply chains, uncertain capacity and fluctuating prices, whether a business is large or small it can make a lot of sense to turn to the experts to stay ahead of the curve.

Should you outsource TMS?

A TMS, or transportation management system, software solution offers access to robust technology that can bring together an entire logistics operation. While it is possible for a business to purchase and run a TMS solution on its own, outsourcing a TMS to a 3PL means the business will have access to all the TMS solutions and enhancements the 3PL does, as well as the 3PL's expertise in running it. This means, the business won't have to find and add the additional components that improve the base of a TMS on their own, like 

  • shipment tracking
  • route optimization
  • freight audit and pay
  • load boards
  • insurance and certification information

 While these services are all available through that one-stop or single-pane-of-glass TMS, they typically don't come out of the box. In other words, it requires time and money to not only find and purchase the right plug-ins, but implement them correctly to maximize their benefit. Speaking of implementation, rather than a business needing to spend time training multiple employees in the use of a TMS, the right 3PL will have multiple staff who are experts in its use, ensuring freight operations get the most out of it, have access to troubleshooting and keep the TMS and its enhancements up to date. And with an ever-changing freight market with plenty of volatility in capacity, cost and more, turning to a 3PL-managed TMS lets the experts handle those changes and that volatility for the company, allowing the business to focus on what they do best.

At InTek Freight & Logistics, we are a 3PL who operates an industry leading TMS chock full of integrations that make it even better - and with the expertise to back it up. Tell us about yourself and we'll go over how we can be the partner you need for TMS and more. Rather do a bit more research first? Visit our Learning Center for videos, articles and eBooks on all things freight and logistics.

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