What is Managed Transportation Services & Its Benefits?
Definition of Managed Transportation Services Solution:
Managed Transportation Services Solutions (Managed TMS) involve shippers outsourcing their freight and logistics processes to a third party logistics (3PL) provider.
Third party logistics companies offering this service are often called logistics service providers (LSP’s).
Functions managed by 3PL's in a Managed TMS solution:
- Sourcing & Procurement
- Freight Carrier Optimization
- Planning & Execution
- Freight Audit & Pay
By partnering with a professional logistics service provider organization, shippers improve their logistics and supply chains through increased operational efficiencies, lower logistics network and organizational costs, improved order-to-cash cycle and improved communication with all supply chain stakeholders.
The graphic below outlines the steps within a managed transportation service solution:
While many shippers are hesitant to commit to outsourcing non-core competencies, the stats indicate it is an increasingly common practice because of the extensive list of benefits it provides companies. In fact, 90% of Fortune 500 companies engage with a third-party logistics providers (3PL’s) to help manage their logistics and supply chains.
Benefits of Managed Transportation
- Access Capacity
- Full Supply Chain Visibility
- Unified Communication Platform for All Stakeholders
- Cost Savings
- Risk Management
- ROI Improvement
- Improved Service KPI's
- Offload Non-Core Business Processes
- Operational Control
- Reporting & Analysis
- Leverage Knowledge & Expertise of 3PL
- Freight Audit & Pay
- Improved Reporting and Analytical Capabilities
A managed transportation service solution is a fully transparent strategic relationship where the 3PL charges a service fee for their work. The carrier rates and agreements are negotiation on the shipper's behalf and are a pass-through expense.
Additional articles of interest:
- Complete Guide to Managed Transportation and Transportation Management System
- Best Managed Transportation Companies
- Cost of Managed Transportation Services
- Transportation Management System (TMS): Functionality, Benefit & Implementation Guide)
- Best Transportation Management Systems
- Comparison between Freight Broker and Managed Transportation Services