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:
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.
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.
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