When to Switch From In-House to Managed Logistics Transportation Services

The supply chain is evolving, and the standards used for managed logistics transportation services today are more data- and technology-driven than those of the past. As market volatility, delivery expectations and customer experience levels impact supply chain strategy, shippers are looking for new ways to drive operational and competitive advantage from external expertise. Shippers should consider the following as indicators for when to add an outsourced managed logistics transportation services provider.

Indicator 1: It’s Difficult to Track Your Inventory From Suppliers Through Final Mile

Poor visibility will lead to additional delays in executing shipments, sharing updates with network partners, and adverse impacts on customer experience. Inventory tracking and visibility must be present from the first mile through the final mile, reflecting the entire shipment lifecycle through white glove services.

Indicator 2: Freight Spend Seems to Be Spiraling Out of Control

Another indicator of switching from in-house to managed logistics transportation services is expanding freight spend. This can be a confounding issue. During times of high market volatility, freight spend will inevitably grow faster than anticipated. However, tendering shipments at higher rates in low volatility markets would suggest overspending, and for some shippers, those areas of excess spending may not necessarily be easy to identify. Gradually increasing freight spend that seems out of pace with the current expansion of your network and shipment volume is the defining indicator that it is time to consider outsourcing.

In a well-set-up, managed logistics solution, 3PLs should serve as strategic partners and ensure financial controls are in place across various levels, point of execution through financial forecasting, auditing, and the last mile delivery.  Having a partner like GlobalTranz that understands the importance of this will keep the customer in the driver seat and able to make proper adjustments ahead of issues.

Indicator 3: Obtaining Coverage Is Taking Too Much Time From Your Back-Office Workers

Difficulty getting coverage for shipments, a top issue within a capacity tightened market, is another indicator that it may be time to outsource with a managed logistics company. Depending on the typical workflows in your organization, spending too much time trying to get coverage for a load will lead to added back-office expenses. Take an example.

If it takes a team member 20 minutes to obtain coverage for a given shipment, that effectively limits the number of shipments covered for a week to 116. Now, let’s assume that that team member makes an hourly wage of $20. That amounts to $800 in cost just for finding coverage across 116 shipments. Meanwhile, an automated tendering process within a TMS that could reduce the time needed down to mere minutes, such as five, would have the net effect of increasing the total volume of shipments tendered to 464 without necessarily increasing the back-office cost for that team member.

That’s where automation within 3PL-driven systems can add value. As further noted by Global Trade Magazine, “Before transitioning into ‘things to consider’ before choosing a 3PL, perhaps the best reason for their existence is technology related. A tech-enabled 3PL leverages the latest fulfillment software to streamline the flow of information, which saves time and automates nearly everything along the supply chain.”

This level of managed logistics automation allows for the exponential growth of profit margins by saving on back-office processes to execute more shipments and avoid delays.

Indicator 4: Expanding Responsibilities Lead to Missed Opportunities for Oversight of Partnerships and Limited Auditing of Freight Invoices

Another indicator is a general lack of accountability and limited auditing of freight invoices. Depending on the source in question, most freight invoices contain some form of discrepancy. Not all freight invoices are erroneous enough to the point where shippers are overbilled and underbilled. Discrepancies over time can impact overall performance ratings and adversely affect customer experiences. The worst-case scenario is excess freight spend for shipments that did not technically exist because they are duplicates. If your company is not actively auditing and filing claims against errors on invoices, you’re leaving money on the table. Now is the time for a managed logistics system.

Indicator 5: In-House Teams Often Tender More Shipments in the Spot Market Than With Contracted Carriers

Finally, the last significant indicator that it is time to obtain a managed logistics system is trouble enabling strategic planning for freight management. In other words, your in-house team members are continuously putting shipments to the spot market and not taking advantage of the volume commitments and discounts associated with contracts. This may not necessarily be a problem, but it occurs as duties expand. During the thick of the pandemic, carriers were forced to navigate the murky waters without confident transportation stability. Moreover, carriers may simply lack capacity or be experiencing other stressors. Rather than staying reactive and opening the door to significant risk and massive delays in overall shipment execution, it’s best to let someone else handle the day-to-day of transportation through managed logistics.

Let the Experts Help You Learn to Recognize When Things Are Going Wrong

Day-to-day operations may seem in jeopardy when the business falls solely on in-house transportation services. Overwhelmed teams, time, and money can slip through the cracks if not managed appropriately. A 3PL managed logistics service will help businesses and customers to ship seamlessly and access the technology needed for growth. See how your team could benefit from increased efficiency and value within managed logistics by connecting with a GlobalTranz expert now.