Do-It-Yourselfers Need Help Too
I once worked with a fellow who cut his own hair. Every few days or so he gave himself a new hairstyle—he justified it by saying it was more economical. The only problem was his hair looked like he had cut it himself! It was difficult for anyone not to notice, what with the uneven shape and all.
Whenever I hear of a company successfully outsourcing transportation management I always think of my old associate. Usually the company deciding to outsource realizes that while it "believes" it knows what it's doing, a professional can do a better job.
Here are four of many reasons why you should consider outsourcing:
1) Experience. Just as hairstylists or barbers perfect their art over years of training, transportation managers wield similar expertise. The best logistics managers handle thousands of loads and shipments daily and weekly. Naturally, the greater the market presence, the better a company should be at its trade.
Additionally, a professional transportation management provider has more buying power in the marketplace, especially when negotiating with a larger and sometimes specialized carrier base. Whether it's cutting hair or handling transportation, doing something every day of the year, 24 hours a day, demands a certain level of expertise that a novice cannot offer.
2) Expenses. Though my old friend probably believed he was saving money by cutting his own hair, he might not have considered the time and hidden expenses. In the long run, the ramifications of a less-than-comely appearance may have cost my friend a lot more than just money.
Shippers today face a similar challenge to utilize state-of-the-art tools in managing transportation spending. New technology is useful and can be a great asset, but high-tech systems cost money to purchase, install, and run effectively. A freight/management optimizing system may be enticing to smaller companies, but is it worth the investment? It is often more economical to let the 3PL provider invest the time and money in technology so that you can devote more time to your core business.
3) Service. The biggest hurdle most companies face is deciding whether or not a third-party logistics provider can handle the customer service side of their business. Does the 3PL provider deliver the same level of specialized service that the company's in-house traffic department has offered over the years?
More often than not, the overwhelming answer is "yes" and the resounding question is, "why didn't we do this sooner?"
The transportation management professional's specialization actually provides more in terms of customer service. For example, simply having a live person available 24 hours a day to deal with weather delays, production changes, re-routes, and breakdowns means more efficient response to inevitable problems. Some 3PLs allow their customers to access their management systems to track and trace shipments, freeing customer service personnel from routine, time-consuming practices.
4) The intangibles. By using a third-party logistics provider, freight bill audit, allocation, and payment costs can be dramatically reduced—one itemized bill, one check—and actual costs for both inbound and outbound transportation can be tracked, allocated, negotiated, and managed.
Service management is many times left to the carriers through their self-generated "service reports." Many freight management firms employ their own tracking systems that verify on-time performance. This tool can support "Quality Award Service" programs that encourage and recognize vendor support of the company's supply chain.
So is outsourcing your traffic department to a professional transportation management firm a viable option? That question requires a little foresight and some research into your company's circumstances. Perhaps you should use similar discretion the next time you consider a new hairstyle.