The Types of Services Provided by a Managed Transportation Services Provider Explained
We continue our series on all things managed transportation today by going over some of the major managed transportation services that a managed transportation services provider may provide. Yesterday we went ahead and addressed the outdated notion that managed transportation services are a separate offering from a transportation management system, as some have stated. The New model in managed transportation is a holistic strategic approach for creating transportation solutions using a combination of technology and services.
Throughout the information below, you will see some shared managed services through out each various category. The theme that continues to pop out to us is this focus on services that use both technology and people to deliver.
The Major Services offered by a Managed Transportation Services Provider
Tactical transportation procurement using a Transportation Management System or a Routing Representative
With transportation eating up the lion’s share of logistics expenses, shippers are under constant pressure to drive down rates and overall costs. A managed transportation services provider can relieve that pressure. The largest part provided by any managed transportation services provider is in the area of tactical transportation procurement services. These types of services result in operationally feasible capacity plans with savings of up to 35% on the rates themselves. The tactical transportation procurement Managed Transportation Service directly improves efficiency, profitability, service and cost savings for shippers.
Shippers can outsource their day-to-day transportation procurement to the provided transportation management system (TMS) and / or entire function to a freight routing representative at the logistics services provider and maintain strategic control. If you need help with planning, execution or load & route optimization or if you are still utilizing Excel spreadsheets to manage your transportation system, Managed Transportation Services can help! A managed transportation services provider can help a shipper through a collaborative effort that creates a business process out-source solution that is executable and delivers the shippers specific needs.
The optimal set up between a shipper and provider of managed transportation services is through a collaborative effort. The following services make up the tactical transportation procurement management service:
- Maximize load factor
- Maximize route cost savings
- Shipment optimization: Consolidate smaller shipments into larger cost-effective shipments
- Exception management: Efficiently cover even the most challenging freight
- Mode comparison for using the best mode for each specific freight shipment
- Order / Shipment Management
- Load / Route Optimization
- Ensure the right carrier is handling each load day-to-day, eliminate rogue buying
- Administrative efficiency: Automate bill of lading creation, reduce phone and fax usage for shipment tenders, status checking, expediting
Inbound Freight Management
If you’re looking to save costs on shipping, take a look at inbound shipping. Depending on the industry and size of the company, a business can spend more than 40% of its annual freight budget on inbound shipping, according to the Aberdeen Group, a research firm in Boston. A more efficient inbound freight program can minimize delays, save money and even reduce confusion.
75% of companies surveyed by the Aberdeen Group report that inbound freight management is a key focus point & Total freight spend is between 3.6% and 5.2% of surveyed companies’ total sales, according to Aberdeen’s results. The following are some key areas of the inbound freight managed transportation service:
- Inbound freight planning & execution: routing inbound shipments , scheduling pickups, shopping for volume/spot quotes, re-routing shipments in transit
- Getting suppliers and multiple locations to comply to the routing guide: the managed transportation services provide will route your inbound shipments ensuring they are routed to your specifications at the best possible rates, working with your vendors. The provider can also use a TMS or the same routing services to serve and make multiple locations comply to the routing guide.
- Ongoing standardization of process
- Increase freight & transportation cash flow by optimizing your freight paid vs. freight collect
Reverse Transportation/Logistics Management
As shippers strive to wring every cent out of their logistics costs, they’re increasingly taking a hard look at their reverse logistics management practices. And no wonder, they may find a motherlode waiting to be mined.
Companies can no longer afford to treat reverse logistics management as an afterthought. It needs to be a core capability within the supply chain organization. For years, most shippers paid little attention to returns.
That has changed as companies increasingly realize that understanding and properly managing their reverse logistics programs can not only reduce costs, but also increase revenues. It can also make a huge difference in retaining consumer loyalty and protecting the brand, as we explain more fully below.
Just how big is the opportunity? According to the Reverse Logistics Association, the volume of returns annually is estimated at between $150 and $200 billion at cost.
Reverse Logistics services include:
- Dedicated customer service to handle the entire reverse logistics process
- Return center operations: Management of centralized or regional return centers
- Return-to-vendor management: Management of the flow of returned product from retailer to vendor
- Product recall management: Management of recalls resulting from product defects and other circumstances
- Test, repair and refurbishment: Inspection, testing and repair of products in preparation for resale
- Product recycling: End-of-life recycling to maximize the reuse of all component parts and raw materials, as well as regulatory-compliant disposal
Pool distribution is picking up one or more truckloads of LTL shipments at an origination, taking it to a staging area or cross dock facility and reassembling the shipments on multiple trucks for distribution. Pool consolidation is the opposite. Pool consolidation picks up multiple LTL shipments from multiple locations, brings the shipments to a central staging area for customer pickup or loading it onto a truck for line haul. Many managed transportation service providers offer these strategic shipping options to help drive more costs out of your transportation spend.
eCommerce Freight Shipping Processing
In developed economies, e-commerce logistics represents the latest big driver of change in logistics and physical distribution networks, which have evolved substantially over the past 40 years or so. Currently, it remains the case that as e-commerce continues to grow, most shippers, particularly multi-channel shippers, are still only just beginning to work out what this will entail for their distribution network infrastructures. The following eCommerce freight shipping services could be provided by a managed transportation services provider:
- Retrieve freight rates from carriers via plugin built for an eCommerce shopping cart and then integrated into the managed transportation services provider’s TMS
- Provides options to offer e commerce freight solutions only when an item marked as freight is in the cart, or if a pre-defined weight limit is exceeded, this extension is ideal if you sell a mix of freight and non-freight items.
- Use with Dropship functionalities to specify standard shipping rates on items from one location and freight rates on items from another.
- Provides instant rates to the shopper vs. having to call in for the freight costs
- Gives the shipper the option to understand true freight costs vs. estimated and offer attractive shipping options to increase customers acquisitions
- Access to full managed transportation services for eCommerce logistics processes to give control like traditional transportation procurement
Some other core managed transportation services provided by a managed transportation services provider include such standards as:
- Freight Claims Management
- Freight Accounting
- Freight & Transportation Analysis, Strategy & Continuous Improvement Consulting
- Carrier Relations Management
- Transportation Optimization
What other managed transportation services are providers offering that you are seeing that are not listed above? Let us know in the comments below. If you’d like access to these great services, reach out to us today and set up an in depth consultation to your current transportation practices.