The value of implementing a transportation management system (TMS) is undisputed. Companies across the globe are looking to leverage an advanced TMS function and capabilities to streamline logistics management. Unfortunately, not all TMS solutions are created equally. According to Emma James of Inbound Logistics, a shippers core business strategy must include an evaluation of who developed the platform. In fact, a TMS may be developed in-house, by a 3PL or an outside party that the 3PL hires. Unfortunately, every 3PL will bill its system as the one solution you need for success which only serves to compound the problem when attempting to choose a partnering software vendor, so it is wise to evaluate whether the TMS was designed by the 3PL itself or an outside entity that was hired by the 3PL.
To eliminate any confusion, let us look at the difference between a 3PL TMS development and development by another entity. As explained by Price of Business, a TMS development by a third-party to the 3PL, which may actually be called a fourth party, can alleviate many of the costs and burdens in developing a TMS. Hiring is less labor-intensive, and the TMS development can proceed rapidly. Unfortunately, the process of hiring that extra party complicates the business relationship. Since the 3PL is not in full control of development, unnecessary functions may exist, opportunities are lost, and other issues may arise.
Now, if the 3PL develops its own TMS in-house, such as that offered by Cerasis, it is more likely to provide greater control to the shipper. The in-house team can directly communicate with its customers, wich are shippers. As a result, the 3PL continuously monitors and improves upon the TMS to optimize logistics.
The challenges arising from a tech company hired by a 3PL to develop a TMS are significant. The other party may not understand the actual needs of each consumer. Developing a catch-all platform is excellent, but it will always lack value unless it bears the capability to integrate with legacy systems. Take that fact alone; legacy systems vary by shipper. As a result, the platform developed by a third-party tech company could limit your ability to use existing systems.
Furthermore, the costs assessed by the 3PL may be higher. This is the result of the need to pay a third-party and make a profit. While short-term costs may be less than developing an in-house solution within the 3PL, the long-term costs could be quite much more than the 3PL expected, as the cost structure with the hired developer will need to include the ongoing cost of maintaining the system or adding new functionality. These costs could then trickle down to the shipper, making working with the 3PL more expensive than what was first though. If anything is certain in business, it is that the price of service and equipment will always increase.
Implementing a TMS that was built, managed, and maintained by a 3PL eliminates all uncertainty concerning the ongoing development and improvement of the system. Advantages of working with a 3PL-developed TMS include:
Cerasis firmly believes the in-house development of our TMS, the Cerasis Rater, is essential to our primary business model. It does little good to outsource the outsourcing, and that is not what Cerasis is about. Instead, we focused on building an e-commerce solution for less than truckload, integrations, parcel rate comparison to LTL, final mile and white-glove service features, and even after-hours order tendering and pick up. The continuous development of the Cerasis Rater reaffirms our belief that all TMS development should take place wholly within a 3PL, not an outside software developer.
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