Supply Chain Expertise and Technology Blog by TMC, a division of C.H. Robinson

A Roadmap to Successful Transportation Management

Outsourcing TMS

Factors to Consider when Choosing Providers

If you had a forgettable experience when you tried to outsource transportation management or find the idea of relinquishing control of this vital function to an outsider a non-starter, it might be time to think again.

Transportation management solutions have advanced a great deal over recent years. Numerous companies now reap rich performance rewards by using third-party providers to help manage all or part of their freight.

Of course outsourcing is not for every organization. But reviews of failed relationships suggest that they were not thought through sufficiently well, a flaw that can be avoided through systematic due diligence. That’s easier said than done you might say, so here is seven-step guide for putting these partnerships on a firm footing.

1. Know Your Provider

These days there are more variations on the transportation management theme than you might imagine, but as a consumer you have to figure out which one is right for you. The alphabet soup of provider options – including TMS (transportation management solutions), 3PLs (third-party provider) and LLP (lead logistics provider) – can be confusing. Don’t fixate on the terminology. Focus on the level of collaboration and transparency that each service provider offers in relation to your underlying costs.

2. Know Thyself

Having the latest and greatest technology at your disposal is not the only point of the exercise. Evaluate various factors including the caliber of your people and the quality of your core processes. Answer some searching questions such as should all or part of the supply chain be outsourced. Match the answers to what providers are offering to decide which solution is the best fit.

3. Define the Scope

It might seem obvious but defining the scope of the relationship at the evaluation stage greatly increases its chances of success. A marriage between a provider that is driven primarily by revenue growth and a shipper that lives to cut costs is likely to flounder. Define service requirements at the outset and check that the provider is on the same page.

4. Watch Out for Culture Clashes

Make sure that respective cultures mesh. Ask the provider about its organizational strategy and corporate values. Make site visits to ensure that this is the type of organization you want to partner with. Confirm that the provider’s service menu is real and not the product of marketing hype.

5. Build a Support Base

It’s a cliché but that does not make senior management buy-in any less important. The new transportation management strategy will touch some core processes. Also, win broad organizational support by involving a cross-functional committee in the selection process.

6. Time Not the Enemy

Don’t allow your impatience for an ROI to derail the partnership. Meaningful outsourcing is not cosmetic; it should involve transformative change and this takes time. Set out agreed goals and milestones at the start while keeping in mind that you are embarking on an ambitious change management journey.

7. A Proper Partnership

Treat the provider as an extension of your business and not just as an expendable vendor. One way to ground the relationship is to continuously monitor the provider’s performance by using a 360-degree scorecard. But make an effort to embed a spirit of collaboration in the relationship. A truly collaborative partnership is open to the exchange of best practices and nurtures a deep understanding of the transportation network being managed.

Following this seven-step guide does not guarantee success, but it will increase the chances of you establishing a productive, enduring outsourced relationship. The range of transportation management options out there is extremely rich. Taking a thoughtful approach to evaluating them can pay big dividends.