Weighing Managed Services? An Ounce of Prevention Really is Worth a Pound of Cure.Connect
The demands on your logistics management operation have increased to a point where it’s time to consider adopting a managed services model. Where do you go from here?
In some ways, managed services solutions are a level up from traditional third party logistics provider (3PL) models, where a 3PL handles carriers and negotiates rates for you. Graduating to managed services often happens when shippers want more control and more visibility into their supply chains—but how do they know that they’ve reached that stage? And if they have, what combination of services best suits their needs?
Where are you now?
Thinking about these questions before you get into the due diligence phase can save a lot of time and wasted effort.
Managed services solutions offer transportation management system (TMS) technology combined with support from freight management experts who know how to get the most out of TMS software. It’s a very powerful combination, but to realize its full potential, you need to have a clear idea of how it will be deployed.
That may sound obvious. However, the extent to which you are familiar with the managed services model and its applications depends to a large degree on where your logistics organization is in its freight management journey.
Perhaps you’ve reached a stage where your freight network has grown so much—both geographically and in terms of its complexity—that you need the consultancy support offered by a managed services package. Another possibility is that your company’s logistics demands have changed as a result of a major restructuring. Now you need a managed services team to shoulder much of the freight management burden while your department addresses new strategic imperatives.
There are many possible scenarios; each one is different in terms of what logistics support you’re looking for and how knowledgeable you are about managed services applications.
This is why it’s important that you clarify your needs before you start interviewing potential providers.
Lines of inquiry
No doubt numerous questions need to be answered in order to tease out a working list of requirements. But here are three that, in our experience, help shippers get an initial fix on their freight management destination.
Where are my pain points? What do you want to accomplish, which critical gaps in your current set up need to be filled to achieve these goals, and what gaps could open up in the future?
What resources do you bring to the table? Key considerations are your team’s current level of TMS expertise and which tasks it can or should be responsible for in a managed services environment. Keep in mind that one of the big advantages of managed services packages is that they bring a high level of automation.
What is my budget? This question is not only about how much you have to spend, although that is important of course. Managed services costs are structured differently than those associated with a 3PL model where you pay a third party provider to broker carrier capacity.
Taking the time to consider questions like these pays dividends later on—even if you urgently need to hire managed services talent.
Another option worth considering is to commission some early research. In fact, this course of action is recommended. A qualitative assessment of your needs carried out by a neutral third party brings clarity of purpose and helps to ensure that the due diligence process is on track from the start.
For more information on considerations before choosing TMS provider, download our white paper, Choosing a TMS Plus Managed Services Provider: Making the Most of Your RFP.