Is it just me, or do Managed Transportation and Transportation Cost Management sound a lot like the same thing?
It isn’t just you. A lot of businesses experience the same confusion – just like some of us at AFS wonder if singer Katy Perry and that actress from Elf are actually the same person.
With that in mind, allow us to spell out just a few of the ways that the two disciplines are actually quite different.
It starts with the workload. With Transportation Cost Management, you’re essentially using a intermediary with the scale to help find, negotiate with and monitor the service levels of qualified carriers. There is usually some level of account management to act as an escalation point when the carriers don’t behave well. However, the rest of your transportation activities are mostly handled in-house.
But with Managed Transportation, you’re entrusting a 3PL with all of those things and more, including overseeing and executing your modal selection, route planning, carrier booking, freight consolidation, shipment execution, regulatory compliance and performance monitoring – all tied together with a bigger picture, more strategic intent.
Go on…
Transportation Cost Management services give you access to huge number of carriers who meet your pre-established cost and service criteria – along with full transparency to their pricing and service records and access to several advanced technologies and platforms. As a result, you can enjoy cost savings and reliability levels you might not achieve on your own. However, it’s still largely up to you and your company to do most of the strategic planning and day-to-day execution.
By contrast, Managed Transportation takes things several steps further. Essentially, it empowers your 3PL to use all of the strategic tools and technologies at its disposal to map out the best possible big-picture and day-to-day transportation options for your company – and to employ best practices across the board to ensure those options are exercised as seamlessly and optimally as possible. The net result is usually bigger efficiencies, greater economies of scale, higher cost savings and more time for you and your company to focus on your core competencies.
So which is better?
It really depends on your company – and the scale, complexity and specific challenges of your logistics network.
If, for example, you have a large, extremely multifaceted network with numerous products and configurations, highly varied sales channels and dynamic operations, a Managed Transportation solution could be an excellent fit for you, because there are numerous iterations to consider and leverage – and lots of ways this service can help you get things right.
By the same token, if you have a more decentralized network that’s characterized by fewer and highly similar shipments to each of your customer locations, Cost Management might be the better option for your company at this point.
Ultimately, it also comes down to your company’s outsourcing comfort level – i.e. how okay you are with teaming up with your 3PL – and where you want the strategic responsibility for your transportation excellence to reside.
The good news is, AFS is cool either way. We offer both services with great success, and we’d be happy to dialogue with you about which one might be best for your company. Send us a message if you’d like to know more. And if you happen to run into Katy Perry or Zooey Deschanel, please don’t tell them what we said. Rumor has it they get really cranky when people bring it up.
