6 Reasons Why You Need A Transportation Management Firm

Supply chains are evolving at a more rapid pace than ever. Land and ocean carrier consolidation, warehouse automation, shifting sourcing structures, and digital supply chain transformation all have a tremendous impact on the current state of the logistics industry. Big box stores have shorter delivery windows, distribution centers are spreading out in some regions while consolidating in others, fulfillment obligations are growing more stringent and time is condensed. Moreover, market conditions like the trucking capacity crisis have shippers struggling to move freight on their own. More than ever shippers need comprehensive solutions for supply chain clarity, consistency and cost-effectiveness.

Transportation management firms are businesses that are dedicated entirely to your supply chain and logistics. Their goal is to optimize goods flow, reduce carrier costs, improve data capture, upgrade technology, strategize routing, and provide cross industry analytics.

Here are 6 reasons you need a transportation management firm:

Technology

It's hard to compete in today's freight market without using technology to optimize your shipments and make the most of your data capture. The problem is that solutions such as a transportation management system are prohibitively expensive for all but the largest of shippers. Beyond just cost, they require operational know how and departmental structure to support them (IT, training, etc.) Fortunately, most transportation firms and freight forwarders now offer customers access to their TMS for a fraction of the cost of bringing one in-house.

"A transportation management [system] is the highest ROI of any planning system that you're going to put in for a process industry." said Lora Cecere, founder of Supply Chain Insights to Consulting Logistics. "If you're shipping with trucks you're crazy to not have a good TMS." 

FOCUS

A transportation management firm allows the shipper the freedom to delegate the daily functions of their supply chain while they focus on the core of their business. Shippers have a diverse set of needs and goals that can be overextended without proper management and oversight. A transportation management firm's entire business is grounded in supply chain optimization, cost reduction, and process improvement. Aborn & Co founder, Russ Aborn, advises, 'By using a transportation management firm you have someone on your side who can work with your freight carriers, optimize your supply chain, and continuously improve your logistics program while you concentrate on growth and your customers."

Scale & Negotiation

How often are shippers negotiating their own rates and with which carriers? Let's face it, freight is a flux market. With capacity issues on both the trucking and ocean side of the delivery equation it may be likely that whatever rates you locked in 6 months or a year ago are no longer market competitive. Your carriers are negotiating with shippers every day while you only speak to them once or twice a year. It is a competitive advantage to work with an independent intermediary that negotiates with carriers on a daily basis and knows when and why to go with a contract rate vs a spot rate. As your supply chain grows and scales you have more leverage and buying power that you can use to your advantage to lower rates and increase carrier commitments.

Cross Shipper Learning

What separates a good transportation management firm from a bad one is the way in which they learn. Exceptional transportation management firms are always looking for the best way to get from point A-Z and everywhere in between. Beyond market research, that takes a knowledge base derived from dealing with shippers moving product to all points along the supply chain. Your transportation management firm should always be looking for new and creative ways for their clients to ship more effectively.

Freight Payment & Auditing

It isn't long after you start shipping that you'll begin getting invoiced. There are few among us who haven't looked at a bill upside down and backwards trying to figure out where all of these accessorial charges and surcharges are coming from. Are they warranted? Was there even a GRI or was that not put out to market? A transportation management firm like Aborn & Co. not only can negotiate some of these away before they even make it to invoice, but we have the market knowledge to know which ones are warranted and in what circumstances they are. Standardize your billing and audit it against contracted rates and performance. If you want to insure that you're not only paying on-time, but never paying more than you should, than strongly consider a transportation management firm.

Benchmarking

There are few shippers who haven't pondered the same universal question, "Am I receiving my freight in the best possible way, at or below market cost, and on time?" The answer is likely a resounding, "NO!" A transportation management firm can look at all of your options, compare them against current market rates and delivery times to determine the vitality of your supply chain. Test the strength of your supply chain while removing any weak links. 

Great benchmarking analytics go beyond that. They look at what class is the freight, what is your average weight per shipment, what percent are minimum charge, are there OS&D problems, who are you shipping to, where (geography), type of delivery, is it to warehouses, strip malls, residences, how is the freight conveyed, how quickly do you pay the carriers, do you or your customers require appointments, these factors and many more go into freight pricing. 

Want to learn more about what a transportation management firm can do for your business? Reach out to Aborn & Co. today. Isn't it time you got optimized? Contact us today for a free consultation. 

Listen to our latest podcast - Digital Supply Chain Transformation w/ 'The Supply Chain Shaman' and LinkedIn Influencer Lora Cecere below