Want a Better Supply Chain? Here Are 4 Reasons to Outsource Your Transportation Management

By Matt Menner, Senior Vice President of Strategy, Transplace

Now more so than ever, corporations understand the tremendous impact logistics and transportation can have on their overall business performance and are taking meaningful strides to optimize their supply chain operations. While some organizations have the human capital, industry depth and expertise and IT infrastructure to manage their transportation on an insourced basis, a majority do not. It’s simply not viewed as core competency or they lack the significant technical infrastructure to do so effectively or efficiently. It’s for this reason they outsource this business function to a third party that specializes in this area.

Third party logistics (3PL) and outsourcing of nearly every conceivable logistics function is a known, proven and highly mature strategy that delivers near immediate financial and operational performance efficiencies that assist companies to reduce costs and improve supply chain performance. It’s for this reason an estimated 80% of Fortune 500 companies and 96 Fortune 100 companies use 3PL services in some form or fashion¹. But it’s not just limited to large corporations. Global 3PL revenues grew to $676.9 billion (U.S. dollars) in 2012 – a 9.9% increase over 2011, according to Capgemini’s 2014 18th Annual Third Party Logistics Study. In the United States alone, 3PL gross revenue increased 3.2% (a rate greater than our GDP) from 2012 to 2013 to $146.4 billion, according to a recent research report from industry watchers Armstrong & Associates.

Here are 4 reasons why companies should consider outsourcing their transportation management:

  • Access to a team of knowledgeable, experienced supply chain professionals: Unlike most organizations, a 3PL is filled with experienced logistics professionals – from entry level positions to the CEO. By outsourcing to a 3PL, a customer immediately gains a team – and an entire company – of supply chain practitioners with various areas of expertise around industry segments, mode, geography, regulations and much more.
  • Leverage the 3PL's size and scale: The size and scale of a 3PL presents greater optimization and cost savings opportunities than a shipper would have on its own. For example, a 3PL can combine the freight of 30, 40 or 50 clients to give shippers far more buying power than they would command “going it alone” in these trying times. Additionally, 3PLs can leverage their customer base to enable shippers to co-load freight or utilize a shipper’s private/dedicated fleet to reduce empty miles.
  • Access to a comprehensive technology platform: The core IT systems that run companies focus on, by and large, the operating and financial aspects of the business, not the transportation and logistics functions. In many cases, it’s a passing afterthought – if not completely forgotten. However, for a 3PL, their technical prowess and differentiating agility is centered around the solutions they use to run their customers’ business and is their core IT platform, which receives their daily undivided attention not to mention research and development investment dollars. Instead of buying a system and hoping it works for them, for many, the optimal approach is to outsource to a third party with its own proprietary technology who is continuously focused on it and the implications of that platform on their customer’s business.
  • Commitment to continuous improvement, not just short-term savings: Transportation optimization is more than moving freight for the lowest cost. 3PLs continue to enhance their ability to drive innovation and deliver “long run” value for their customers. And not just a one-time boost in performance, but continuous improvement that comes from the sum of services, solutions and expertise; in unique configurations that 3PLs are adept at providing to their customers.

While there are a few outliers whom excel at the management and execution of their logistics networks, a majority of companies understaff and woefully underinvest in the key critical areas that make up their transportation and logistics function. The supply chain effectively delivers goods to a customer, allowing that customer, whether a manufacturer, retailer or distributor to book  sales and deliver economic value to their shareholders. Excellence ‒ as their core mission and purpose for existence with respect to that area ‒ is what third party logistics is all about

To read how one customers views his company’s relationship with his 3PL as a partnership, click here or to learn more about 3PLs visit: https://www.transplace.com/tms/Pages/third-party-logistics.aspx

¹Source: Armstrong & Associates

Batter’s Up: World Series 2014

Whether by plane, train or automobile, baseball fans will be gathering over the next eight days to attend or meet up with others to watch this year’s Fall Classic. As the World Series kicks off, we can’t help but think of the logistics in place that helps make each World Series a fun game experience for fans. That includes transporting the right amount of hotdogs, beer and baseballs (among many other things) to ballparks for each game. 

Check out just how logistics plays a key role in baseball’s best games of the season in our fun World Series themed infographic!

What is your favorite World Series memory? Best match-up?

Upcoming Webinar Preview: Driving ROI through Network Optimization

Streamlining distribution networks and adding efficiency while improving levels of customer service is a major focus for supply chain organizations. How do I manage costs, maximize network efficiency and meet demanding customer service requirements? Companies are increasingly undertaking initiatives in network optimization projects to evaluate strategic alternatives and drive business value.  

However, network optimization has changed significantly over the years – new focuses in optimization strategies include factors such as market capacity, risk mitigation and identifying quick wins at both tactical and strategic levels. There’s also a new importance being placed on working with both upstream and downstream partners to develop a sustainable and efficient network.

In an upcoming webinar hosted by World Trade 100, Transplace’s Ben Cubitt and Prasad Mahajan will share a panel discussion with Alex Pulko from Zep Inc., and discuss some important aspects of network optimization as outlined below.

Strategy: Network optimization used to be infrequent and extremely challenging projects.  Today’s network optimization tools and improved access to network data means that shippers can model complex networks as needed to respond to the more dynamic market conditions currently faced. Today, shippers can spend more time comparing alternatives to determine the optimal network for their business, versus fighting to get poor data through a large, cumbersome, resource-intensive project. 

Key questions to ask include: What is in scope – entire network? Inbound? Outbound? All business units?  All modes?  Who should you involve in your planning and implementation? What questions, especially in relation to new products, investments or acquisitions, should you be asking to frame up your strategy? How might the network change over a reasonable timeframe (3 to 5 years) – new products, major customer changes, changes to manufacturing/co-packers, suppliers, changes in order, lead time? Is there an opportunity to share facilities – model by business unit, model mixing centers, opportunities for internal/external collaboration?

Methodology:  Network optimization projects require discipline and adherence to a well-established project timeline.  At Transplace, we have a proven methodology that we’ve used with more than 50 customers in the last 3 years alone, in addition to proprietary tools such as Llamasoft and Optimize Prime to tailor unique parameters for optimization.

The webinar will share insights on proven network optimization methodology, including tips on “critical success factors” and equally important potential decreases to productivity levels that must be managed. 

Case Study – Zep Inc: In addition to these insights, Alex Pulko, Supply Chain Manager at Zep Inc., will also be joining the webinar panel to discuss the above topics and how his company has applied them to its network optimization process. Alex will be sharing some tremendous outcomes he has seen as a result! 

Best Practices: We will conclude the webinar by advocating best practices to approach and execute network optimization projects based on our experience and changing trends in the industry.

Join us on October 21st, 2014 at 2:00 pm EST for this not-to-be-missed webinar showcasing proven methodology, tools and the latest and greatest best practices in network optimization strategy. To register, click here!  

What are some of the areas of network optimization that you’re interested in hearing about in this webinar?

Transplace Business Units: Opportunity Abounds with Celtic Intermodal

By Steve Golich, President, Celtic International

Steve Golich.jpg

To define it simply, “intermodal” is the combination of more than one mode of transportation, a method of shipping that has been in practice since 1961. However, for many in the transportation industry, intermodal is still a concept that hasn’t been fully explored. 

A few months ago, Transplace partner Celtic International revealed some exciting news – the rollout of Celtic Rail Direct, a collaborative venture with Transplace’s Mexico operations. A door-to-door, seamless double-stack container service that connects all three North American countries; Celtic Rail Direct provides service between U.S., Canadian and Mexican markets in and near Monterrey, San Louis Potosi and Mexico City.

But why all of the excitement about these opportunities in Mexico?  Some are calling cross-border the “last frontier for intermodal” – there’s an element of the “unknown” to intermodal transportation between the US and Mexico, and all of that untapped potential is certainly intriguing.

Things have also changed quite dramatically for intermodal in recent years. For example, the railroad industry continues to spend significant funding toward infrastructure updates, striving for improvements. It’s now faster to get from Chicago to Los Angeles by train than with a single truck driver.

Some of the other benefits of intermodal for shippers include:

  • Elimination of border congestion, delays, inspections – all non-value activities
  • Reliable, predictable and competitive transit times
  • Transportation and fuel savings
  • Cash flow benefit inventory in transit vs. sitting on a truck or border warehouse
  • Elimination of mishandling and damage oftentimes associated with trans-loading
  • Environmental friendliness and sustainability

Celtic is also a priority partner with all of the Class-1 railroads, enabling them to utilize those relationships and offer complete door-to-door tracking and tracing. Many shippers may have experienced the anguish associated with having a load pulled off at a border crossing to await custom’s inspection approval, but with Celtic Rail Direct, there are no stops at the border!  

Opportunity abounds with cross-border intermodal transportation, and since Mexico is the “last frontier” of potential opportunity in North America, we are front and center. 

What key areas or benefits of intermodal service are the most exciting to your organization?

Read more about intermodal opportunities in Mexico here or watch Steve’s in-depth explanation of Celtic’s recent intermodal ventures at the recent Shipper Symposium in this video.

Top 10 Tweets From CSCMP 2014!

If you’re looking for the latest and greatest industry information from leading experts, practitioners, academics and peers, CSCMP's Annual Global Conference is the place to be.  We had such a fantastic time at this year’s conference – gaining some true end-to-end supply chain knowledge that we wanted to share some of the highlights with you via tweets!

Below (in no particular order) we’ve captured a variety of voices, opinions and insights to share the Top 10 Tweets from #CSCMP2014! 

Ashling @PNAshlingS

Surveys Finds Global 3PL Leaders Remain Profitable and Optimistic ow.ly/BP6GY #3PLCEOStudy #CSCMP2014

Kevin Jones @KevinJonesCCJ

Economist Rosalyn Wilson tells #CSCMP2014 that #truckdriver shortage will rise to the leading problem for the entire economy. #trucking

Eric Kulisch @ericreports

Did u know Julia Collins, woman who won 20 consecutive Jeopardy games & $428K, has spent her career in supply chain management? #CSCMP2014

Michael Hane @TransNerd

In tight market. Customers are shifting lanes that converted to CPU back to the Mfgs. More headaches for Mfgs #CSCMP2014 #supplychain

Dave Blanchard @supplychaindave

Rosalyn Wilson: The first six months of 2014 have seen the strongest freight performance since end of recession #CSCMP2014

Chris Elliott @chris_speaks

View of #CSCMP2014 conference from 750 ft above the convention center. pic.twitter.com/xmCXQi5hO7

Matthew Zahand ‏@MatthewZahand

"If you want to kill a new #supplychain initiative, don't explain it well." - Mark Heinrich, Rear Admiral, US Navy (ret). #CSCMP2014

Columbian Logistics ‏@ColumbianHQ

96% of shippers say 3PL's IT chops are a necessary element of the relationship. #CSCMP2014

DAT Solutions ‏@LoadBoards

Supply chain pros believe truckers no longer ‘crying wolf’ on driver shortage - http://ow.ly/BSccG  #CSCMP2014

Eric Johnson ‏@AmShipEric  

Thoughts from @cscmpconference on #Omnichannel. The next maturity step is more data: http://bit.ly/1BhDCSB

Have a favorite tweet or topic from CSCMP 2014?  Feel free to comment below or let us know via Twitter (@Transplace). And we’ll see you next year for CSCMP 2015 September 27- 30 in San Diego!

Did you connect with peers, learn about logistics and see San Antonio’s sights at this year’s CSCMP 2014?

For more information on third party logistics and technology, visit transplace.com.