How Third-Party Logistics (3PL) Service Providers Can Benefit From a Transportation Management System

Posted by Benjamin Meskin on Jan 23, 2020 12:50:00 PM
Benjamin Meskin

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The expansion of global trade is opening doors of opportunity for logistics and transportation providers. Third-party logistics (3PL) companies have extensive networks that can handle every aspect of the supply chain. Many companies choose 3PL service providers because of the competitive advantages over in-house logistics teams.

However, these service providers have to meet their clients' ever-evolving needs to solidify long-term business partnerships. A transportation management system (TMS) can optimize logistics processes and ensure businesses meet logistics and supply chain requirements.

 

What is a Transportation Management System

A transportation management system helps 3PL service providers optimize the flow of goods via a digital platform. The TMS streamlines shipping documentation and ensures that it's up-to-date. At the same time, third-party logistics providers can track shipments, analyze risks, and access insights. As a result, 3PLs can make more informed business decisions that improve customer satisfaction.

 

Challenges of 3PL Service Providers

Global trade is essential for the growth of nearly every third-party logistics provider. At the same time, many problems stand in the way of a 3PL's ability to complete these trade transactions. We've outlined how a transportation management system can help 3PLs gain the competencies necessary to overcome international trade challenges.

 

3PL Challenge 1: Document Organization

Each foreign trade transaction can require an abundance of paperwork. Some of these documents include the air waybill, a bill of lading, cargo insurance, certificate of origin, commercial invoice, delivery note, dock receipt, export license, packing list, and purchase order, among others. Many small and mid-sized 3PL service providers find it almost impossible to keep up with the immense volume of documents.

 

TMS Solution: Documentation Management System

A transportation management system can automate the documentation process, saving 3PLs endless hours of manual labor. Additionally, the TMS automatically creates and transfers shipping documents in compliance with local laws.

Another benefit is the ability for businesses to share information digitally via electronic data interchange (EDI). This paperless data exchange facilitates transactions and simplifies communication between trade partners.

 

 

3PL Challenge 2: Systematic Reporting

One of the most common problems 3PLs face is the lack of a reporting system. Because the majority of resources are allocated to logistics management tasks, gathering insights on other processes takes a seat on the back burner. A TMS keeps track of useful statistics that help 3PLs make more informed business decisions. For example, the system keeps a log of a company's loss history and suggest the best methods of shipping goods to high-risk areas.

 

TMS Solution: Shipping Intelligence and Insights

A TMS system offers transportation intelligence insights that enable 3PLs to speed up processes and minimize delays. Third-party shipping service providers also benefit from increased transparency. The ability to track in-transit shipments allows 3PLs to provide real-time updates to trade partners and ensure deliveries arrive at their destinations on time. The ability to quickly and accurately process deliveries enables many logistics service providers to exceed customer expectations and scale their businesses.

 

3PL Challenge 3: Lacking Infrastructure

Compared to large logistics companies, 3PL service providers don't have as many resources to establish an internal foundation. Without an organizational infrastructure, many 3PLs have difficulty planning, executing, and optimizing shipments. A lack of assets often contributes to the inability to secure partnerships with independent transport providers. As a result, offering customers competitive rates can prove challenging.

 

TMS Solution: Integrated Shipments

The execution of transportation management tasks needs to be particularly well-organized to handle the intricacies of global logistics. A TMS system determines the best method of shipment, most reliable carrier, and can optimize multi-leg deliveries. At the same time, the 3PL gains enhanced visibility into each stage of the supply chain. Additional insights into specific geographic areas can help 3PLs avoid shipping delays. This infrastructure is essential for effective planning and management of international logistics in a dynamic trade environment.

 

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3PL Challenge 4: International Regulations

Many 3PLs struggle to stay current with international laws and regulations. Supply chain processes become complicated when shipping overseas due to shipping rule discrepancies. Additionally, these regulations can change, creating many different opportunities for compliance issues. However, keeping up with international codes and laws requires more resources than most 3PL companies have.

 

TMS Solution: Risk Management Software

A TMS can simplify these various supply chain processes, as well as determine the best shipment method for a particular order. The software helps 3PLs stay compliant with local and international regulations. As a result, 3PL companies can minimize penalties and avoid delays. A TMS also enables service providers to establish best business practices and strategies for shipping goods to risky areas. Instead of responding reactively to economic risks, 3PLs can begin to take proactive measures.

 

3PL Challenge 5: Inventory Management

Without a TMS, gaining an overview of inventory, orders, and shipments is challenging. Omnichannel, both in-store and online, purchases require a particular organization. For example, using effective inventory management, companies would ship goods from the closest distribution or retail location. This method ensures the most cost-effective transport of products. Using location, social network, and traffic data, TMS can also improve the accuracy of estimated arrival times.

 

TMS Solution: Warehouse Management System Integration

The TMS gives 3PLs real-time status updates on shipments as they move through the supply chain. Additionally, a TMS can integrate with warehouse management systems to provide real-time updates on inventory. For example, when e-commerce, barcode, or QR codes are scanned, the WMS can update stock levels in real-time. This capability streamlines the supply chain process. At the same time, customers stay up-to-date on the status and location of their cargo.

 

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Final Thoughts

A high-quality transportation management system helps 3PLs operate more efficiently. Reporting, analytics, compliance, and risk management capabilities help third-party logistics providers streamline services and expand their geographic reach.

Most significantly, a TMS helps remove any operational inefficiencies, resulting in more reliable, on-time deliveries. As a result, customer satisfaction and retention rates improve.

To learn more about how 3PL service providers can benefit from a transportation management system, contact the experts at Cabrella at 844-422-2735. Our professionals are happy to answer any questions you have.

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