How Managed Transportation Systems Improve Supply Chain Efficiency and Cost Savings
The nature of supply chains has evolved over the years, with new technologies and many players in the middle making logistics highly complicated and expensive. A report by PwC indicates that logistics and supply chain costs account for approximately 10% of the organization’s total expenses. This is the most costly issue businesses struggle to minimize in their supply chain operations.
Managed transportation systems (MTS) address this problem, providing an organized way of consolidating logistics and eliminating waste. According to Gartner, the transportation management systems (TMS) market is expected to grow by 60%. This boom exemplifies the role of MTS in adapting to the prevailing dynamics of supply chain management.
This article will define MTS within the supply chain, reveal its operational and financial advantages, and explain how companies can embed them within their current structures and processes without disruption.
Benefits of Using Managed Transportation Systems
Managed transportation systems (MTS) go beyond optimizing shipping routing and data analysis management. They help manage logistics, allowing companies to concentrate on their primary business operations. Outsourcing the transportation management systems promotes professional development within the organization. It also enhances efficiency by eliminating wastefulness and saves costs in the long run.
The following are key benefits of using MTS in your supply chain processes:
Risk Management
Risk management has become more crucial now than ever because disruptions are bound to impact a company’s performance in its logistics industry. A managed transportation system can reduce risk by controlling carrier relationships and fine-tuning supply chain networks while using data-driven predictive tools to prevent delays or inefficiencies.
Cost Savings
Managed transportation systems assist organizations in selecting appropriate carriers and routes. This helps marketers cut transportation costs. In fact, companies that use data-driven insights can make well-organized decisions geared toward saving and managing costs effectively in the long run.
Simplified Day-to-Day Operations
If your company outsources logistics management, it can concentrate on its core business activities, such as developing new products and servicing customers. MTS providers manage logistics complexities, from booking shipments to addressing issues that may arise, so internal resources can be focused on core operations, increasing operational efficiency.
Enhanced Data and Insights
MTS analytics helps businesses monitor where logistics failed in real time. These insights allow businesses to make timely decisions, reduce delivery time, and optimize supply chain operations. Research indicates that data analytics helps cut costs and improve service levels.
Achieving Cost Efficiency with Managed Transportation Solutions
To stay competitive in the logistics market, your business must focus on reducing the cost of operations. But how do we achieve this? It’s pretty simple: Integrate managed transportation systems into your business.
Here are some vital hands-on ways to guarantee cost-effectiveness with MTS.
Carrier Optimization
Cost efficiency starts with choosing the appropriate carrier. MTS providers are not always out to settle on the cheapest rates but instead aim to optimize carrier selection by balancing cost and service performance. This guarantees timely deliveries and reduces transport costs.
Route and Mode Optimization
MTS helps companies find an optimum route and transport mode, resulting in huge cost savings. Increased route planning and mode selection for faster transit times help save on fuel consumption.
Data-Driven Decision Making
Data analytics are essential tools in minimizing a company’s costs. MTS vendors gather information from multiple systems and provide organizations with intelligence regarding logistics activities. Predictive and prescriptive analytics help forecast demand, anticipate disruptions, and make informed decisions that drive long-term cost savings.
Harnessing Data-Driven Insights for Superior Supply Chain Management
As supply chains grow more complex, data and analytics have become more than an optional add-on; they have become enablers of efficiency and resiliency. With the situation becoming even more complicated due to global disruptions, regulatory demands, and changing market conditions, data-driven approaches can bring a paradigm shift in supply chain management.
Here’s how businesses can capitalize on data-driven capabilities to improve the efficiency of their supply chain.
Supply Chain Data Management
Effective data management is the backbone of survival in the modern supply chain. There is an increasing reliance on advanced analytic tools for managing large volumes of data, which warrants quick insights and quicker actions.
According to KPMG’s Future of Supply Chain report, 39% of global supply chain professionals say they will invest in digital technologies to strengthen their data analysis capabilities. The readily available data enables an organization to anticipate interruptions, enhance visibility, and support efficient actions that maximize costs and service.
AI-Enabled Supply Chain Planning
Traditionally, demand planning is frequently carried out across departments using antiquated methods. This always leads to slow and less accurate forecasts. Fortunately, using AI-powered supply chain planning, the gaps between internal and external data can now be eliminated by leveraging unique machine learning models that link disparate types of information into a much more accurate forecast.
Generative AI in Supply Chain
Generative AI (GenAI) can transform supply chain management by making automation and decision-making easy. Examples of Gen AI use cases are translating complex data, summarizing legal documents, and analyzing customer feedback in real time.
Gen AI helps supply chain leaders more easily spot early warning signs, such as disruptions in supplier countries. It also supports faster response due to its capacity for handling huge amounts of information.
Best Practices for Leveraging Managed Transportation Systems in Your Business
A managed transportation system is a significant step and must be planned accordingly. Some best practices can help guide the process and ensure business gain from these systems.
1. Evaluate the Specific Needs of Your Business
Each company has different logistics requirements, and there may not always be a one-size-fits-all answer. When choosing a managed transportation provider or system, map your specific needs and see if they align with what they have—this is key. Shipment volume, frequency, and where you operate your business are some things to reflect on.
2. Monitor Key Performance Indicators (KPIs)
Measuring success for managed transportation system metrics begins with setting KPIs as they provide the capability to formulate results and track ongoing progress. Some metrics to monitor in your LSP are on-time delivery rates, transportation cost per shipment, and how fuel-efficient they run. Frequent monitoring of these KPIs will help determine the probable areas where the system could be improved to deliver desired outcomes.
3. Focus on Continuous Improvement
The logistics industry is ever-changing, and what works today may not work tomorrow. Businesses should be proactive agents, constantly assessing their managed transportation system and making informed course corrections based on data intelligence and performance metrics.
While this explanation can be more in-depth, businesses that embrace these best practices will have a smoother deployment of their managed transportation system and the operational as well as cost-saving results they expect.
Conclusion
There are many benefits of using managed transportation systems for businesses trying to improve supply chain efficiency and cost savings. MTS gives companies the tools needed to modernize logistics by delivering real-time visibility, route optimization, and data-driven decision support so that carriers can gain a competitive advantage in an increasingly complex supply chain. By deploying these systems, businesses can reduce costs and improve compliance and overall customer satisfaction.
*This article is written by Sheer Logistics. Sheer Logistics provides technology-driven supply chain solutions that empower businesses with visibility, efficiency, and agility across their logistics operations. With a focus on transparency and strategic partnership, Sheer Logistics helps clients optimize their supply chains and drive sustainable growth.
