Last year, I moved into a house that is more than 100 years old. While I hope to eventually turn it into my dream home, saying it's a fixer-upper would be a massive understatement.
The home needs a lot of work, so I spend most of my weekends covered in paint and sawdust, working on projects to upgrade and customize the home to my liking. I'm a fairly handy guy, and I face a difficult decision with each new project: Do I tackle it myself, or should I hire someone who can offer expertise on the job at hand?
Businesses face a similar decision when they're ready to implement a transportation management solution (TMS). Do they place the burden of implementing a TMS on their internal team? Or do they partner with a logistics service provider (LSP) that has years of industry knowledge and experience?
Countless companies pour money into implementing an off-the-shelf TMS, reasoning that they can save some money by taking on a portion of the work themselves. If they purchase and maintain their own system, they reason, they will have more control over their transportation network and performance.
A do-it-yourself approach to logistics might seem appealing, but let's take a look at some of the lesser-known costs of this strategy and then consider the benefits of working with a full-service LSP.
The Costs and Complications of DIY Logistics
Aside from the obvious price tag for a TMS, expect to spend a significant amount of time working with your IT department to integrate the system with your current technology and processes. Assuming you have the right people and the necessary resources, consider how frequently the project will pull your team members from their day-to-day roles.
Finding the best integration points based on your business information requirements and workflow is not always obvious — nor is it covered in system manuals. More often than not, you’ll need to hire experts to implement the software across finance, IT, and warehousing or logistics departments.
It should take about two to three months to fully launch a TMS with limited functionality. For a more customized suite of tools that works in tandem with your entire network, expect the process to take as long as six months (including testing time). Once you’ve finally implemented a TMS, you still aren’t out of the woods. Software maintenance and upgrades, license costs, and manpower demands will ultimately dictate an expenditure that’s typically at least five figures.
You can expect the transportation industry and your company's logistics requirements to evolve over time. Even the most customer-friendly TMS will likely require some modification on your end, including custom work that might require the assistance of a programmer and dedicated IT staff. For most companies, the extra level of control over their shipping systems doesn’t come close to meriting an investment of this magnitude.
Beyond these financial issues, many companies setting up their own TMS dramatically underestimate how much data they’re going to receive. Information is good, but all the information in the world is useless without someone to sift through it and glean real-world insights. Expect to invest even more in analytical resources required to turn the flood of data generated by a TMS into usable metrics that can contribute to your success.
We recently worked with a larger retailer that had gone down the path toward a TMS without a full understanding of these common hurdles. This client had acquired Oracle’s TMS but quickly realized it didn’t have the internal IT resources necessary to get the system operational. We were able to step in and integrate with the client’s enterprise resource planning system, eventually completing the implementation using our own suite of solutions.
5 Reasons to Look for a Logistics Partner
It's easy to watch several episodes of "Property Brothers" or "Fixer Upper" and feel inspired to renovate your home, but the reality is far more difficult than television makes it seem. In reality, a DIY renovation can quickly swell beyond the initial scope of the project.
The shipping world is similar. Organizations large and small might be tempted to manage their own logistics and implement their own TMS, but they often bite off more than they can chew. A logistics service provider can deliver advantages that far outweigh the limitations of doing it yourself.
- Cost: A wise man once said, “If you think hiring a professional is expensive, try hiring an amateur." This statement applies to any enterprise-level software solution, but it's particularly true for a TMS. Working with an LSP might seem more expensive at first glance, but consider the potential long-term costs of a poorly executed implementation.
- Efficiency: Implementing a complex TMS is no easy task. Thankfully, it's nothing new for an experienced LSP. We've done this before, and we have all the right tools necessary to accomplish the job. This enables us to implement a TMS quickly and correctly despite any complexities specific to the client.
- Industry insights: An LSP lives and breathes logistics every single day. In addition to adapting to new regulations like the ELD mandate, an LSP can help companies make the most of the latest technologies, such as real-time tracking, modern TMS software, and blockchain. Every organization's supply chain is unique and complex, so working with a broad array of clients allows LSPs to develop and perfect industry-leading practices.
- Meaningful metrics: A TMS provides a wealth of data at your fingertips. But turning that data into meaningful, actionable business intelligence is easier said than done. Logistics providers have developed views and reports to support multiple lines of decision-making. They know which reports are the most useful, and they continuously improve them based on client feedback.
- Peace of mind: As with any project, it's crucial to weigh out how confident you feel in your ability to accomplish the job at hand. While I might feel comfortable changing out a few light fixtures in my house, I'd definitely want to bring in an electrician to handle major rewiring. When it's time to implement your TMS, consider whether you want to tackle the task or outsource it to an expert in the field. Sometimes, it's worth the investment to know that the job is done correctly.
For the majority of companies, it makes a lot of sense to recruit an LSP to facilitate transportation management instead of taking a DIY approach. This strategy can lead to lower costs, quicker implementation, and a higher degree of reliability than purchasing your own TMS. For more information on teaming up with an experienced logistics partner, request a demo today.