Importance of 3PL, the most efficient transport management tool

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A Transportation-Management-System/tool (TMS) is a software application between an ERP system and a shipping distribution channel. Freight logistics in Melbourne is one of the shippers that have to implement a TMS four ways:

  • Develop a TMS in-house
  • Develop a TMS in-house
  • Outsourcing the TMS operation to a third-party logistics (3PL) supplier
  • Implement transportation management software

Small shippers who do not own a fleet can outsource the TMS function to a 3PL provider or implement a TMS product – a type of logistics software that allows shippers to perform a freight audit. They also include other logistics functions without staffing logistics experts or contracting with a third party:

  1. 3PL vs. TMS Software

TMS software and 3PL each have unique advantages depending on the shipper’s wants and needs. The following are the benefits of each in terms of cost, control, and carrier options:

  1. Cost

The price of 3PL is determined by the type of provider used by the shipper: traditional 3PL, service developer, customer adapter, or customer developer. Standard 3PL providers and service developers, on the other hand, offer a restricted set of standard logistical services and a limited set of value-added logistical services. As a result, they aren’t a good fit for TMS management. That leaves customer developers and customer adapters, who both handle all aspects of shipping.

  1. Control

The shipper is relieved of direct control of the TMS function by outsourcing it to a 3PL supplier. Some shippers want this; however, logistics software provides an excellent medium for shippers who prefer to run their freight audits and enjoy controlling the shipping process. It saves money by eliminating the need for an in-house logistics department while still allowing the shipper to handle the TMS function within the organization.

  1. Options for Carrier

TMS software gives shippers the most alternatives when it comes to shipping. The number of shipment choices considered by a 3PL provider is frequently unknown. Some companies use electronic posting systems to match available loads with available carriers. In contrast, others have long-term business connections with a restricted set of carriers and rely on them for most of their shipments. Using logistics software instead of 3PL has been shown to save ten percent on shipping expenses in the first year, thanks to the broader selection of carrier options it provides.

Conclusion

When compared to maintaining a TMS product within the freight logistics in Melbourne, the transportation management tool provides a cost-effective option for shippers to undertake a freight audit and other TMS operations. Outsourcing the TMS function to a 3PL provider is also less expensive than in-house. Still, it lacks the pricing, control over the shipping process, and carrier options that TMS software provides.