6 Considerations When Deciding to Outsource TMS

Transport Management Software (TMS) plays a huge role in the success of a logistics business. There are many benefits of insourcing, however, it could create many problems if it isn’t managed properly. Thankfully, businesses can outsource their TMS, leaving all the costly and stressful aspects to their providers. This will allow them to generate their TMS data for their company without the unwanted loss of control.

TMS Benefits

TMS offers many benefits to those who ship freight. It helps companies move freight from destinations efficiently while cutting costs. Businesses can expect the following benefits when they use TMS.


Cash Flow Improvements

When users employ transportation accounting, through freight payment, auditing, and consolidation services with TMS solutions, they can reduce the costs of freight invoice payment as well as their total freight bill.


New Delivery Capabilities

TMS is able to optimize the way you ship as it creates efficient methods of shipping which saves costs for users. This also allows users to create master bills for lading which optimizes efficiency.


Improve Warehouse Efficiency and Productivity

TMS creates a record of orders and is able to locate them in the warehouse. This ensures a logistic process that has a constant flow of incoming and outgoing inventory.


Reduce freight expenses

TMS is able to reduce freight spend because it provides savings through analytics and optimization. The system is able to offer different suggestions of how expenses can be reduced as it provides data that consists of valuable information.



When to Know To Outsource TMS


It could be difficult for a business to decide when to outsource TMS, the following guidelines could help you determine whether you should make the switch or not.


Inefficiencies in Business

Using TMS is very time-consuming as you need to do tasks such as creating reports and compiling data. Managing TMS alone can end up burdening your employees and in order to cope, you might have to hire additional staff. Instead, you could outsource TMS; this would not only improve productivity in the business but it would save costs for your organization that would have been utilized for training and hiring more staff.


Increase in Number of Customers Leaving

The disadvantage of using TMS incorrectly is that you experience the opposite outcome. TMS improves customer satisfaction, however, if it is being used incorrectly, more customers are likely to abandon your business due to inefficiencies.

If you are seeing an increase in the number of customers leaving, then it might be time to outsource. This will help you achieve the desired outcome and will likely lead to your customers recommending your services to others.


Increase in Transport Costs

Most companies switch to TMS in order to gain a competitive edge or to reduce costs without necessarily knowing how to manage the system. Once purchasing it, they realize that they do not have the necessary training to operate it. Their expenses keep rising as well as the added expenses for the maintenance and system upgrades. When businesses see that their expenses are continuing to increase, then they should look into outsourcing.


Increase in Overtime Rates

TMS is a very complicated system and trying to manage it on your own just increases the amount of work that employees have to do. This can increase not only their workload but overtime hours. They are likely to become more stressed out, which can take a toll on them physically & mentally. In order to help them, you should outsource your TMS to an experienced provider.



Factors to Consider When Outsourcing TMS


When you have decided to outsource, it is essential to take the following considerations before making the final decision.


1. Resources and Technology


When choosing to outsource you should consider whether or not the provider has the relevant resources and technology that your business needs, this is important to judge whether they can cover all your outsourcing needs.

The relevant provider should have all the resources that your business needs as well as being well trained for the assignment. The provider you select should have updated technology to seamlessly handle your business functions.


2. Pricing


Since most companies who choose to outsource TMS do so in order to save costs, it is essential that the providers you choose offer their resources at a price that is competitive.

Choosing the cheapest provider might not be the wisest decision as this could mean that they offer fewer functions than other competitors, therefore doing research first to compare is advisable.


3. Ability to Meet Deadlines


The ability to meet deadlines and being on time are just as important as saving costs. Choosing a provider who is unable to meet deadlines can be disastrous as it could lead to the loss of clients. Before you choose a provider, ensure that they can deliver on time and that they offer the best quality.

It is essential to avoid providers who do not have quality control measures and those who don’t have contingency plans in the event that they are unable to meet deadlines. Providers who do not have either plan should not be hired.


 4. Excellent Industry References


Before choosing a provider, ensure that the references you receive for them are excellent. They should be worth your time and the clients who have used them should give raving references about the results that the provider has delivered for them.

Their references should include security, reliability, as well as flexibility. Furthermore, they should include their character and the culture of the vendor. As a service-oriented business, the general reputation of the business will speak more about their reliability and efficiency more than you know.


5. Reduce Liabilities


When choosing to outsource, ensure that it saves your business money and time.  Ensure that all functions that your business needs are covered and avoid choosing a provider who will create more liabilities for your business.


6. The Service Level Agreement


The most important document when entering an outsourcing partnership is a Service Level Agreement. Before entering into the agreement ensure that every detail is written and every concern has been addressed.

Doing this will eliminate any confusion and ambiguity about the services you want to receive. Including a lawyer would be advisable to avoid any legal problems.




Learn How A Transport Management System Enhances Customer Experience.