Podcast with Talking Logistics: How Managed Transportation Services Enable Resilient Supply Chains

George Swartz, Loadsmart’s VP of Shipper Solutions, sat down with Adrian Gonzales, a leading industry analyst and founder of Talking Logistics, to discuss enabling resilient supply chains with Managed Transportation services.

The conversation centered around how transportation and logistics leaders shouldn’t get complacent with the status quo. Though we may be in a “shipper’s market,” that could change at any time. It’s imperative that shippers take action now before the pendulum swings again.

Below are some highlights from the conversation and key takeaways shippers looking for ways to maximize their logistics operations should consider.

Q: In your conversations with shippers who just came through Covid, what does ‘resiliency’ look like and how do you, as an industry veteran, interpret it? 

A: Resiliency has a few connotations when you talk about supply chain and logistics. Two of the main things people associate with resiliency is the notion of flexibility and speed to react. Things are changing, and doing so rapidly. Even isolated supply chain events that aren’t going to result in long-term changes are important to be able to quickly react to and flex around in the short term. Shippers want to be ready for unplanned events so they can make the quick changes needed so as not to disrupt their operations as much as possible.

It’s the opposite of the old, static supply chain where nodes were set in stone and largely immovable.

The old adage “failure to prepare is preparing to fail” is especially true for supply chains right now.

Q. How is the transportation landscape changing -- or need to change -- in response to these challenges and risks?

A. There are several challenges impacting the transportation landscape. There’s the traditional problems like driver shortages which are being exacerbated by lack of incoming truckers. Then there are new factors: millennials and Gen Z are getting more and more involved with the gig economy. This creates a huge opportunity for last-mile deliveries, but makes it harder to cover a long-haul shipment.

We’re also seeing a lot more micro fulfillment centers being set up, which is putting goods closer to the market. Additionally, companies are increasingly thinking regionally, pushing more shipments into intermodal and rail instead of on coast-to-coast tractor-trailers. This change is in part due to the desire to reduce costs, a secondary goal is also to reduce emissions by eliminating miles.

Q. Historically, when it came to managing their transportation operations, companies had basically two options: they could either invest internally in people and technology and manage the operations themselves, or they could outsource everything to a third-party logistics provider. Are those still the only two options

A. We’re seeing a lot more hybrid options out there these days. If you look at our Managed Transportation Services group within Loadsmart, we can do turn-key and take over the whole operation if the shipper wants. But more often, a client is looking for a combination of the expertise that we can bring to the table and advanced software solutions to help them manage aspects in-house. We can then combine those into a hybrid solution. This is especially useful for shippers looking for advanced network, route, and mode optimization that lack the internal skillset but don’t want to abandon their logistics teams by outsourcing with a traditional 3PL.

A Managed Transportation option is also a huge strategic choice for leaders that are looking to add resiliency into their operations. As there are peaks and valleys in the supply chain, a Managed Transportation services provider can flex up or down, meaning shippers don’t have to worry about adding or reducing headcount, and there’s an easy way to keep costs under control.

“I almost equate Managed Transportation to cloud computing. There are times where you need more computing power to solve different problems. With cloud computing, you don’t have to invest in additional servers or hardware that you might only use half the year. I think it’s the same with Managed Transportation services. You can flex up and down depending on what your needs are.” - Adrian Gonzales

Q. What attributes/capabilities should companies look for in a Managed Transportation Service provider, particularly if they’re looking to create a more resilient supply chain?

A. It depends on what the shipper’s current capabilities are. When we at Loadsmart work with a client, in the beginning, we look to understand what that client wants their internal core competency to be. Only then do we talk about what Loadsmart can add to that.

If you’re a shipper that doesn’t want to manage your transportation, make sure the provider is capable of end-to-end management. If you already have an established logistics team, make sure the provider has the key capabilities to provide optimization and consultative advice to improve your supply chain. An MTS should have capabilities that run the gamut of logistics operations and you should be able to pick and choose the aspects your individual company needs.

Shippers should also ensure from the outset that their provider has access to a complete set of technology including integration capabilities and API connections.

Q. Finally, what defines or enables a successful business relationship between an MTS provider and a client? In other words, how can the two parties create a long-term win-win partnership?

If you’re a shipper going this route, don’t think you can just flip the problem over the fence. It’s never going to be a completely hands-off solution. At the end of the day, as a shipper, you still own your relationship with your customer. Your MTS or TMS provider is going to be a key part of that. For that reason, you need your providers to truly be partners. They need to share KPIs and metrics readily, communicate often, and do routine business reviews to understand the ROI. There should be continuous improvement initiatives in any great partnership.