With so many options in the logistics industry, it is easy to confuse the different services third party logistics companies offer. Whether some of this confusion may be caused by general unfamiliarity with the logistics industry, the many available services offered, or because companies do not want to waste their time worrying about transportation, at the end of the day, it is important to know and understand the differences between managed transportation services (MTS) and transportation management systems (TMS).
Managed transportation services and transportation management systems are different (but not exclusive). Millennium Logistics Management will discuss the differences in this article:
Managed transportation services offer many benefits which include:
Managed transportation services (MTS) offer of a wide scope of benefits from a third party logistics company, which not only includes access to a TMS but also allows a 3PL to monitor and operate the system for a company as a part of the transportation services they offer.
A 3PL will usually enter into a long-term contract in a full outsource of transportation management and will act as an entire transportation department, with full control of all shipping functions and data. They must also meet annual goals that are set, on their own.
MTS is somewhat different; they are more collective in nature and generally have an assignable pay structure. In this scenario, the 3PL still acts as an outsourced transportation department and will operate a TMS for you and still conducts any (or all) of the transportation functions you want (and when you want them to) but, they operate under your direction.
Transportation Management Systems offer many benefits as well:
To improve transportation operations, TMS technology is fundamental in order for a shipper to primarily gain visibility into transportation and shipment operations in order to find further cost saving opportunities as well as to find the lowest cost routes, carriers and book outbound loads. Although some shippers choose to operate a TMS themselves, most shippers prefer to have a third party logistics company (3PL), such as Millennium Logistics Management, operate the software for them because TMS implementation can be time consuming, costly and the software can be difficult to learn when exclusively operated internally therefore, they hire experts who know how to use the system effectively.
There is an obvious difference in savings from companies who manage their transportation properly and companies that managed their transportation poorly. This result is largely contributed to the use of a TMS, which in fact has helped companies save a substantial amount of money. And yet, it may come as a surprise to learn that a large percentage of shippers still do not use a TMS to manage and automate freight spend and movement, even with the introduction of cloud-based TMS software, which makes it profitable even for small shippers to use this system.
Both managed transportation services and transportation management systems are common in the transportation industry. To avoid any confusion, just remember that managed transportation services almost always include the use of a TMS but, using a transportation management system does not necessarily mean that a company is involved in outsourced transportation. For more information about the information covered in this article or if you are interested in our logistic management services, please contact Millennium Logistics Management.
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