Top 7 Challenges Faced by Logistics Service Providers in Transportation Management
With the increase in trade activity on a
global front, several companies are trying to make their presence felt in the
transportation industry. After all transport and logistics aid different
businesses to forge relationships and collaborate with each other. Many believe
that large organizations opt for in-house supply chain management and logistics
to meet their business requirements.
However, research reveals that most Fortune
500 companies prefer Third Party Logistics services for their needs. The
companies prefer third-party logistics owing to their huge network that ensures
a competitive advantage over most in-house supply chain systems. Outsourcing
logistics also reduces time, effort and money while ensuring a seamless
process.
The market is competitive and providers need
to retain clients in an aggressive manner, especially in the field of
transportation. Here are some of the biggest challenges faced by third party
logistics service providers:
- Time Utilization
Effective time utilization is critical to the
success of logistics service providers. They need to support customers by
reducing lead-time from order placement to receipt of the shipment. To achieve
this, providers need to communicate and coordinate with agents, transport
carriers, etc. on a prompt basis with efficient transportation management system.
- Adequate Infrastructure
Lead logistics providers rely on specialized
industry expertise but have much lower negotiating power owing to fewer
resources. In such a situation, the success depends on their ability to
collaborate with independent transport carriers.
- Documentation
It is a difficult task for logistics
providers to enable shipment tracking. International trade transactions need
thorough documentation of purchase orders, bills of lading, cargo insurance
certificates, packing lists, delivery notes, invoices, export licenses, etc.
Logistics service providers need to ensure
documents are transferred to shipper, consignee, transport carriers and the
like and transportation management systems can ensure that.
Supply chain transactions can involve
standardized documentation related to buyer and seller, trading or banking
requirements, and even requested by customs authorities. Transportation
management systems can support the business aligned with commercial laws.
- Reporting Systems
The upper-level managers in logistics
leverage transportation activity and logistics management with efficient
transport management systems but they do suffer from lack of visibility or
insight in other areas. Depending on business size, it is evident that seamless
and streamlined automated reporting systems can help in better decision-making
too. One can even conduct detailed cost-benefit analysis for higher
profitability and on-time deliveries.
- Order Management
Transportation management systems can fulfill
order management through seamless integration of ERP and distribution facets of
business. With this system, they can manage huge shipments or order data
offering the ability to track order status and the like.
- Rate Sheet Management
Freight rates are based on load type, rates,
surcharges, and other dependencies. Cargo is dispatched in varied loads
depending on the transportation mode. Each mode of transportation also affects
the rate of shipment. Transportation management systems help logistics
providers to create accurate rate sheets and assign them to customers or
vendors based on their proposed contracts. Shippers can also access the system
and review the applicable rates before order placements.
- Fleet Tracking
Smartphone-based GPS-tracking systems provide
trucking companies, with quick real-time information about shipments. They can
track vehicles managed by different vendors through an effective transport
management system and assign shipments to relevant trucks depending on their
GPS location.
The ability to plan, optimize, implement,
analyze, and react to all requirements determines the success of any logistics
provider. Transportation Management Systems can aid these providers with the
ability to streamline their business processes, gain a competitive edge, reduce
transportation costs, and boost in customer satisfaction.
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