A common question in supply chain is “Should we outsource, at the potential expense of control, workforce morale and visibility, or should we insource a technology solution for our team to manage in-house?” It can be a difficult choice to make; supply chains are not one-size-fits-all, and your transportation technology solutions shouldn’t be, either.
Shippers wrestling with this very question should consider a hybrid solution, which can leverage both technology and services across a software-as-a-service (SaaS) network. More than a strictly outsourced model, a hybrid of managed services and technology can adjust to fit unique supply chain needs, provide visibility to a company’s transportation data and network benchmarks, and supply the expert talent a company needs.
It could be the “just right” fit a company is looking for, especially when considering large-scale changes to a transportation model. SaaS solutions specifically provide this kind of flexibility, giving shippers access to talent, data, and business processes, with the ability to control their supply chain and accommodate any organizational changes during periods of fast growth or a waning talent pool.
We have seen an increase in requests for a more à la carte approach to solutions for a number of reasons: companies transitioning from a 3PL partnership to bringing all transportation in-house; companies moving away from a manual process and they’re not ready to own the daily execution yet; or companies experiencing rapid growth and they’re not prepared to scale their workforce talent quickly enough. Regardless of their reasons, all of these companies needed to quickly gain supply chain expertise, apply proven business processes, and access transparent data, while beginning a true partnership.
The most common model could be described as a gradual implementation. Companies start with a managed model to support them through the transition of implementing new technology and/or processes. The gradual move from managed transportation services (MTS) to TMS provides these companies with access to people, best practices, and network benchmarks, still affording them the opportunity to design, build, and roll out the right transportation strategy without worrying too much about the day-to-day execution. It provides a cushion of time to begin defining and implementing not only an improved supply chain process, but the talent strategy necessary to build a solid team of supply chain professionals.
A shipper currently outsourcing who decides to move to a new technology might need that cushion of time to prepare their existing team to take the reins. In such a scenario, being able to outsource temporarily takes the pressure off of their supply chain employees, who would be busy learning the new technology and how to configure it to support their requirements (sometimes requiring business process change).
Think of the benefits that kind of breathing room can provide a company that has made the strategic decision to centralize its transportation. Transitioning from a decentralized supply chain could have major cost-saving benefits, but it could be difficult to pull off quickly putting at risk the promise of a fast return on investment (ROI). If that shipper could have 12 to 24 months of support, it provides the time necessary to ensure that changes are implemented seamlessly, standard operating procedures (SOPs) are created and tested, and they find the right people to put in the right place at the right time. With a SaaS-based technology, the company would not have to sacrifice visibility or strategic control to their managed services provider.
Utilized correctly, and with an intentional plan in place, fluidity between managed models and in-sourced technology solutions gives the shipper the ability to ease into a new technology, process, or transportation footprint, perfecting their overall strategy before hiring the personnel to execute tactically. It can lead to a more successful partnership with a supply chain solutions vendor because of the added knowledge each party receives during the lifecycle of the transition. It can be a springboard or a safety net. Most notably, it can lead to faster and greater ROI.
Regardless of the reasons, the question shouldn’t be “Do we outsource or do we insource technology?” The question should be “Who can we partner with to ensure that we make the changes we need to make to drive improvement across our supply chain?” It’s not about technology or services; it’s about building better supply chains.
Samantha Safin is Data and Systems Analyst at LeanLogistics.