For years, outsourcing was the default strategy for transportation management, and once outsourced, it was rarely brought back in-house. But the tide may be turning. Today, many companies are taking back control of their transportation operations by bringing them in-house. What’s driving this shift? How are technology, talent, and AI enabling smarter, faster, and more resilient logistics? And what should leaders consider before making the insourcing leap? Those are some of the questions I asked Kevvon Burdette, Chief Commercial Officer at Princeton TMX on a recent episode of Talking Logistics.
Why Did Companies Outsource?
Historically, many companies have outsourced their transportation management operations. I asked Kevvon about the factors that led companies to take this approach.
Kevvon says many companies saw opportunities for cost control, achieving incremental process improvements and support for growth strategies. They were looking to leverage economies of scale and best practices from third-party logistics providers (3PLs) and the technology they provided. Also, back then companies were looking at transportation and logistics as a cost center rather than as a core competency or competitive advantage. “A lot has changed in the past 20 years,” Kevvon says.
What’s Changed?
Kevvon suggests, “First, companies are looking for better control and visibility across their network. Second, companies want to reduce lead times and improve resilience. The increased agility enables faster decision-making which is critical in today’s environment.”
Another contributing factor, as Kevvon explains in the short clip below, is the increase in college logistics and supply chain programs which generate a base of skilled and knowledgeable employees who weren’t available 20 years ago.
Kevvon and I also discussed how leading companies, partly driven by the Amazon effect, no longer view transportation and logistics as a cost center; they view it as a competitive differentiator that can drive revenue growth, increase market share, and improve customer satisfaction and retention.
These factors together have created an environment quite different from what existed in the past.
The Difference in Technology
Years ago, in-house TMS technology was costly, complicated, and took years to implement. Has that changed?
Kevvon explains that systems used to be more monolithic from an architectural standpoint, and it was hard to adapt them for an individual company’s needs. Often the options were either costly modifications, which caused huge problems for future upgrades, or changing your practices to fit the system.
But he notes that today’s TMSs are highly modularized, configurable, and scalable. You can choose the modules you need, such as rating and mode selection, routing and optimization, carrier management, real-time visibility, and reporting/analytics, and then tailor them to meet your business requirements.
The Impact of AI
Today, you can’t discuss technology without addressing the impact of AI, which promises to enable faster decision-making with increased accuracy and fewer people. But how does this apply to transportation management?
Kevvon describes the impact within three roles. The first is the transportation or logistics manager, as he shares in this short clip:
The second role is carrier procurement. In the past it may have taken weeks to gather all of the information needed to understand your needs. With AI, that information is quickly captured and available for evaluation and benchmarking so bid requests can be completed in days, if not hours.
The third role is the supply chain manager who wants to better understand their networks, workflows and opportunities for improvements. AI can provide better visibility to these issues on a strategic level to support continuous improvement, faster decision-making and competitive advantage.
The Insourcing Process
My last questions for Kevvon were about the steps companies should take when considering an insourcing model or strategy, and what pitfalls they should avoid. He had some great insights on these points, including a succinct seven-step roadmap, so I encourage you to watch the full episode for all of his insights and advice. Then keep the conversation going with your own comments and questions!
