Third party logistics (3PL) freight management technology providers offer a range of services for manufacturers from shipping to contracting warehouse space, all of which can tie into ERP, warehouse management and supply chain management systems.
One of the most important issues to consider when choosing and using a freight management 3PL is shipment visibility, said Michael Smyers, business development manager at Allyn International Services, a supply chain consultancy.
"Freight management is a piece of that [shipment visibility] which is normally connected to other systems like inventory and finished goods inventory," Smyers explained.
In some cases, outsourcing logistics freight management can give manufacturers greater visibility of products while they're in transit. But when evaluating potential suppliers, manufacturers should find out what a 3PL's geographical scope is -- global or local.
Other benefits to outsourcing logistics freight management is for limited frequency shipping or inventory management. A manufacturer might use a 3PL freight management service for as few as one shipment a month, said Smyers. It is also possible for a 3PL to own the inventory for a manufacturer's inbound supply chain or use 3PL logistics freight management for access to a private fleet of trucks or contracted warehouses, according to Smyers.
Manufacturers are taking notice of new Software as a Service (SaaS) technology which offers cheaper, quicker implementations where the 3PL hosts the software and the manufacturer can see freight shipments and place orders online.
The downside for some manufacturers is a loss of control. "A shipper might consider logistics a core competency and might have an in-house department managing logistics," said Smyers. "If a manufacturer's logistics is better, it gives them a competitive advantage."
Outsourcing can be a difficult decision for a manufacturer that's traditionally handled that functionality internally and will require establishing trust with a 3PL, he said.
About the author: Christine Cignoli is a Boston-based freelance writer who covers IT infrastructures and storage technology. She is a regular contributor to SearchManufacturingERP. Contact her through her website.
This was first published in January 2010