BY JAMES A. COOKE, EDITOR AT LARGE
TRANSPORTATION MANAGEMENT SYSTEMS
technologyreview
After eight years, heavy-
equipment maker CNH
ended its relationship
with a 3PL and brought
transportation management
back in house with the aid
of a Web-based TMS.
Would its gamble pay off?
NOT SO LONG AGO, IF A COMPANY WANTED TO REIN IN ITS FREIGHT
expenditures, it hired a third-party logistics service provider (3PL) to manage its carriers. In many cases, it wasn’t that the 3PL had more expertise than the company’s
internal logistics department; it was simply that the 3PL’s staff knew how to use the
complex transportation management systems (TMS) needed to optimize carrier
movements and selection.
But now that’s starting to change. With the advent of lower-cost, online transportation management systems, some companies are discovering that they no longer
need outside expertise. They’re dispensing with the services of their 3PLs and bringing the transportation management function back in house. Though no hard numbers are available on the number of companies taking this tack, at least one analyst,
Adrian Gonzalez of the Dedham, Mass.-based ARC Advisory Group, has identified
this trend as a factor in the recent uptick in TMS sales. (See “software for hard times,”
DC VELOCITY, January 2009.)
One company that has had considerable success with this approach is CNH Global
N.V. Two and a half years ago, the agricultural and construction equipment maker
dropped the 3PL it had been using for carrier management in favor of having its in-house staff take over the function. Not only did the manufacturer see freight costs
drop and shipment visibility improve, but it also realized several unexpected benefits.
Fixing “broken processes”
Created in 1999 through the merger of New Holland NV and the Case Corp., CNH
Global manufactures a full line of farming and agricultural equipment—from tractors to balers and harvesting machines. It also produces heavy construction and light
industrial equipment used in industries like road building. The company sells its
products through 11,000 dealers in 160 countries.
Around the time of the merger, CNH hired a 3PL to oversee its truckload shipments.
By outsourcing that activity, says Dave Czerniejewski, CNH’s senior director of supply
chain, distribution, and logistics in North America, the company hoped to control costs
and fix “broken processes.” (Although it farmed out the management of its truckload
operations, the equipment maker decided to retain control of its less-than-truckload
