Make or buy assessment for operational transport management

The setup and operation of an operational transport management is a strategic key decision in supply chain management. The aim is to make transports within the supply chain more efficient, reliable, and transparent. At the center is the question of whether these tasks – planning, disposition, control, monitoring, and optimization of transport processes – should be built in-house (“Make”) or outsourced to external specialists (“Buy”).

An operational transport management today encompasses far more than the pure disposition of transport orders. It serves as the link between purchasing, production, warehousing logistics, and distribution and is responsible for the holistic control of goods flows across all modes of transport. This includes, among other things, carrier management, freight tenders, monitoring of delivery times, and handling of complaints. Increasingly, operational transport management also integrates process automation, real-time data analysis, and sustainability metrics into its control logic.

The Make-or-Buy decision is therefore not only a cost issue but a strategic turning point with implications for control, flexibility, know-how, and responsiveness. In practice, the discussion often focuses on the so-called control tower function – i.e., the dispositive planning, control, and monitoring of transports via a central transport operations control system. This function can be built internally or transferred to a 4PL provider (Fourth Party Logistics Provider) who conducts the operational handling, monitoring, and reporting on behalf of the company.

A major advantage of an internal transport management lies in direct control and transparency over the processes. Companies keep know-how, data, and decision-making authority in-house and can respond quickly to changes in customer demand, market conditions, or transport capacities. Moreover, an internal team enables tight alignment with other logistics functions and the corporate strategy. The drawback: building this requires substantial investments in personnel, training, processes, and IT infrastructure. Modern transport management systems (TMS) are costly to acquire and implement – yet to realize their full potential they require specialized users and interface integration into ERP or SCM systems.

Outsourcing to an external 4PL provider, in contrast, offers scale effects and specialization advantages. 4PL providers possess extensive market knowledge, standardized tools, established processes, and access to established carrier networks. This allows them to negotiate freight rates, bundle capacities more effectively, and regularly implement optimizations through benchmarking. They also oftentimes take on freight cost controlling, performance monitoring, reporting, and reorganization of transport concepts as part of an end-to-end service. The downside, however, is dependence on the provider, potential interface risks, and reduced influence on operational detail decisions.

An objective Make-or-Buy decision should therefore be based on a holistic profitability analysis. Beyond direct costs (personnel, systems, infrastructure), indirect factors such as flexibility, data availability, response speed, and risk exposure must be evaluated. The use of a total cost of ownership (TCO) analysis along with qualitative evaluation criteria (e.g., control competence, process stability, scalability) is recommended.

Increasingly, companies also employ hybrid models, where core functions – for example strategic transport planning, carrier selection, or reporting – remain internal, while operational activities (e.g., disposition, freight invoicing, shipment monitoring) are handed to external partners. This model combines control with efficiency and enables flexible adaptation to market changes.

An essential criterion remains the IT aspect: the choice of the appropriate transport management system, whether on-premise, cloud-based, or as a SaaS solution (Software as a Service), largely influences the success of the chosen model. Cloud-based systems offer rapid scalability and lower upfront investment costs, while on-premise solutions provide higher data security and customization.

Ultimately, the Make-or-Buy decision in operational transport management depends on the company's strategic direction: Should transport logistics be developed as a core competency to gain competitive advantages, or should it be efficiently procured as a service from the market? Only through a structured evaluation of all costs, risks, and potentials can a sustainable, high-performance transport management be realized that ensures efficiency and transparency across the entire supply chain.