Logistics Software Helps Companies Achieve the Optimal Freight Bid

Whether your company’s success depends on shipping a large amount of goods or a small amount of gods, chances are that your shipping process can benefit from the implementation of logistics management software. Also referred to as freight transportation software, logistics management software uses the power of logistics to increase the delivery time of a company’s products and cut its shipping costs in the process. While logistics software can benefit companies of any size, it remains ideal for small to midsized companies that don’t have the IT infrastructure to support a full scale shipping system and must therefore rely on third party shipping for the delivery of their goods to and from warehouses, to and from manufacturing locations and ultimately to store shelves. By using logistics software, companies can examine the shipping process from a variety of vantage points, including accounting, billing, dispatching, payroll, driver settlements, carrier settlements and shipping route efficiency, allowing them to realize the optimal freight bid.

In addition to the shipping process benefits that logistics software offers companies, perhaps its greatest advantage is that you don’t have to have a background in logistics to understand and operate it. On the contrary, the software comes with an easy to understand user interface that reduces learning curve, and the software can easily be integrated into a company’s already existing transportation procedures. Logistics software can be accessed from any computer location through the Internet and offers a variety of customized modules that allow all employees associated with the shipping process to view the process from their particular vantage point. Some of the module areas commonly offered by logistics software are accounting, customized reporting, scheduling, shipping management, purchasing management, labor management, job management, order management, inventory management, data import and export, cross currency management and labor management.

One scenario where logistics software regularly benefits companies by improving their shipping time and reducing the cost of the shipping process involves warehouse management. In some cases, companies that lack logistical capabilities end up choosing the shortest shipping route in terms of distance without considering the number of warehouse stops that are made along the route. Consequently, their goods take longer to reach their destination than they would have if shipped on a longer route that didn’t contain as many warehouse stops. In addition, more warehouse stops equals increased warehouse fees, and logistics software may discover that the additional fuel charges that result from a longer route are less expansive than the total warehouse fees of the shorter route.

Another scenario where logistics software helps companies improve delivery time and save money involves evaluating alternate means of transportation. Although a company might be used to moving its products by freight, logistics might reveal that it could improve delivery time and saving money by air shipping their products. Although traditionally more expensive than ground shipping; in some situations, air shipping can prove more economical than grounding shipping due to the collective expenses associated with ground shipping routes. Regardless of your company’s current shipping arrangements, examining them using logistics is certain to save you time and money by allowing you to realize the optimal freight bid and/or integrated transportation solutions.

Advantages of Logistics Software Over Third Party Logistics

For manufacturers who ship a steady supply of cargo, the cost of shipping can rival the cost of payroll. Consequently, reducing shipping costs is a full-time task for most shipping managers. Today, most shippers manage the logistical side of shipping (the part of the shipping process where costs can be cut) with one of the following resources:

  • In-house Logistics – A model of shipping logistics in which the shipping process is managed by a shipper’s own staff of experts.

  • Third Party Logistics (3PL) – A model of shipping logistics in which a third party manages one or more aspects of the shipping process.

  • Logistics software – A web-based or in-house program that allows shippers to choose its own shipping arrangements and perform important tasks such as a freight audit.

Most shippers prefer the first option, but paying a team of experts can be unaffordable. Left to choose between the second and third options, many shippers choose the latter based on the following considerations:

Cost

The cost of 3PL is based on the services a shipper receives. When a shipper receives only a few services through a standard 3PL provider or a service developer, 3PL can be affordable. However, when a shipper uses the comprehensive services of a customer adapter or customer developer, the cost of 3PL can be significant. A software-based resource can facilitate comprehensive shipping management for a fraction of the cost of high-level 3PL services.

Shipping Options

Some 3PL providers make carries arrangements using a narrow range of carrier options, such as those found in an electronic posting system. Conversely, logistics software allows shippers to choose from a limitless range of shipping options based on the appropriate shipping model (e.g. less than load or truckload), and perform a freight audit to monitor shipping costs.

Control

Shippers who use 3PL commonly complain that the shipping process feels too removed-a complaint that often results from the failure of a 3PL provider to provide ongoing, in-depth communication to the customer. Using a software-based resource eliminates this issue by placing the shipper in full control of the shipping process.

Permanence

When shippers use 3PL, they often go through multiple 3PL providers as their shipping process evolves, beginning with a standard 3PL provider and eventually using the services of a customer adapter or customer developer. In addition to being more expensive than using a software-based resource, switching from one 3PL provider to another requires forming new business contracts, continuously delegating more shipping tasks to a third party, and implementing new standards for quality control.

Most shippers wish to implement a permanent logistical solution as soon as possible, and implementing a software-based solution is the best way to do it. After the solution is implemented, it options can be changed as the shipping process changes, providing a seamless transition that does not require the customer to look for a new service provider.

Conclusion

For many shippers, logistics software is the most cost effective logistical resource. In addition to allowing shippers to choose from the broadest range of carrier options, it allows them to perform important tasks (e.g. freight audit) without the assistance of a third party. To learn more about the benefits of software-based logistics, contact a provider of transportation software.

Amateurs Study Shipping Rates, Professionals Study Logistics

Omar Bradley offered a truism, that amateurs study tactics, armchair generals study strategy, and professionals study logistics. This is just as true in the world of business as it is in the military. Logistics is the art of getting supplies where they’re needed so other functions can happen. In the modern business world, logistics means freight shipping – both internally and externally. In this field, freight rates and carrier rates are the price of doing business.

Freight shipping is one of those expenses that can be minimized, but never totally eliminated. It’s also a manpower time sink, and because of this, more and more companies are outsourcing their freight needs to third party logistics companies. These are outfits that have people who do nothing but look over the assorted rates and package deals offered by the major freight carriers and try to find the best deal possible for their client, with a nice commission on top for them.

All in all, third party logistics management makes sense for organizations that are above a certain size (too small, and they don’t generate enough volume to be worth the trouble of maintaining the account) and below a certain size (at which point the company can have an inside staff that does the same function for less).

Alternatives to third party logistics offers are in house logistics software. Much the same way that travel agencies quickly became redundant with online booking services, logistics software vendors are trying to render the third party logistics company obsolete. Building automatic data scrapers that can do the basic work of comparing logistics rates to different parts of the country or world is fairly straightforward, as is a price search algorithm.

While these systems primarily offer a way to avoid third party logistics fees, they also offer a bit more direct control over your company’s shipping needs, and some managers and executives like that hands on feel. They can also be used to significantly automate a lot of routine functions in the shipping department and the mail room. They can also be used to identify process problems – there’s a saying that every time something was sent out overnight, someone higher up in the chain didn’t do their job correctly, and when you’re looking directly at the costs of expedited shipping, it becomes easier to focus on the process issues that lead to it, than when you’re looking at a third party statement of account.

Ultimately, which one works best is a function of your business’ needs and internal culture; some businesses simply don’t want to bring that job in house. Others need to. Both are viable strategies depending on what your operation’s needs truly are.

LTL Software: An Overview

Small and medium size shippers often need Less than Truck Load (LTL) shipping arrangements to move their freight. Unlike Truck Load (TL) shipping, in which cargo from a single shipper fills a semi trailer, LTL shipping fills a semi trailer with cargo from two or more shippers. After splitting the cost of the load, each shipper pays less for shipping than it would if it used TL shipping.

As with any shipping arrangement, maximizing the benefit of LTL shipping requires shippers to locate the best rates. To do so, many shippers use logistics software.

Logistics Software among Other Resources

Logistics can be defined as “The detailed coordination of a complex operation where a small or large group of people and facilities are involved in the movement of materiel, goods, or supplies.”

Logistics software is an application that helps shippers choose the best shipping solutions by supplying the logistics function. In the absence of the software, a traditional logistics department or a third party logistics (3PL) provider would supply the logistics function. For businesses that have a limited budget, hiring a team of logistics professionals, or paying a 3PL provider to manage the shipping process, is often unaffordable.

Logistics software is an affordable alternative to these options, as it allows shippers to manage the shipping process without investing significant capital in the management function. In addition to improving your bottom line by improving your Transportation Management System (TMS), logistics software can help you profit by replacing a logistics resource that costs more to maintain. If your company needs to cut shipping costs, implementing the software can help. According to research, using tailored logistics software reduces shipping cost by at least 10 percent in the first year.

Implementing the Right Program

To realize the most savings, shippers must implement TMS software that is tailored to their shipping process, and has the lowest collateral costs. Shippers that need LTL shipping would implement LTL software. To minimize collateral costs, they would implement the product on a Software as a Service (SaaS) model, which eliminates the following expenses that come with implementing it on an in-house model:

  • Product purchase
  • Installation fee
  • System maintenance fees
  • System update fees

Implementing logistics software on a SaaS model is similar to implementing other programs on the same model. The service provider performs a four-step process:

  • Analyzes your unique shipping process
  • Creates a program that reflects your wants and needs
  • Presents the program for your review
  • Implements the program when you approve it

The program is operable 30-45 days after you approve its implementation, and you can start to see savings within weeks. If your business needs a low cost solution for finding the best LTL arrangements, a SaaS logistics solution is an excellent option.

Conclusion

Now more than ever, companies improve their bottom line by cutting operating costs. For shippers, the shipping process and the logistics function are two areas where operating costs can be cut significantly, and implementing TMS software is an effective way to do it. If your business needs to reduce the cost of shipping and identify better LTL arrangements, implementing LTL software is an affordable way to accomplish both.