Logistics Software Allows Shippers to Conduct Their Own Freight Optimization

If you plan on starting a manufacturing business or currently own a manufacturing business that needs new shipping solutions, a critical part of maximizing your bottom line will be arriving at shipping solutions that offer the best delivery result at the lowest cost. To arrive at such solutions, shipping companies have three basic options: they can hire an in house logistics team; they can outsource their logistics to third party logistics (3PL) providers; or they can implement logistics software. For small to midsized companies, the cost of hiring in house professionals is often prohibitive, leading them to outsource their logistics.

But before you outsource logistics, its important to know that most 3PL providers adhere to rigid shipping heuristics, making them a poor choice for companies that want innovative shipping solutions. Logistics software, on the other hand, allows companies to realize innovative shipping solutions on their own. By accessing a user-friendly interface, companies can conduct freight optimization without possessing logistics expertise. When you implement logistics software, the software acts as a logistics expert and guides you through the phases of the freight optimization process, which we describe below.

Channel Selection and Development

Channel selection and development begins with identifying shipping channels that have strong matching potential to your companies shipping needs according to various criteria, including: freight volume, shape of freight and freight destination. After performing channel selection, logistics software aids shippers in identifying and enlisting carrier companies that carry a high volume within a company’s ideal shipping channels.

Carrier Selection

Carrier selection commences with identifying and evaluating specific carrier companies. Logistics-software evaluates these companies according to the price and delivery efficiency of their shipping options. Commonly realized shipping options include LTL shipping solutions, TL shipping solutions and a combination of TL and LTL shipping solutions. Carrier selection also results in integrated shipping solutions between water, air and land carriers to offer the best shipping price and delivery time.

Transportation Route Design

As a part of the carrier selection process, logistics software allows companies to identify transportation routes that decrease shipping cost and improve delivery time. The transportation route design process entails three basic steps: discovering the fastest routes, discovering carriers that match shipping volume and negotiating rates with carriers and confirming shipping capacity.

Route Execution and Management

After your company has chosen carriers based on shipping route analysis and carrier offerings, logistics-software allows you to perform route execution and management. During the route execution and management process, logistics software offers two essential benefits: it allows you to function as a shipping captain, monitoring your overall shipping network performance; and it allows you to perform customer service and conduct billing and reporting. If you currently outsource your freight optimization needs to a 3PL provider, consider implementing logistics software today. Research shows that companies can reduce their annual shipping costs by 10 percent after the first year of implementing logistics software.

Transportation and Logistics Software – What Are Its Advantages?

If you are a small to midsize company that tries to ship your goods without the aid of transportation logistics, you’ll likely end paying significantly more for shipping than you would if your hired a third party logistics (3PL) provider or implemented online transportation and logistics software. Without the aid of freight logistics, the cost of the shipping process can prohibitive for small to midsize companies for two main reasons: they either pay full truckload FTL shipping (full truck load) rates to ship partial loads or, realizing the economic disadvantage of FTL shipping for partial loads, they use parcel shipping, which is also a disadvantage when shipping multiple parcels on a regular basis. In response to these situations, 3PL and transportation and logistics software can revolutionize a company’s sipping costs by providing them with options such as LTL shipping (less than truckload), integrated transportation methods based on competitive pricing and shorter shipping routes based on route analytics.

But while 3PL and logistics software function in the same capacity, the latter has two basic advantages over the former, beginning with price differential.

Price Differential

Although 3PL and logistics software companies serve the same purpose, they are principally different in their corporate make up. Third party logistics providers are freight logistics experts that act as middlemen between manufacturers and shipping companies, while logistics-software providers are freight logistics experts that specialize in creating freight logistics software, which they offer as an online software application for an affordable monthly fee. In other words, when you opt for 3PL, you end up paying more because you pay for an expert to manage your account, whereas logistics software lets you manage your own freight logistics through an easy to use interface. Essentially, 3PL providers make their money by charging you for a logistics service that you could easily perform on your own with the aid of logistics software. It’s as simple as that.

Level of Control

When you outsource a service that isn’t one of your company’s core competencies, you’re naturally at the mercy of the company that you outsource to. This is not to say to that 3PL providers are out to profit on their clients’ lack of logistics expertise in an ulterior way. But it does mean that 3PL providers are always looking for LTL shipping rates and other shipping options that offer the greatest price differential between what the options actually cost and what they charge their clients to secure those options. In some cases, the greatest price differential might result from shipping your goods with a company that doesn’t have the best reputation; a situation that you could easily avoid if you opt for logistics software. In addition to allowing more control over what companies you ship with, logistics software also allows each of your company departments to participate in the shipping decision process by accessing the software online, which can prove extremely valuable from an accounting and management perspective.

Logistics Software Vs 3rd Party Logistics Companies

Whether you are a small company that transports your products through a shipping provider or a large company that has your own shipping fleet, saving the most money and time on your shipping arrangements typically requires the implementation of transportation logistics. However, while the efficacy of transportation logistics is inarguable, there continues to be a debate about whether it is better for companies to hire 3rd party logistics companies or to purchase logistics management software and handle logistical issues on their own. While purchasing logistics software is far and away more cost effective than hiring out 3rd party logistics companies, some companies question whether logistics management software is as effective at revolutionizing the shipping process as a logistics company. Yet, once companies implement logistics software, they soon see that the only difference between the software and a logistics company is price. For those who are still on the fence about logistics software, below we list a few of the helpful services that it can provide at the same level of quality as a logistics company.

Freight Shipping Analysis

On the surface, freight shipping can seem like a cut and dried affair. However, when you analyze the various cost factors involved in freight shipping, it becomes anything but a simple process of shipping your products from one location to another. For example, fuel surcharges, warehouse fees and load style can play a large role in determining whether your shipping process is cost effective or cost prohibitive. Without the aid of logistics, companies are basically at the mercy of shipping companies to apprise them of what shipping options make the most sense, and you can count on the fact that shipping companies aren’t in the business of saving you money at the expense of cutting into their profits. By implementing logistics software, you can examine your shipping needs according to various criteria and engage shipping companies in a bidding process until you receive the best deal.

Shipping Route Analysis

Even companies who own their own shipping fleet or deliver goods locally can benefit from logistics software. In addition to removing unnecessary costs from the shipping process, logistics software can also reduce shipping costs and improve delivery time by identifying the shortest shipping routes according to various criteria. For example, while a route that is shorter in length than another route may seem to be the timeliest transportation route, logistics software can point out that a shorter route will take more time than a slightly longer route due to such factors as road construction, traffic patterns and traffic signals.

Integrated Shipping Analysis

In addition to pointing out the best freight shipping options and the best shipping routes, logistics software may also reveal that a company could save time and money on their shipping process by integrating different means of product transportation. For example, while air shipping is often a second consideration to ground shipping due to air shipping rates, logistics software can reveal that shipping by air alone or combining air shipping with ground shipping is the most cost effective means of transporting goods. While ground shipping might offer lower rates, such factors as warehouse stops and fees and the variety of fees that can rack up from your products moving from one ground shipping company to the next can sometimes make ground shipping cost prohibitive. By analyzing the time and cost benefits of integrated shipping arrangements, logistics software can create shipping solutions that you could never create on your own.

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