Logistics Software Solutions Can Benefit Your Company in Three Basic Ways

When companies present their transportation logistics solutions, they have tendency to either engage in corporate speak and not really say much about their solutions or speak with such expertise that they fail to give you a basic understanding of how logistics solutions can benefit your company in a daily way. For small to midsized companies, transportation logistics typically arrives in one of two forms: by a company outsourcing its logistics to a third party logistics (3PL) provider or by implementing logistics software solutions that are available as an online software application.

Given that logistics software offers an easy to use interface can be customized to a company’s particular shipping needs and costs far less than outsourcing to 3PL providers, it’s usually the logistics option of preference for small to midsized companies that don’t have the luxury of a shipping fleet or a large shipping budget. If you’ve heard of logistics software but are looking for a basic understanding of how it can aid your shipping process, we offer the following overview of how logistics-software solutions help companies in terms of freight optimization, shipping route optimization and shipping method integration.

Freight Optimization

For small to midsized companies that regularly ship less than a full freight load of products, freight optimization typically subsists on finding the best less than truckload (LTL) shipping options. LTL shipping is when a shipping carrier lets companies ship partial loads that combine to compose a full truckload. The cost value of LTL shipping comes from shippers splitting the cost of a full freight load. Although less than truck load shipping offers low shipping rates, due to numerous stops for delivery and pick up, it often takes goods longer to reach their destination than in other shipping arrangements. Nevertheless, logistics-software solutions can be used to find less than truckload carrier routes that offer the best delivery time. Because warehouse stops are a common feature of freight shipping, logistics software also offers warehouse optimization capabilities.

Shipping Route Optimization

If you use a 3PL provider, you probably won’t have any idea what shipping routes your carriers are using. But shipping routes are a major factor in determining overall shipping cost. Logistics-software can analyze shipping routes according to multiple criteria, including: length of route, traffic patterns, road quality and construction patterns. One example of how route optimization can decrease shipping cost and improve delivery time is by analyzing routes in terms of travel time. For example, a route that is shortest in distance may be longer than another route in terms of travel time due to traffic patterns.

Shipping Method Integration

Shipping method integration is an unofficial term that refers to the ability of logistics software to suggest integrated shipping methods for the sake of reducing shipping cost and improving delivery time. For example, even though air shipping is traditionally more expensive than ground shipping, logistics software might suggest shipping certain shipments by air due to expensive, unavoidable warehouse fees that would result from ground shipping. In addition, logistics software may make such suggestions as shipping products halfway to their destination by boat and the other half by freight truck.

Logistics Software Removes the Need For 3rd Party Logistics Providers

The more products a company ships, the more shipping costs become subject to cost saving strategies. For most companies, realizing the most economical shipping solutions depends on the implementation of the most popular form of supply chain software (SCS): logistics planning software. On the most basic level, the solutions offered by logistics software improve a company’s phased planning measures, product sales forecasts and scientific safety stock. Some companies hire 3rd party logistics providers, but more and more companies are turning to logistics software in place of 3rd party logistics providers for two reasons: logistics software offers the same level of quality as 3rd party logistics providers and it offers it a much lower price.

When companies use logistics planning software, they can centralize and integrate their product delivery system by allowing drivers at different sites to connect using the most efficient travel routes, which increases product delivery time and decreases fuel costs by reducing empty running. Regardless of which style of logistical planning a company needs to implement-inbound logistics, contract logistics, LCL/FCL, LTL/FTL, etc.-logistics planning software allows companies to arrive at advanced planning and scheduling solutions that can significantly increase their bottom line. By implementing this software, companies can improve the cost effectiveness of the following product distribution arrangements, among others: container planning and empty container repositioning, intermodal transport, multi-hub and multi-leg transport, cross docking, multi-compartment trailer planning and inventory management.

One example of how logistics software helps companies reduce their shipping costs can be seen in less than truckload (LTL) shipping arrangements. Especially beneficial for companies that don’t ship a high volume of goods, LTL shipping allows companies to pay a fraction of full truckload (FTL) shipping costs. LTL shipping combines multiple partial truckloads into a full truckload and splits the full load price between the shippers. For trucking companies, LTL is beneficial because it draws in customers who would traditionally ship their good by parcel carrier. Another example of how logistics software can save companies money is by examining the characteristics of shipping routes. For example, while the shortest route might seem to be the fastest route, this software can reveal that a longer route would be faster due the traffic characteristics of the shorter route.

Without this software, most companies continue to pay more for logistical solutions than they need to. While research shows that both logistics software and 3rd Party logistics providers can help companies reduce their annual shipping costs by 10 percent at the end of one year, opting for this software adds to the savings. When companies use logistics software, they increase their bottom line in basic two ways: by delivering their products to the sales floor faster and by reducing the cost of getting them there.

Logistics Software Provides Companies With Freight Optimization

In the manufacturing industry, the discipline of logistics focuses on efficiently moving products from the manufacturer to the buyer. For large manufacturers, logistical operations can represent a large expense, especially when logistical elements are managed separately instead of being integrated into one solution. In an attempt to take the time and guesswork of out executing logistics, many companies totally or partially outsource their freight optimization needs to third parties. A complete outsourcing amounts to hiring a company to move products throughout the entire supply chain, while a partial outsourcing involves letting a third party manage the transportation of goods through the “stages” of the supply chain. However, implementing logistics software is a more cost effective way to achieve freight optimization that offers the same level of quality as a third party logistics provider.

There are several factors that contribute to a manufacturer’s total shipping costs, including warehouse fees, inventory fees and freight carriage fees. To minimize these fees, a manufacturer might choose to ship by air carrier instead of in tandem with freight carriage, significantly reducing warehouse fees by moving the goods from manufacturer to buyer in a matter of hours. However, to save the most money, companies have to examine all three cost areas with an eye toward developing an integrated cost savings solution. In developing such a solution, there are two basic issues that manufacturers must address: finding the right mix of freight carriage, inventory and warehouse services and finding the best price for each one.

Logistics software can help by providing an analysis of service combinations in relation to individual service cost. For small to midsize companies that deliver goods from the assembly line directly to retail outlets, logistics software can offer a basic analysis of routing options and freight rates. But companies that use multiple warehouses and multiple supply chain locations may require more, such as production scheduling analysis that develops manufacturing plans with regard to multiple supply chain locations (i.e. company’s whose products are assembled at more than one location before reaching the retailer).

The basic advantage of logistics software is that offers refined shipping solutions that meet the needs of a variety of manufacturing situations (and does so at a lower cost than hiring a third party logistics provider). For example, some solutions may focus on a particular freight carriage issue, such as analyzing how to increase delivery time by studying construction schedules and highway traffic data, while other solutions may focus on offering an integrated solution for all logistical concerns, including carrier loading, weight distribution, cube optimization and shortest path to destination. Studies show that manufacturer’s who implement logistics software regularly realize a 10 percent decrease in shipping costs after the first year.

Whether your company has its own trucking system or uses a third party, logistics software can help reduce your delivery costs without compromising punctuality, efficiency or freight safety. If you need to simplify your delivery process and reduce your cost of shipping, consulting with a logistics software provider is the best way to arrive at a solution that accomplishes both at the same time.

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