LTL Logistics Software Among Other Logistical Resources

Businesses shipping small loads through second party carriers often have difficulty finding affordable shipping arrangements. Truck Load (TL) shipping is unaffordable because a partial load would be shipped at the price of a full load, while parcel shipping can become unaffordable when a large number of parcels are shipped. When low volume shippers can afford neither TL shipping nor parcel shipping, they turn to Less than Truck Load (LTL) shipping – an arrangement where two or more partial loads fill a full semi trailer, and the shippers split the cost of the load.

For most small and midsize shippers, LTL shipping is the most affordable transportation arrangement, but maximizing its benefits requires a strong logistics function-a requirement satisfied by one of three resources-an in house logistics department, a Third Party Logistics (3PL) provider, or logistics software.

Evaluating the Resources

Traditionally, shippers keep the logistics function in-house by staffing logistics experts. When this option is unaffordable, they consider 3PL and logistics software.

The value of 3PL depends on the type of provider one uses:

  • A standard 3PL provider who provides basic logistical services
  • A service developer who provides specialized logistical services
  • A customer adapter who manages the shipping process
  • A customer developer who manages and innovates the shipping process

If you need a specific service, such as cross docking, or tracking and tracing, 3PL can be remarkably affordable, but when full shipping management is the goal, 3PL can be expensive. It can also create a feeling of disconnection from the shipping process. Compared to high-level 3PL, TMS software or LTL logistics software offer two distinct advantages:

  • It is less expensive than using a customer adapter or customer developer
  • It allows you to have full control of the shipping process

Available on a web-based model or an in-house model, the software can be implemented according to your company’s needs and policies. Additionally, the implementation process is designed for efficiency. The provider analyzes your transportation process, creates a program with the right features and functions, and delivers the final version of the program in 30-45 days.

Savings Start Immediately

Financially, the most attractive aspect of the software is its ability to deliver savings in the short term. In the first year, many shippers experience a ten percent reduction in shipping cost, with savings increasing in the years following. In an economy where recessionary spending is still common, a ten percent reduction in shipping cost can bring a welcome increase to a shipper’s bottom line. For many shippers, the savings generated by the software easily reach the six-figure mark.

If your business has a moderate shipping volume, TL shipping and parcel shipping may be unaffordable, and paying a 3PL provider to manage the shipping process may be unaffordable as well. If so, TMS software or LTL logistics software can provide an affordable resource for identifying the best shipping arrangements.

To learn which type of logistics software is right for your transportation process, contact a provider of web-based logistical solutions today.

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.

Logistics Software is the Ultimate Transportation Management Program

It’s difficult to think of an area of business that hasn’t benefited from SaaS offerings. And if you own a manufacturing company or plan on starting one, you may be familiar with truckload transportation management software, a form of logistics software that is available on both a SaaS model and as an internal software solution. The value of logistics software is typically discussed in relation to third party logistics (3PL), with its main benefits being that it offers logistics solutions at a significantly lower price than 3PL while offering more shipping options.

Logistics software offers the same logistics expertise as 3PL providers for a lower price because it’s priced as a software service and not as a logistics consulting service. It offers a broader range of shipping solutions because it doesn’t act as a business entity that prefers its own shipping solutions or the solutions of its associates. But there are also other benefits of using logistics software instead of 3PL; below, we take a look at three reasons why logistics software is the ultimate transportation management program.

Companies Can Become Their Own Logistics Providers

When shipping companies get large enough, they usually purchase their own shipping fleet and hire a team of logistics professionals to oversee it. But for small to midsize shipping companies, the financial necessity of outsourcing logistics means that they have to maintain a relationship with a 3PL that 3PL clients regularly characterize as being distant and disconnected, and it’s easy to see why. If you aren’t a logistics expert, it’s difficult to maintain a business dialogue within someone who is. But logistics software effectively places the power of the logistics function in the hands of shipping companies by providing an easy to use customer interface, making it an ideal transportation management program.

Companies Receive a Comprehensive Logistical Approach

There are four types of 3PL providers: standard 3PL providers, service developers, customer adapters and customer developers. But only customer developers offer a comprehensive approach that results in new shipping solutions. The problem? Cost wise, hiring a customer developer is essentially like hiring your own team of logistics professionals. And if you can’t afford that, then hiring a customer developer is a bad decision as well. Companies hire standard 3PL providers and service developers when they have a specific need, but not when they when they want the best systematic shipping process; and customer adapters are hired by companies that simply want their shipping process “managed”.

Companies can Significantly Reduce their Annual Shipping Costs

Research shows that companies that implement logistics software can reduce their annual shipping costs by 10 percent at the end of the first year. With the aid of logistics software, shippers typically pay more than they need to in freight transportation and a variety other costs commonly associated with the shipping process, including but not limited to: TMS software costs, annual software maintenance costs, gain shares, freight margins and common rate based licensing costs.

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