Shipping Logistics Software: Frequently Asked Questions

In lieu of staffing a logistics department, many shippers turn to Third Party Logistics (3PL) providers to secure the best carrier arrangements. However, depending on the type of shipping management you need, 3PL can be as costly as staffing in-house experts. It can also make you feel distanced from the distribution process.

Instead of using 3PL, many businesses now use shipping logistics software – a class of applications that perform the logistical analysis traditionally performed by experts. If you are considering the software as an alternative to 3PL, but you have questions about its benefits and applications, the answers below can be helpful:

How much knowledge is required to operate the applications?

Ideally, the user should have a proficient understanding of transportation logistics, but a consummate understanding of logistical analysis is unnecessary. After performing logistical analysis based on the data you supply, the applications provide you with a list of recommended options via a user-friendly interface.

How much can the applications reduce the cost of freight transportation?

Research shows that top-notch shipping logistics software can reduce the cost of freight transportation by ten percent in the first year. Depending on your transportation process, the percentage could be even higher.

Can the applications support a transportation management system?

TMS software can support a Transportation Management System (TMS) by helping shippers perform the crucial processes of freight transportation management: planning and deciding on transportation arrangements, monitoring the transportation process, and measuring Key Performance Indicators (KPIs).

Are applications available that support LTL transportation?

Yes. The applications can be designed to support any freight transportation need, including LTL transportation. If you routinely ship partial loads, LTL software can help you identify more affordable transportation arrangements than Truck Load (TL) or parcel shipping.

Are the applications available on a web-based model?

Yes, the applications are available on a web-based model. They are also available on an in-house model. Most shippers choose the latter due to its cost effectiveness and the ability to access the application remotely.

How much do the applications cost?

The cost of the applications depends on several factors, particularly whether it is implemented on an in-house, or a SaaS (Software as a Service) model, along with the logistical options you need. The best way to receive an accurate cost assessment is to have a provider of logistics software review your freight transportation process and administrative needs.

What if the transportation process changes after implementing an application?

The application you implement is not set in stone. If you experience new shipping needs, you can add new logistical options to the existing system. In terms of adding new options, implementing a web-based application typically offers the most flexibility.

Conclusion

Shipping logistics software is a cost effective alternative to staffing experts or contracting with a 3PL provider. Unlike 3PL, it puts you in direct control of freight transportation, helping you identify the best transportation arrangements in terms of freight safety, delivery time, and transportation cost. To learn more about the benefits of TMS software and other types of logistics software, contact a provider of web-based logistical solutions today.

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.

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.

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