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 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.