Logistics Software Helps Companies Reduce Shipping Costs

In the shipping industry, logistical solutions focus on stream lining the process of moving products through the supply chain. For large manufacturers, the shipping process represents a significant expense, which explains why such companies are now using logistics software-also known as freight transportation software-to evaluate and improve the financials of their shipping process. To benefit from logistics, some companies choose to completely or partially outsource their logistical needs. In the first case, companies hire a third party logistics expert to oversee their shipping process. In the second case, they hire logistics experts to manage particular stages in the delivery process. In each scenario, significantly minimizing the cost of the delivery process and reducing delivery time is the ultimate goal.

There are several factors that influence a manufacturer’s total delivery costs, including inventory fees, freight carriage fees and warehouse fees. But instead of focusing one particular factor, logistics aims to integrate each aspect of the shipping process into a single manageable solution. For example, in order to make an impact in inventory, freight carriage, and warehouse fees, a company might decide to start shipping by air instead of by ground. While air shipping is more expensive than ground shipping, it can eliminate warehouse and inventory fees for companies that ship long distance. Similarly, a company might also switch from air shipping to ground shipping where warehouse and inventory fees are negligible.

In developing the best logistics solutions for your shipping process, there are two chief issues to address: finding the right combination of carriage, inventory and warehouse services and finding each of them at the best price. Logistics software begins by identifying the optimal combination of these services and then analyzes them by price. In the case of large companies whose shipping process is complicated, the initial goal of logistics is to reduce complexity by integration, while for smaller companies whose shipping processes are simpler, a simple analysis of shipping rates and delivery routes may be sufficient. A complex shipping process is usually defined by multiple warehouse stops and product assembly that occurs in various stages at different locations, while a simple delivery process amounts to products that travel nonstop to the buyer.

Whether a company’s shipping solution is simple or complex, freight transportation software offers solutions that benefit large companies and small companies alike. For example, logistics software can be used to analyze highway traffic patterns and the prevalence of construction zones along particular shipping routes. In addition, the software can be used to analyze aspects of freight loading such as cube optimization, best fit, vehicle loading and weight distribution. Without the use of logistics, the smaller aspects of the shipping process often remain unstudied and needlessly increase a company’s shipping costs. Whether your company ships locally, nationally or internationally; according to recent research, hiring a third party logistics expert or implementing logistics software can reduce your shipping costs by as much as 10 percent after the first year; and for most companies the percentage increases significantly thereafter.