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.

How Does TL Logistics Software Compare to Other Logistics Options?

When a company needs to ship its goods form point A to point B, finding the best shipping arrangement is rarely as simple as contacting the nearest carrier and signing a contract. On the contrary, most shippers require the aid of in-house logistics experts, third-party logistics (3PL) providers, or logistics software to arrive at the right shipping plan in terms of delivery time and cost. However, there’s a big difference between hiring an in-house logistics expert, hiring a 3PL provider, or implementing logistic software. So, which one offers the most benefits to the most shippers? To answer this question, it helps to explain how each of these options operates within the shipping process.

A logistics expert’s place within the shipping process is fairly obvious: for roughly $80,000 a year, he or she manages a company’s shipping process and proposes newer, better shipping solutions when possible. The upside side of hiring an in house expert is that you have a logistics expert at close contact, which is never the case when you hire a 3PL. But the downside is that the expert’s salary is a lot of money to add onto an already expensive shipping process. Furthermore, despite a logistic expert’s “expertise”, he or she can rarely study all possible shipping arrangements before choosing a best arrangement-a task that TL logistics software performs with regularity.

As with hiring a logistics expert, contracting with a 3PL provider can be expensive, especially if you need a provider to manage your shipping process and propose innovative solutions. There are four types of 3PL providers: standard 3PL providers, which offer basic shipping services; service developers, which offer more specialized shipping services; customer adapters, which manage a company’s existing shipping process; and customer developers, which manage a company’s shipping process and propose innovative solutions. If you need a singular shipping solution, hiring a standard 3PL provider or service developer might make sense. But if you need TL shipping management and innovative TL solutions, TL logistics software is the more affordable option.

Due to its name, shippers sometimes believe that logistic software requires logistics expertise to operate, which isn’t true. Because the software serves as a logistics expert, figuring out the best routes and shipping methods, its users select recommended shipping options by accessing a user-friendly interface. Compared to 3PL, logistic software has three advantages: it puts companies in control of their shipping process; it allows them to cut the middleman out of the shipping process; and it provides them with the fullest range of shipping options, which combine to make the software the most affordable logistics solution on the market.

Instead of Hiring a Logistic Expert, Save Money by Implementing Logistics Software

There are two inherent challenges to running a manufacturing business. The first is producing products that will sell. The second is shipping those products to retailers in a timely fashion at an affordable price. If your company has mastered the first challenge but is still searching for the ideal shipping solutions, you may be on the brink of hiring a logistic. When companies hire a logistic expert, they either hire an in house logistics professional or outsource their logistics to a third party logistics provider when their budget prohibits the former. If this describes your company, it’s important to know that, while hiring a 3PL provider may be less expensive than hiring an in house professional, there is a logistics option that costs significantly less than 3PL, and it exists in truckload transportation management software-also known as logistics software.

When companies hear about logistics software, they often think that it requires logistics expertise. But it doesn’t. Logistics experts tailor logistics software to meet a company’s unique shipping needs and allow the company to meet and control those needs through a friendly user interface. There are several reasons why implementing logistics software is more affordable than hiring a 3PL provider, beginning with the fact that logistics software is priced as a software offering and not a consultancy offering. Although the companies that design logistics-software are software companies, they employ freight logistics experts and are run by business veterans of the freight transportation industry. Another reason why logistics software is less expensive than 3PL is that 3PL arrangements typically result in shippers being charged over and above the actual cost of shipping solutions. When non-asset based 3PL providers secure shipping solutions for their clients, they contract with carriers that offer a discounted rate, allowing the 3PL provider to profit from the differential between actual service cost and service cost as charged.

In addition to being more cost effective than 3PL, logistics software also allows companies greater control over their shipping process by providing more shipping options. Most 3PL providers adhere to rigid shipping heuristics to provide clients with shipping options in the shortest amount of time. Consequently, many 3PL clients end up with shipping options that meet their needs but don’t offer the best possible delivery time at the lowest possible price. One example of how logistics software allows shippers to realize more shipping options can be seen in integrated shipping solutions. Whereas asset-based 3PL providers only offer as many shipping modes as they have equipment to support them, logistics-software allows shippers to integrate truck, boat and air shipping over the course of one transportation route. Whether your company’s shipping needs are just emerging or have recently changed, don’t pay more for freight shipping than you need to. By implementing logistics software, you can become your own logistics provider and cut the middleman out of the logistics function.