Logistics Software Allows Shippers to Conduct Their Own Freight Optimization

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

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.

TL Logistics Software – What Are Its Advantages?

If your company ships enough goods to qualify for full truckload (TL) shipping, you may think that your shipping situation can’t be improved. After all, TL shipping offers the advantage of shipping goods directly to their destination without the hassle and expense of warehouse stops. Yet, because the cost of shipping also includes the cost of the logistics function, companies should also question whether their logistics source is working for or against their shipping process in terms of cost.

Traditionally, companies either hire an in house logistic expert or outsource their logistics needs to a third party logistics (3PL) provider, either of which can be too expensive for smaller companies, especially when they need a comprehensive approach to the TL (truckload) shipping process. Today, however, companies have the option of implementing affordable TL logistics software instead of hiring an expert or outsourcing to a 3PL provider.

TL logistics software is geared toward companies that need TL shipping arrangements (i.e. where a carrier transports full semi trailers of goods on a regular basis). After implementing the software, a company selects its TL shipping arrangements from among ranked TL solutions that are presented on a user-friendly interface. When a company implements logistics software, it essentially becomes its own logistics provider, which brings three basic advantages: a wider range of shipping options; the possibility of integrated shipping solutions; and the removal of the middleman (3PL) from the logistics function. After implementing logistics software, studies show that companies lower their shipping cost by 10 percent within the first year alone.

To understand how logistics software achieves its impact, it helps to understand how companies overpay for logistics when they an in house expert or contract with a 3PL provider. When a company hires an experienced logistics expert, it can expect to pay between $75,000 and $90,000 in annual salary. Also, the shipping arrangements devised by the expert, although well researched, rarely result from the consideration of all possible shipping arrangements-a task that logistics software can perform in a matter of minutes.

Similar to hiring an expert, hiring a 3PL provider brings unnecessary cost from the beginning. And unless the provider is customer developer, which manages a company’s shipping process while developing new shipping solutions-the prospect of TL shipping being integrated with other shipping solutions (e.g. air and rail) is remote at best. Although 3PL has long been the logistics option for companies that don’t have logistics departments, that TL logistics software performs the work of a 3PL, except with better results, makes it the superior choice.

Logistics Software Solutions Can Benefit Your Company in Three Basic Ways

When companies present their transportation logistics solutions, they have tendency to either engage in corporate speak and not really say much about their solutions or speak with such expertise that they fail to give you a basic understanding of how logistics solutions can benefit your company in a daily way. For small to midsized companies, transportation logistics typically arrives in one of two forms: by a company outsourcing its logistics to a third party logistics (3PL) provider or by implementing logistics software solutions that are available as an online software application.

Given that logistics software offers an easy to use interface can be customized to a company’s particular shipping needs and costs far less than outsourcing to 3PL providers, it’s usually the logistics option of preference for small to midsized companies that don’t have the luxury of a shipping fleet or a large shipping budget. If you’ve heard of logistics software but are looking for a basic understanding of how it can aid your shipping process, we offer the following overview of how logistics-software solutions help companies in terms of freight optimization, shipping route optimization and shipping method integration.

Freight Optimization

For small to midsized companies that regularly ship less than a full freight load of products, freight optimization typically subsists on finding the best less than truckload (LTL) shipping options. LTL shipping is when a shipping carrier lets companies ship partial loads that combine to compose a full truckload. The cost value of LTL shipping comes from shippers splitting the cost of a full freight load. Although less than truck load shipping offers low shipping rates, due to numerous stops for delivery and pick up, it often takes goods longer to reach their destination than in other shipping arrangements. Nevertheless, logistics-software solutions can be used to find less than truckload carrier routes that offer the best delivery time. Because warehouse stops are a common feature of freight shipping, logistics software also offers warehouse optimization capabilities.

Shipping Route Optimization

If you use a 3PL provider, you probably won’t have any idea what shipping routes your carriers are using. But shipping routes are a major factor in determining overall shipping cost. Logistics-software can analyze shipping routes according to multiple criteria, including: length of route, traffic patterns, road quality and construction patterns. One example of how route optimization can decrease shipping cost and improve delivery time is by analyzing routes in terms of travel time. For example, a route that is shortest in distance may be longer than another route in terms of travel time due to traffic patterns.

Shipping Method Integration

Shipping method integration is an unofficial term that refers to the ability of logistics software to suggest integrated shipping methods for the sake of reducing shipping cost and improving delivery time. For example, even though air shipping is traditionally more expensive than ground shipping, logistics software might suggest shipping certain shipments by air due to expensive, unavoidable warehouse fees that would result from ground shipping. In addition, logistics software may make such suggestions as shipping products halfway to their destination by boat and the other half by freight truck.