Logistics Software Removes the Need For 3rd Party Logistics Providers

The more products a company ships, the more shipping costs become subject to cost saving strategies. For most companies, realizing the most economical shipping solutions depends on the implementation of the most popular form of supply chain software (SCS): logistics planning software. On the most basic level, the solutions offered by logistics software improve a company’s phased planning measures, product sales forecasts and scientific safety stock. Some companies hire 3rd party logistics providers, but more and more companies are turning to logistics software in place of 3rd party logistics providers for two reasons: logistics software offers the same level of quality as 3rd party logistics providers and it offers it a much lower price.

When companies use logistics planning software, they can centralize and integrate their product delivery system by allowing drivers at different sites to connect using the most efficient travel routes, which increases product delivery time and decreases fuel costs by reducing empty running. Regardless of which style of logistical planning a company needs to implement-inbound logistics, contract logistics, LCL/FCL, LTL/FTL, etc.-logistics planning software allows companies to arrive at advanced planning and scheduling solutions that can significantly increase their bottom line. By implementing this software, companies can improve the cost effectiveness of the following product distribution arrangements, among others: container planning and empty container repositioning, intermodal transport, multi-hub and multi-leg transport, cross docking, multi-compartment trailer planning and inventory management.

One example of how logistics software helps companies reduce their shipping costs can be seen in less than truckload (LTL) shipping arrangements. Especially beneficial for companies that don’t ship a high volume of goods, LTL shipping allows companies to pay a fraction of full truckload (FTL) shipping costs. LTL shipping combines multiple partial truckloads into a full truckload and splits the full load price between the shippers. For trucking companies, LTL is beneficial because it draws in customers who would traditionally ship their good by parcel carrier. Another example of how logistics software can save companies money is by examining the characteristics of shipping routes. For example, while the shortest route might seem to be the fastest route, this software can reveal that a longer route would be faster due the traffic characteristics of the shorter route.

Without this software, most companies continue to pay more for logistical solutions than they need to. While research shows that both logistics software and 3rd Party logistics providers can help companies reduce their annual shipping costs by 10 percent at the end of one year, opting for this software adds to the savings. When companies use logistics software, they increase their bottom line in basic two ways: by delivering their products to the sales floor faster and by reducing the cost of getting them there.

Logistics Software Solutions Vs Hiring a Parcel Rate Adjuster

Parcel carrier rates aren’t designed to help your company reduce shipping costs; they’re designed to support the profits of parcel carriers. You won’t hear it in their advertisements, but parcel carriers have an inflexible set of standard rates that give the appearance of flexibility due to a set of pricing algorithms that determine how the rates are applied. So, how do you keep your shipping system from being a financial casualty of the parcel carrier system? The first step is a simple: avoid being convinced that one parcel carrier is somehow “better” than the rest. When people arrive at this perception, it’s often in response to advertising ploys that promote notions of a carrier’s “nobility” via its selfless dedication to the customer.

When businesses become dedicated to one carrier, they typically stop shopping for better parcel shipping rates and end up paying for services that they don’t need. Therefore, step two of assuring that your company gets the best carrier rates is either having a parcel rate adjuster investigate your situation or implementing transportation logistics software. Both transportation logistics software and parcel rate adjusters offer extensive logistical information that reveals fair courier rates for a variety of shipping situations, including the comparative analysis of fuel surcharges between carriers and audits of shipping fees that uncover breaches in service, such as non-delivery of services or service delivered too late. Logistics software and rate adjusters also determine whether your company is being charged for services that it simply doesn’t need, such as residential delivery or Hazmat shipping services.

When you consult logistics software or a reputable rate advisor, you can expect to receive detailed questions about what you ship and how you go about shipping it. In each case, cost savings suggestions are often simpler than expected. For example, a Philadelphia law practice was able to save $15,000 a year in shipping costs by determining when parcels were expected instead of sending every parcel overnight. Why didn’t the firm do this in the first place? In the legal profession, the “importance” of legal documents leads to the perception that they need to be delivered as quickly as possible, even when they don’t. Similar to seeing through advertising ploys, simply seeing through the trends in your business area can result in significant parcel savings.

Arriving at the best shipping plan for your business involves selecting the shipping options that meet your specific needs and then finding them at the best price. While some companies choose to consult with a rate advisor, other companies choose to implement logistics software and save money. In addition to being more cost effective than hiring a parcel rate adjuster, logistics software solutions arrive in a shorter period of time and are always free of human error. If you suspect that you’re paying too much for parcel shipping or you haven’t compared rates in awhile, why pay even more by hiring a parcel rate adjuster when logistics software solutions can offer you more dependable results in a shorter period of time and at a lower cost?

Logistics Software Aids in Retail Vendor Compliancy

Vendor compliancy occurs when a vendor meets a set of requirements imposed on it by a buyer of its products. Vendor compliance focuses on making it easier for the buyer to receive goods, process them upon reception, and bring them to store shelves, where applicable. Unfortunately for manufacturers, the most complex compliance standards are usually handed down by companies that have the largest buying power, a fact that causes some companies to question whether the money necessary to implement the standards would be worth the profits that resulted from doing business with an entity. In the long run, adapting business standards to meet compliance standards is almost always beneficial, as nothing can replace the selling power of having large contracts with major companies and retailers. However, affording the infrastructure necessary to facilitate compliance can still be a problem in the short run.

Retail Vendor Compliancy and Logistics Software

When you look at a major buyer’s retail vendor compliancy scorecard, a rating system that ranks vendors according to their compliance to a number of requirements, it’s often difficult to ascertain how to begin meeting the requirements. However, upon closer inspection, many companies find that a majority of compliance issues, and certainly the most critical ones, are associated with the shipping process, such as product labeling, product packaging, and method of shipment, to name a few. Yet, here there emerges another roadblock for many vendors: how to gain more control over the shipping process through logistics. Most companies receive their shipping logistics from one of three sources: an in-house logistic department, a third party logistics (3PL) provider, or by implementing logistic software, which allows you to become your own logistics provider without possessing logistical expertise.

In-House Logistics

Meeting shipping needs in-house is the traditional preference of companies that can afford to hire their own logistic experts, who typically earn around $80,000 per year. This fact alone prevents many companies from going in-house with their shipping process, as well as the fact that most companies pursue in-house logistic arrangements upon purchasing their own fleet, once and for all ending their dependence on 3PL.

3PL

What you receive from 3PL depends entirely on what type of 3PL provider you contract with: standard 3PL providers, who offer basic shipping services and seldom practice shipping logistics as a core practice; service developers, who offer more specialized services but not a comprehensive approach to the shipping process; customer adapters, who manage an existing shipping process but don’t propose new solutions; and customer developers, who manage the shipping process and do propose new solutions. For vendor requirements, customer developers make the most sense. But you can receive the same level of focus through logistic software at a fraction of the cost.

Logistics Software

Also referred to as freight transportation software, logistic software is priced as a software as a service (SAAS) offering, making it less expensive than other logistic options. What this means for vendors is less money spent on meeting vendor requirements, and an annual reduction in shipping expense that can be delegated toward other compliance needs. After using freight transportation software for one year, most companies experience a 10 percent reduction in shipping expense that increases in years following.