Freight Logistics Software Vs Third Party Logistics: Which Is Better?

Today, two types of freight solutions appeal to shippers that rely on carriers: logistics software (a.k.a. TMS software) and third party logistics (3PL). Logistics software allows shippers to become their own logistics provider by using a software program, while 3PL providers negotiate arrangements between shippers and carriers. Frequently compared and contrasted, logistics software and 3PL each offer unique benefits. However, the former has the following important advantages:

Less Expensive

Standard 3PL providers and service developers, which offer particular services and not comprehensive solutions, are usually quite affordable. When you hire a provider that offers innovative management of the shipping process – namely, a customer developer – the cost can compare to hiring an in-house logistics department. Logistics software provides logistics through a software as a service (SaaS) platform. It can also be implemented as an in house solution. Instead of relying on a costly customer developer, you can save money and realize more control by using a software solution.

More Control

A top complaint of 3PL customers is they feel distanced from their shipping process and the entity that manages it. Different 3PL providers have different approaches, but few of them integrate the shipper in the shipping process in a formal capacity. For some shippers, having the shipping process fully managed by another entity is appealing. Due to its expense and vendor issues it involves, most shippers wish to be involved in the process. Freight logistics software does more than “involve” shippers in their own shipping process; it puts them in control of it.

Better Options

3PL providers make freight arrangements by listing an available load in an electronic posting system, where it can be matched with an available carrier, or by negotiating with carriers that don’t use a posting system. Because the former method is usually the easiest, many 3PL providers use it to arrange the largest percentage of shipments – a scenario that limits shippers to carriers who use a posting system. Logistics software removes this barrier and exposes you to more carrier options. In some instances, a shipper misses the best carrier option because the carrier who could provide it will not work with the shipper’s 3PL.

Greater Security

No shipping process is as secure as one that the shipper handles on its own. When outsourcing to a 3PL, shippers naturally lose the capacity to scrutinize the carriers with which their loads are placed. Although 3PL providers select carriers with the customer in mind, they also select them with themselves in mind – a dichotomy that can jeopardize the interests of shippers. Freight logistics software alleviates security concerns by putting you in control of the shipping process.

Conclusion

Logistics software is a viable replacement for 3PL, particularly for shippers who wish to control their own shipping process. Next to payroll, shipping is the second largest operating expense for most shippers. This means that rejuvenating a stale shipping process with better carrier options can have a significant impact on a company’s bottom line – an impact that logistics software allows you to achieve.

Is Transportation Management Software Beneficial?

When trucking and other shipping companies need to oversee the planning and operation of their vehicles, they use a transportation management system. This subset of supply chain management focuses specifically on transportation operations by helping companies choose the best carrier. In recent years, transportation management software has become the key component within this process because it adds context to the shipper’s transportation data so that the software is aware of various components and better equipped to make good decisions. Organizations that work with logistics shipping companies are able to find software that best meets their needs, which therefore allows these organizations to reduce truckload and less-than-truckload costs.

Before making the mistake of undervaluing transportation management software, an organization should recognize that these resources help improve organizational awareness across the supply chain. Organizations’ supply chain awareness is improved by the technological advancements that have been made with regards to transportation management software provided by logistics shipping companies. Some of those technological advancements are outlined in this article.

Freight Execution

Regardless of modes, shippers are now able to tend to all shipments by using a single system. This not only means that individual apps are not needed to handle specific modes like small parcel, but also means that one system can be used to integrate data with the host system. Transportation management software also makes it possible for information for each mode to be included in the host system in the same format, so that it is easier to work with. One other important aspect that impacts freight execution is the ability to print documentation. Shippers with shipments like less-than-truckload shipments and small parcel labels can print necessary documentation like pallet labels, international documentation, and hazardous materials documentation on-site.

Pre-Audit Measures

When the organization needs to audit its shipping processes, this task is much simpler when an individual can match the information from the freight execution tool to the carrier’s invoice. One simply needs to match up the characteristics of the invoice with the corresponding charges for each shipment to more efficiently complete an audit.

Communication and Visibility Tools

When an execution tool with transportation management software is provided to the shipper’s vendors, the shipper can pre-load it with organizational rules, carriers, and purchase orders. The shipper’s carriers can then use this pre-loaded information to tender shipments, without needing to depend on the carrier to provide the shipper with these crucial details.

Real-Time Monitoring

The above tools can be included in a dashboard that allows the organization to monitor and manage freight activity in real-time. Using their own business rules, the organization is able to ensure proper measurement and management of freight payment and pre-audit details to gain a better understanding of each shipment’s characteristics. This monitoring and analysis is made possible by the information supplied by the transportation management software.

An organization can use supplied metrics to draw its own conclusions about the meaning of events within the supply chain, or can rely on logistics shipping companies to analyze this task for them. Regardless of which route they choose, organizations should recognize that the technological advancements provided by transportation management software helps the organization monitor shipping activity in real-time.

Supply Chain and Logistics Management

Supply chain management is the supervision of a set of connections of organized businesses drawn in the definitive condition of manufactured goods and service parcels required by ending clientele. Supply Management spans all progress and storage space of raw materials, work-in-process stock, and completed merchandise from point of origin to point of utilization. Supply chainmgnt software includes tools or modules used to carry out dealings, administer supplier associations and be in charge of linked commerce processes.

Six most important activities can be observed in the progression of supply chain management study: Creation, Integration, Globalization Specialization Phases One and Two, and SCM 2.0.Supply chain business course of action involves shared work involving buyers and suppliers, joint product development, common systems and shared information. Common SCM problems involve distribution strategy, distribution of network configuration, trade-offs in logistical activities, information, inventory management and cash-flow.

Successful SCM entails a alteration from managing individual functions to integrating actions into key supply chain processes. An example scenario: the purchasing department places orders as requirements are known. The marketing department, responding to customer requirements, converses with a number of distributors and retailers as it tries to establish ways to satisfy this requirement.

Logistics management activities usually consist of inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply/demand planning, and management of third party logistics services providers.

If the Supply chain management is global in nature many more challenges in addition to existing problems comes into picture as the lead time is much longer. Actions in supply chain management can as well be classified into various levels like strategic, tactical and operation.