Logistics Management: Which Option Is the Most Effective?

In shipping, logistics management refers to the management of the shipping process in three respects: transportation planning, transportation monitoring, and the measurement of Key Performance Indicators (KPIs). These disciplines form what is known as a Transportation Management System (TMS), which manages the shipping process from the planning phase to the quality assessment phase. With the exception of certain administrative functions of transportation monitoring, logistics informs each aspect of a TMS. But the best logistical resource for shipping management can be a matter of debate.

The Emergence of 3PL

In recent years, Third Party Logistics (3PL) has become a viable alternative for companies that don’t have – and often can’t afford – an in-house logistics department. Also known as freight brokers, 3PL providers offer different levels of logistics, from basic shipping services to comprehensive, innovative shipping management. For companies that need a singular shipping service (e.g. cross docking) instead of a comprehensive logistical approach, 3PL can be an economical alternative to creating a logistics department. But for companies that need the highest level of logistics (comprehensive, innovative shipping management), contracting with a 3PL provider and maintaining an in-house logistics department can be similarly expensive.

But there is an affordable alternative to creating an in-house department or using a high-level 3PL provider: logistics software, also known as TMS software. Featuring a user-friendly interface that allows non-experts to plan, monitor, and assess the value of shipping arrangements, TMS software occupies a unique niche in the shipping logistics industry, one that allows shippers to supply their own logistics without hiring in-house experts.

If your company is considering alternatives to entering another 3PL contract, the software’s benefits could provide exactly what you need.

The Benefits of TMS Software

For most shippers, TMS software has three primary benefits when compared to operating an in-house logistics department or contracting with a 3PL provider:

  • Low overall cost
  • Truly unlimited shipping options
  • Direct control of the shipping process

An in-house department can offer unlimited shipping options and control of the shipping process, but it doesn’t offer these benefits on a budget that is affordable for small and midsized companies. 3PL can offer an economical logistics function, but it doesn’t offer control of the shipping process. When a shipper wants the benefits listed above in a single solution, TMS software is the most effective option.

Conclusion

TMS software can be implemented on an in house model or on a Software as a Service (SaaS) model. Because it eliminates hardware costs, system maintenance fees, and system upgrade costs; the latter model offers the most economy and the least aggravation, making it the most popular option.

If your company doesn’t have the budget to support a logistics department, and it doesn’t wish to delegate its shipping process to a 3PL provider, TMS software could be the answer. To learn more about how TMS software could improve your company’s TMS while lowering its operating cost, consult with a provider of shipping logistics software today.

Six Benefits of Implementing a Software-Based Logistics Management Program

A logistics management program-also referred to as a transportation management program-is a comprehensive approach to managing every aspect of the logistics process while developing innovative shipping solutions that save time and money wherever possible. A logistics management program is achieved in one of three ways: hiring a team of in house logistics experts, hiring a third party logistics (3PL) provider or implementing third party logistics software.

Hiring a team of experts is usually too costly for small to midsized companies, and hiring the type of 3PL provider that would implement a comprehensive, innovative logistics management program is usually too costly as well. But implementing logistics software allows companies to develop a comprehensive, innovative management program without the aid of paid professionals. Logistics software does the work of a logistics expert, meaning that its users don’t need to possess logistics expertise. Instead, they use a user-friendly interface to choose from among recommended shipping solutions for every area of the shipping process. Below, we list six benefits that shippers experience after implementing logistics software.

Reduction of Expedited Order Costs

Expedited shipments can significantly drive up the cost of shipping if they occur on a regular basis; and without a comprehensive logistics solution, they typically do. Logistics-software allows shippers to reduce expedited shipments through better shipment planning and system directed exceptions handling, which resolves exceptions before they necessitate an expedited shipment.

Increase of Load Consolidation

Upon implementing logistics-software, shippers immediately realize the ability to consolidate parcel shipments into less than truckload (LTL) shipments, as well the ability to consolidate LTL shipments into truckload (TL) shipments, each of which significantly lessens annual shipping costs.

Automation of Carrier and Mode Selection

When companies automate the selection of the best carrier and the best shipping mode, they save money in terms of both saved time and saved manpower, especially considering that logistics software immediately pairs optimal carrier and optimal mode selection.

Identification of Invoice Discrepancies

Searching for discrepancies in invoices on your own can be tedious and time consuming. But logistics software can instantly compare the audit of a freight invoice against the shipping contract, allowing you to never pay for services that weren’t rendered as promised or that were rendered in violation of the shipping contract.

Tracking of Carrier Performance

Tracking a carrier’s performance can help you negotiate better rates. Logistics software provides information on a carrier prior to your forming a contract with them, which can allow you to receive a lower rate if, for example, a carrier’s promised delivery times average a few minutes or more less than the promised times.

Reduction of Product Breakage

Regardless of the cost effectiveness of shipping routes and load arrangements, a company doesn’t profit from an economical shipping process if its products regularly break en route. Logistics software solves this problem by connecting shippers with carriers that offer the right mixing and stacking strategies for a particular type of freight.

Get a Move on With Logistics Management

If there’s ever been a time of your life when you lived by the clock, waking up, getting dressed, organizing breakfast, dropping kids to school, getting in to work, picking kids from school, dropping them off for baseball practice, catching a hurried sandwich, getting back to work… you already know what logistics management is all about. Logistics management is a crucial function in most companies, and can pose challenges that even Superman would balk at. Think of it as the backbone – central to survival, but rarely seen.

The Council of Supply Chain Management Professionals, who know a thing or two define logistics management as that part of Supply Chain Management that plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers’ requirements. Simply put, it is all about ensuring that inputs get to the manufacturing site on time so that the output gets to the customers on time. Naturally, in order to do that, the logistics team needs to know where each input or output is at any point in time.

With that oversimplified definition if we’ve given you the impression that logistics management is kid stuff, nothing could be further from the truth. Get a load of this – the scope of logistics management covers inward and outward transportation, storage and material handling, order fulfillment, managing inventory, planning supply and demand and even designing the complete logistics network! If that wasn’t enough, sometimes logistics managers are also involved in production processes, right from sourcing and planning to packaging and customer service. Logistics management is therefore a “synthesizing” function – it cuts across functional boundaries and helps integrate them. No wonder that 95% of CEOs in the United States believe that they need to have a specific strategy for logistics.

Did you know that companies spend over 10% of their revenues on logistics? Yet, logistics management is still manual process in many organizations, dependent upon fax, phone and human intervention. However, it won’t be long before more and more businesses resort to automated solutions for managing their logistics needs. That’s why it’s worth taking a quick look at logistics management software.

The focus of logistics management software is on execution, rather than planning. That’s why they are capable of working with huge amounts of live data and making micro level decisions literally on a minute to minute basis. Typically, these systems have the following components:

o Inventory management system – manages stock of raw material, work in process and final goods. For example, the Affal Inventory System 1.7, is supposed to be ideal for small and medium sized businesses.
o Order management system – provides an in-depth view of the order at various stages of its life cycle
o Warehouse management system – tells you all you need to know about your inventory, stores and stock levels, as it happens
o Transportation management system – looks at the transportation needs in totality – right from choosing routes and carriers to working out a delivery schedule
o Yard management system – helps to make time and space irrelevant! With this system, businesses can extend control to outside locations such as the dockyard

So, maybe you’re still thinking what are the real advantages that a logistics management software solution brings to any business, besides ensuring that various materials are amazingly in the right place at the right time? Take a look.

o Automated processes mean reduced deployment of personnel
o Holistic approach leads to reduced transportation and distribution cost
o Greater visibility of processes means improved customer service
o Efficiencies lead to shortened cycle time

A real Superhero, isn’t it?