Implementing a Logistics Management Program – Evaluating the Options

In the shipping industry, the term logistics management program refers to the aspect of supply chain management that plans and carries out the flow of products from distributor to retailer, or directly to the customer, as the case may be. In many cases, shippers don’t perceive themselves as having an official logistics management program, either because their shipping process is simple, or because they have a logistics provider handle their shipping process. But, regardless of how a company perceives its shipping process, chances are that the process adheres to at least basic logistical concerns, such as route quality, delivery time and condition of freight upon delivery; disciplines that could possibly be improved upon if the shipping process were subject to logistical analysis.

For some shippers, logistics is something to be seen and not heard, as the perception that only logistics experts can have any input on the logistics management understandably tends to dominate. In most cases, shippers know little if anything about how the freight management process actually works, either hiring in house experts to oversee the shipping process or outsourcing logistics needs to third party logistics providers, of which there are four types: standard 3PL providers, which only offer basic services and generally don’t practice 3PL as their main function; service developers, which offer more advanced services but not comprehensive shipping solutions; customer developers, which oversee an already existing shipping process; and customer adapters, which oversee the shipping process and propose innovative solutions.

As one might expect, hiring in house experts can lead to budgetary constraints, as an experienced logistic expert earns $70,000 to $90,000 annually, and the same holds true for hiring 3PL providers that handle the shipping process. As a result, some shippers contract with standard 3PL providers, service developers, or both. But what results is a non-integrated shipping process that suffers from poor range of options and, because of numerous contracts, becomes rather costly anyway. There is, however, another option: logistics management software-also referred to as logistics software and freight management software. From a distance, the software’s biggest draw is its ability to cut the middleman out of the logistic function, and with it the expense of outsourcing. But in the long run, the software’s users profit most from realizing a limitless range of ranked shipping options that are tailored to a company’s particular shipping concerns, resulting in lower shipping costs and improved delivery time.

Available on either a SaaS (software as a solution) model or as an internal software solution, freight management software allows companies to use a user-friendly interface to make informed shipping decisions without possessing logistics expertise. Easy to modify as a company’s shipping needs change, research shows that company’s that implement the software average a 10 percent decrease in annual shipping cost after only the first year.