Hiring a Logistic Expert Vs Implementing Freight Management Software

If you’re fortunate enough to operate a thriving shipping company, then you’re also unfortunate enough to experience the ins and outs of trying to find the best shipping solutions. While it’s easy to call a third party logistics provider and have it overtake your shipping process, this usually doesn’t result in the best rage of shipping options or the most money saved on the logistics process, particularly if you hire a customer adapter or customer developer. A better option, many companies think, is to hire a logistic expert. Certainly, having an in house logistic expert is preferable to dealing with 3PLs from a distance. But hiring that expert could increase your payroll between $70,000 and $90,000-a small price, some would say, for the potential cost saving solutions that could be developed.

Yet, if the goal of logistics is to arrive at the best shipping solutions while saving as much as possible on the logistics function, the answer lies neither in 3PL or in house logistics experts; it lies in logistics management software-also known as freight management software-which can be implemented for a fraction of the cost of hiring a logistics expert or a 3PL provider. For companies that have long relied on 3PLs, the prospect of using logistics software to fully manage the shipping process can seem daunting. But that’s exactly what the developers of the software-all of whom have first hand knowledge of the shipping industry-expect you to do, and it isn’t as hard as you think.

While freight management software isn’t new, its proliferation as a user friendly logistics solution began in the software as a service (SaaS) movement, in which the prospect of offering businesses software solutions that could be operated by non-expert users dramatically increased the market for various types of programs, and freight management software included. Essentially, the software functions as a logistics expert, presenting shippers with an unlimited range of ranked shipping solutions that take into consideration their shipping needs, including warehousing needs, freight packaging and handling needs, delivery time, etc. The shipper then chooses solutions as a 3PL provider once did, cutting the middleman out of the logistics function and saving money.

Although a company owning its own shipping fleet and logistics experts is viewed as the ideal shipping situation, freight management software is beneficial to large and small companies alike; and, in the case of companies that own their own fleet, a tremendous cost saving measure compared to hiring one or more logistic experts.

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.

Truckload Logistics Management – Why You Shouldn’t Choose Management Based Third Party Logistics

In order for your company to make as much money as possible, it has to save as much as possible; and if your company has shipping needs, how you handle your shipping process can have a significant impact on your bottom line. In order to save the most money on the shipping process, companies that don’t employ fulltime logistics professionals pursue one of two logistics management options: hiring a third party logistics provider or implementing truck load logistics software. Traditionally, companies outsource their transportation logistics. But with the technological truckload logistics management solutions that are now available through truck load logistics software, more and more companies are deciding to take control of their own shipping process through logistics software.

If you currently use management based 3PL and are satisfied with the results, you may not be aware of how management based 3PL really works. Although 3PL providers offer their clients truckload (TL) shipping solutions, the paramount goal of 3PL is not to provide shipping companies with the best logistics operations for their shipping process; the primary is to make money for 3PL companies. Management based 3PL companies earn their money by seeking out discounted shipping arrangements with carrier companies. The carrier companies offer the discounts because 3PL-providers supply a steady stream of business that more than offsets the discounts. But once management based 3PL providers receive the discounts, they don’t pass the savings on to their customers.

Calling management based 3PL providers middlemen might sound hyperbolic, but that’s essentially what they are. They know that companies that don’t employ fulltime logistics professionals have to look for logistics elsewhere, and they supply logistics at a price that defeats the purpose of pursuing truckload logistics management in the first place: to save as much money as possible. Because 3PL providers have to realize a meaningful price differential between the price discounts offered by carriers and the price that they charge shipping companies, 3PL providers only work with carriers that offer preferred discounts, meaning that a company’s range of TL shipping solutions is ultimately contingent on the 3PL provider’s needs and its clients’ needs. By implementing truckload logistics management software, companies can increase their range of shipping options and realize the same shipping discounts that 3PL providers realize, the difference being that the discount increases only a shipping company’s bottom line and not a 3PL provider’s.