Organizations that have several campuses or facilities have an overhead cost associated with moving inventory and logistical needs. Product and inventory, components for products, even office machinery or documents, need to be moved from one location to another, and this takes time (tracking down the item in the first place, making sure nobody else is using it) and money (freight delivery fees from commercial carriers like FedEx, DHL or UPS).
This overhead will never entirely go away, though it regularly gets transformed by way of technology. One of the best business models of the last quarter century, from the founding of UPS to eBay, has been to trim inefficiencies from this category of overhead.
For your own organization, trimming the excess from this overhead is important in any economy, but may be the key to keeping the business open in the current down cycle. For large organizations – very large ones – the usual method of dealing with this is to get a third party involved to handle updating quotes for freight transportation; a freight broker services dozens to hundreds of clients and gets regular updates on prices.
What’s changed is that the technology is in place to make freight brokerage services as necessary as full service travel agents are. More and more of the freight carrying services are providing their prices in formats where they can be collated by internet search engines. This raw data allows for useful analytics on trends on pricing, delivery times and more.
Even so, many companies and organizations work out manual “Requests for quotes” and tabulate them internally to their own metrics, simply because it’s hard to tell if a broker is working for them, for another client, or trying to meet a quota with a shipping company to maintain a pricing tier. This is starting to change, and the software tools to let this change happen are becoming more wide spread.
In addition to automating the quote generation process, these software tools also improve transparency in logistical operations; they make for a substantial improvement in tracking package shipment and delivery, while helping costs stay under control.
Automated solutions give you better data, and data that’s assimilated more rapidly, for example, fully automated updates, rate changes between carriers, automated weekly fuel surcharge changes, etc. New automated tools are actually able to utilize proprietary technology to statistically normalize carrier rates and various pricing rate bases to determine optimal carriers and optimal pricing strategies for companies, utilizing each company’s unique shipping characteristics, shipping locations, inbound activity, etc.
There are many TMS software packages available in the marketplace, and many are effective in different areas, but do not have carrier relationships, know-how, or freight volume to determine and coordinate appropriate pricing strategies for shippers. Third-party logistics companies (3PL’s) have carrier relationships, but rarely have technology available to execute appropriate and effective strategies – and, at present, none have small parcel carrier compliancy available with their websites or technology, i.e. FedEx, UPS, USPS, etc.
Shippers who are able to obtain companies that offer the best fit for their particular shipping needs with an end to end logistics management software solution can realize the benefits immediately, and can usually realize a payback scenario within their corporate guidelines.