Monthly Archives: October 2017

How Does a Logistics Software Solution Compare to Third Party Logistics?

If you’re searching for new shipping solutions, you may have encountered the debate that asks: which is more beneficial to the shipping process: implementing a logistics software solution or outsourcing logistics to a third party logistics (3PL) provider? To answer this question, its helps to consider the three things that every company wants out of the shipping process: cost effectiveness, excellent delivery time, and safe delivery of freight. With these things in mind, we take a look at whether a logistics software solution or a 3PL solution offers the greatest value.

Cost Effectiveness

In terms of cost, you’ll always pay more to receive a comprehensive, innovative approach to the shipping process from a 3PL than you will to implement a logistics software solution, and the reason why is simple: when you hire a full scale 3PL provider (i.e. a customer adapter), you pay a company to do what logistics software does without employing anyone. In other words, the software allows you to become your own logistics provider. Although other types of 3PL providers can be hired for less than the cost of customer developers (i.e. standard 3PL providers, service developers, and customer developers), they don’t provide the same level of service, with standard 3PL providers and service developers only offering specific services, and customer developers handling the full shipping process without proposing new solutions.

Excellent Delivery Time

Excellent delivery time depends on route analysis and optimization, as well as the availability of integrated shipping solutions. In simple shipping situations, route analysis could consist of analyzing route time in relation to distance, road surface quality, traffic patterns, etc., while in complex shipping situations, such as global shipping or moving unfinished products from location to location during the manufacturing process, route analysis could consist of the strategies mentioned above along with developing integrated shipping arrangements that could combine road, air, sea, and rail shipping, or any combination thereof. Improved delivery time can be achieved with both logistics software and 3PL. But logistics software, due to its impartiality, will present a broader range of options.

Safe Delivery of Freight

The safe delivery of freight is achieved through freight optimization, particularly in terms of using the right stacking strategies and ensuring that like products are shipped together. The cost of broken freight is perhaps the least mentioned aspect of shipping cost, and preventing it from happening can be achieved with either 3PL (e.g. standard 3PL provider or service developer) or logistics software. However, unless a shipper is looking for freight optimization alone, using logistics software would be the better choice financially.

How Do They Compare to Third Party Logistics?

Third party logistics (3PL) is the most popular choice for freight logistics among small to midsized companies. In order to help companies that regularly make shipments that are too large to financially benefit from parcel shipping and too small to financially benefit from full truckload (FTL) shipping, companies turn to third party logistics providers to get them the best deals on less than truckload (LTL) shipping, integrated shipping methods and to reduce the delivery of products to retailers. To these ends, 3PL providers significantly reduce their clients’ shipping costs compared to what they would spend on shipping without the aid of freight logistics. But they obviously do so by charging their clients for freight logistics services.

So, what’s not to like about hiring a 3PL provider to reduce your company’s shipping costs and ensure that your goods are delivered in a timelier manner? After all, is there really such a thing as realizing freight transportation solutions without seeking the help of freight logistics experts? Yes and no. If freight logistics isn’t one of your company’s core competencies, you’ll certainly need to get logistics solutions from those that specialize in providing them. But you don’t have to turn to a 3PL provider and pay a middleman to provide you with shipping solutions when you can instead use online logistics software.

The difference between 3PL and logistics software solutions-also referred to as logistics management software-typically doesn’t lie in one having more logistics expertise than the other; rather, it has to do with how the logistics information is supplied, how much it costs and how much control companies have over their shipping process. Essentially, a third party logistics provider uses logistics management software to provide you with shipping solutions, whereas online logistics software lets you act as your own logistics provider for an affordable monthly fee. In no case will you find a 3PL provider that offers their services for the low price that you pay for logistics software solutions, nor will hiring a 3PL provider offer you as much control over your shipping options.

Having complete control over your shipping process has two main benefits: you can research the companies that you’re considering hiring and you never have to deal with a middleman’s business policies affecting the price or availability of certain shipping options. Aside of the financial and shipping management benefits offered by logistics management software, its greatest strength is its extreme ease of use. Although the term logistics software implies computer expertise, logistics software comes with an easy to use interface that neither requires expert computer knowledge or expertise in logistics, meaning that each of your company’s departments can be involved in its shipping process.

TL Shipping Software Versus Management Based Third Party Logistics – Which is Better?

Truckload logistics software is increasingly becoming the logistics solution of choice among small to midsize companies that don’t employ logistics professionals. In most cases, companies that don’t employ logistics experts or use logistics software turn to third party logistics providers to handle their truckload (TL) shipping solutions. Companies may choose third party logistics providers for a variety of reasons, but two factors that generally influence this decision are companies’ perception that they can’t handle their own logistics and the corollary perception that only companies that specialize in transportation logistics could yield the most optimal TL shipping solutions. Converse to these perceptions is the fact that many companies that lack core competency in logistics are now acting as their own TL logistics providers by using truckload logistics software. With an easy to use interface and customizable options that reflect a company’s particular shipping needs, TL shipping software offers companies an increased range of shipping options at a lower price than third party logistics.

Perhaps the greatest advantage of third party logistics is that allows companies to be free of the logistics process. However, the price that companies can pay for this negligible freedom can be costly. Management based third party logistics providers make their money by acting as middlemen between shipping companies and carrier companies, securing rate discounts from carriers and charging clients a significant amount above the actual shipping cost in order to make a profit. But in additional to simply costing more money than using logistics software, third party logistics poses another problem: because management based logistics providers only work with carriers that offer preferred discounts, they potentially exclude carriers that could offer their clients the best overall shipping solutions. When companies choose logistics software instead of renewing their contract with a third party logistics provider, they have the opportunity view a full rage of shipping options and choose those that benefit them and not a third party’s business interest.

When you consider the factors that go into determining the best TL shipping solutions, that management based third party logistics providers only consider carriers that offer a preferred discount is shocking. For example, freight optimization, shipping route optimization and the potential for integrated shipping methods are three bargain basement factors that significantly influence the overall cost and delivery viability of a TL shipping solution. Unlike third party logistics, TL shipping software examines these and other factors simultaneously, eventually identifying the best carrier in relation to each factor. Third party logistics is an expense that never goes away. Companies have no insight into their own logistics process and therefore remain trapped at the hands of profiteering logistics experts. But when companies switch to TL shipping software, they don’t just get rid of the cost that comes with paying a middleman; the increased range of shipping solutions that they experience allows them to drastically cut their shipping cost. Research shows that companies that implement logistics software can decrease their total shipping costs by 10 percent at the end of one year.

Features to Look For When Comparing Freight Shipping Software

There is a new solution coming about to reduce shipping overhead and help ensure that companies are getting the best shipping price every time they have a shipment. Although paying a little more for a package seems very minimal at the time. Continually doing so adds up and can make your yearly shipping costs seem pretty outrageous. Freight shipping software is a newer TL shipping solution that many companies are starting to use. Not all of these logistics management software solutions are created equal. Below are some things to look for that can help you make the best choice so the addition to your company’s arsenal of software and tools is worthwhile.

Many software companies that offer freight shipping software have setups that can actually cost you more money. They may require separate licenses and keys for each computer installation and charge additional fees for upgrades and other items. Look for a company that uses a relational database that can adapt to increased activity and be self sufficient. These types of databases do not slow down and continue to perform just as well as the first day they were implemented. How much the activity increases will make no difference. Companies that do not use these types of databases will not be able to offer the ability to have multiple fields per shipping order, may have trouble syncing the data between computers, and will result in slower processing time.

Many TL shipping solutions are set up where multiple instances of the software are necessary. This increases your licensing, implementation, and support costs. Look for logistics management software that does not require multiple instances of the software to be present. Company’s that use this type of application program interface will not have to charge separate licensing costs per setup, have lower implementation costs, and may offer support and updates at no additional cost. When multiple instances of software are needed, there is a high chance of two people editing the same record and the information becoming inaccurate. With software that runs from one direct location, a record will remain locked until the other person is finished and this will protect the integrity of your data.

Logistics management software should also be able to handle all your shipping needs. Some software solutions only deal with outbound shipping. This does nothing for your inbound shipping needs and these can be just as costly. Thoroughly compare software companies to see which ones offer solutions for both. Be sure that they deal with all types of carriers. Another consideration is international and domestic shipping. If your company does business internationally, you want the software to be able to compare and handle international shipping rates as well. Before deciding on a software company, sit down and determine what your shipping needs are, current problems being experienced, desired carriers, and what results you would like to receive by using the software. This information will help companies give you the most accurate proposals for managing shipments and help you make the most well informed choice.