Advantages of Logistics Software Over Third Party Logistics

For manufacturers who ship a steady supply of cargo, the cost of shipping can rival the cost of payroll. Consequently, reducing shipping costs is a full-time task for most shipping managers. Today, most shippers manage the logistical side of shipping (the part of the shipping process where costs can be cut) with one of the following resources:

  • In-house Logistics – A model of shipping logistics in which the shipping process is managed by a shipper’s own staff of experts.

  • Third Party Logistics (3PL) – A model of shipping logistics in which a third party manages one or more aspects of the shipping process.

  • Logistics software – A web-based or in-house program that allows shippers to choose its own shipping arrangements and perform important tasks such as a freight audit.

Most shippers prefer the first option, but paying a team of experts can be unaffordable. Left to choose between the second and third options, many shippers choose the latter based on the following considerations:

Cost

The cost of 3PL is based on the services a shipper receives. When a shipper receives only a few services through a standard 3PL provider or a service developer, 3PL can be affordable. However, when a shipper uses the comprehensive services of a customer adapter or customer developer, the cost of 3PL can be significant. A software-based resource can facilitate comprehensive shipping management for a fraction of the cost of high-level 3PL services.

Shipping Options

Some 3PL providers make carries arrangements using a narrow range of carrier options, such as those found in an electronic posting system. Conversely, logistics software allows shippers to choose from a limitless range of shipping options based on the appropriate shipping model (e.g. less than load or truckload), and perform a freight audit to monitor shipping costs.

Control

Shippers who use 3PL commonly complain that the shipping process feels too removed-a complaint that often results from the failure of a 3PL provider to provide ongoing, in-depth communication to the customer. Using a software-based resource eliminates this issue by placing the shipper in full control of the shipping process.

Permanence

When shippers use 3PL, they often go through multiple 3PL providers as their shipping process evolves, beginning with a standard 3PL provider and eventually using the services of a customer adapter or customer developer. In addition to being more expensive than using a software-based resource, switching from one 3PL provider to another requires forming new business contracts, continuously delegating more shipping tasks to a third party, and implementing new standards for quality control.

Most shippers wish to implement a permanent logistical solution as soon as possible, and implementing a software-based solution is the best way to do it. After the solution is implemented, it options can be changed as the shipping process changes, providing a seamless transition that does not require the customer to look for a new service provider.

Conclusion

For many shippers, logistics software is the most cost effective logistical resource. In addition to allowing shippers to choose from the broadest range of carrier options, it allows them to perform important tasks (e.g. freight audit) without the assistance of a third party. To learn more about the benefits of software-based logistics, contact a provider of transportation software.

Freight Logistics Software Vs Third Party Logistics: Which Is Better?

Today, two types of freight solutions appeal to shippers that rely on carriers: logistics software (a.k.a. TMS software) and third party logistics (3PL). Logistics software allows shippers to become their own logistics provider by using a software program, while 3PL providers negotiate arrangements between shippers and carriers. Frequently compared and contrasted, logistics software and 3PL each offer unique benefits. However, the former has the following important advantages:

Less Expensive

Standard 3PL providers and service developers, which offer particular services and not comprehensive solutions, are usually quite affordable. When you hire a provider that offers innovative management of the shipping process – namely, a customer developer – the cost can compare to hiring an in-house logistics department. Logistics software provides logistics through a software as a service (SaaS) platform. It can also be implemented as an in house solution. Instead of relying on a costly customer developer, you can save money and realize more control by using a software solution.

More Control

A top complaint of 3PL customers is they feel distanced from their shipping process and the entity that manages it. Different 3PL providers have different approaches, but few of them integrate the shipper in the shipping process in a formal capacity. For some shippers, having the shipping process fully managed by another entity is appealing. Due to its expense and vendor issues it involves, most shippers wish to be involved in the process. Freight logistics software does more than “involve” shippers in their own shipping process; it puts them in control of it.

Better Options

3PL providers make freight arrangements by listing an available load in an electronic posting system, where it can be matched with an available carrier, or by negotiating with carriers that don’t use a posting system. Because the former method is usually the easiest, many 3PL providers use it to arrange the largest percentage of shipments – a scenario that limits shippers to carriers who use a posting system. Logistics software removes this barrier and exposes you to more carrier options. In some instances, a shipper misses the best carrier option because the carrier who could provide it will not work with the shipper’s 3PL.

Greater Security

No shipping process is as secure as one that the shipper handles on its own. When outsourcing to a 3PL, shippers naturally lose the capacity to scrutinize the carriers with which their loads are placed. Although 3PL providers select carriers with the customer in mind, they also select them with themselves in mind – a dichotomy that can jeopardize the interests of shippers. Freight logistics software alleviates security concerns by putting you in control of the shipping process.

Conclusion

Logistics software is a viable replacement for 3PL, particularly for shippers who wish to control their own shipping process. Next to payroll, shipping is the second largest operating expense for most shippers. This means that rejuvenating a stale shipping process with better carrier options can have a significant impact on a company’s bottom line – an impact that logistics software allows you to achieve.

Streamline Shipping With Parcel Shipping Software

No matter the size of your company, if you rely on heavy shipping to make your money then you need to make sure you have the best software available. Mistakes made in shipping will not only cost you time and effort, it will also cost you customers and a lot of money. Think about major companies that handle only shipping like UPS, FedEx, and others. These companies must have the most advanced software around in order to make sure that the millions of packages they handle a year get to where they need to get to. We only hear and talk about the mistakes, lost or late packages, but think about it

For handling over a million packages, boxes, bags, envelopes and other things a year, these major shipping companies make a mistake less than one percent of the time. That is a great success rate and any company that has to ship products, advertisements, or anything else for that matter would love to have that kind of success rate as well. That is why you need to have the latest shipping software that can help you stay organized and keep your company moving forward. The reason these major companies have so much success with so many packages is because they have their special software that simplifies things for them. There is no way global businesses be able to handle the enormous volume of shipping they have to every year with such a high success rate if they did not have UPS and other parcel shipping software systems.

If you have a smaller company you may not need the exact same kind of software as some of the billion dollar companies do but you will need some shipping software none the less. It is important that you are able to keep your customers happy and make sure you run a smooth, organized, and efficient shipping program no matter what it is you are shipping. UPS shipping software is a great example of this because if anyone in the company has any confusion about a package, the software will eliminate the confusion without the need to bring the customer back in or cause any delays at all. So many companies offer products similar to other companies at prices that are also similar. What separates many of the companies is the service they can offer to their customers, people are willing to pay a little more for better service. So if you are able to get a client a product quickly, with no delay or mix ups, then you have insured that they will be a repeat customer for years to come.