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Logistics Software Solutions – 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.

Logistics Software Vs 3rd Party Logistics Companies

Whether you are a small company that transports your products through a shipping provider or a large company that has your own shipping fleet, saving the most money and time on your shipping arrangements typically requires the implementation of transportation logistics. However, while the efficacy of transportation logistics is inarguable, there continues to be a debate about whether it is better for companies to hire 3rd party logistics companies or to purchase logistics management software and handle logistical issues on their own. While purchasing logistics software is far and away more cost effective than hiring out 3rd party logistics companies, some companies question whether logistics management software is as effective at revolutionizing the shipping process as a logistics company. Yet, once companies implement logistics software, they soon see that the only difference between the software and a logistics company is price. For those who are still on the fence about logistics software, below we list a few of the helpful services that it can provide at the same level of quality as a logistics company.

Freight Shipping Analysis

On the surface, freight shipping can seem like a cut and dried affair. However, when you analyze the various cost factors involved in freight shipping, it becomes anything but a simple process of shipping your products from one location to another. For example, fuel surcharges, warehouse fees and load style can play a large role in determining whether your shipping process is cost effective or cost prohibitive. Without the aid of logistics, companies are basically at the mercy of shipping companies to apprise them of what shipping options make the most sense, and you can count on the fact that shipping companies aren’t in the business of saving you money at the expense of cutting into their profits. By implementing logistics software, you can examine your shipping needs according to various criteria and engage shipping companies in a bidding process until you receive the best deal.

Shipping Route Analysis

Even companies who own their own shipping fleet or deliver goods locally can benefit from logistics software. In addition to removing unnecessary costs from the shipping process, logistics software can also reduce shipping costs and improve delivery time by identifying the shortest shipping routes according to various criteria. For example, while a route that is shorter in length than another route may seem to be the timeliest transportation route, logistics software can point out that a shorter route will take more time than a slightly longer route due to such factors as road construction, traffic patterns and traffic signals.

Integrated Shipping Analysis

In addition to pointing out the best freight shipping options and the best shipping routes, logistics software may also reveal that a company could save time and money on their shipping process by integrating different means of product transportation. For example, while air shipping is often a second consideration to ground shipping due to air shipping rates, logistics software can reveal that shipping by air alone or combining air shipping with ground shipping is the most cost effective means of transporting goods. While ground shipping might offer lower rates, such factors as warehouse stops and fees and the variety of fees that can rack up from your products moving from one ground shipping company to the next can sometimes make ground shipping cost prohibitive. By analyzing the time and cost benefits of integrated shipping arrangements, logistics software can create shipping solutions that you could never create on your own.

TL Logistics Software – Frequently Asked Questions

If you own a growing manufacturing company, chances are that your shipping needs will eventually change. But that doesn’t mean that the shipping process has to become more complex. In fact, producing more goods can actually make shipping simpler, as can be seen in truckload (TL) shipping, where a company ships a full semi trailer of products direct to destination. To arrive at the best TL shipping solutions, companies have three options: hire an in house logistics expert, outsource to a 3PL provider, or implement TL logistics software-also known as full truckload logistics software-which allows companies to become their own logistics provider. Below, we answer some commonly asked questions about a logistics solution that’s quickly becoming preferred to the more expensive, less flexible options or hiring in house experts or 3PL: truckload logistics-software.

What Aspects of the Shipping Process Does the Software Address?

Logistics software addresses the same aspects of the shipping process that a logistics expert or 3PL provider would address, including route analysis and optimization, and freight optimization. However, unlike a logistic expert, it doesn’t require a $70,000-$90,000 salary to do its work; and, unlike most 3PL providers, the range of shipping options it presents are as broad as possible.

Do You Need Logistics Expertise to Operate the Software?

One of the biggest misconceptions of logistics software in general is that it requires logistical expertise of its user. When you use logistics software, the software serves as the logistics expert, presenting numerous ranked shipping options and allowing you to choose by accessing a user-friendly interface. The goal of logistics software is to cut the middleman out of the logistic function, and it does this by doing the work for you.

How is the Software Implemented?

Most providers of logistics-software offer it on both a software as a service (SaaS) model and as an internal software solution. In either case, the software is tailored to seamlessly integrate with a company’s current shipping process, and can be easily modified when shipping needs change. In the case of internal software, the provider can usually install the software and the hardware necessary to support it.

How Much Does the Software Cost and How Much Does it Save?

The cost of logistics-software varies widely according to two factors: whether it is implemented internally (more expensive) or as a SaaS solution (less expensive), and the range of logistic options required. However, either solution is less expensive than hiring a logistic expert or contracting with a 3PL provider. Concerning cost savings, research shows that companies who implement the software can reduce their total annual shipping cost by 10 percent in the first year alone.