How Logistics Companies Can Gain Competitive Advantage with Customized Software Solutions?
Fluctuating consumer demands, increasing client requirements, and complex business models are posing critical challenges for logistics companies today. According to predictions made earlier this year, two major drawbacks are to be witnessed in the industry.
With drastic changes hovering over the logistics industry, the players are bound to stay equipped with the emerging technology trends, or they might get caught off guard. While its turning imperative for logistics companies to transform with smarter technologies, the question of whether to choose a custom software or an off-the-shelf package still lingers in many minds.
Why Choosing Customized Solutions Over Packaged Software Considered Profitable In Logistics?
Purchasing an off-the-shelf software would sound comparatively simple, stress-free and time-effective. But in the long run, it’s always a custom-built solution that pays off.
Most packaged logistics software, although sophisticated and deployed of disruptive technologies, pose standard solutions for the industry as a whole. Of course, they solve the major supply chain hassles. But with every business, possessing unique procedures, workflows, and objectives, “not everyone fits the same mold”.
So what happens when you choose a packaged software solution for your logistics business?
1. A packaged software often comes with hordes of features. This sure sounds exciting at the beginning. But when you have to pay for more than you use, it sure isn’t a happy moment! Off-the-shelf software solutions are often crafted considering the large players of the industry. Their features focus on resolving the common challenges faced by these companies.
However, in a complex industry like logistics, it’s not always necessary for every company to face the same kind of issue. Hence, with packaged software being available as a whole for a single price, businesses usually end up wasting money on features they do not need.
2. Off-the-shelf logistics software utilizes the latest and advanced technologies to cater to the complexities of an industry. But however, at times these sophisticated technologies complexes situations even further. For companies with basic knowledge on latest technologies, would definitely find it difficult to carry out operations successfully with a sophisticated system.
Moreover, they would have to spend extra time and money on training staff, which is not reasonable in a highly competitive industry like logistics. As mentioned before, with plenty of features, packaged solutions often prove to be less user-friendly and more complicated.
3. Although packaged solutions solve a list of logistics hurdles, their features might not provide a complete automated solution. You might find a good Transportation Management System (TMS) that enables real-time tracking and automated reporting, but you might still have to communicate with your customers, and assigned drivers manually.
Also, an efficient packaged TMS system might have an integrated warehousing management system, but might not facilitate an appropriate billing system, leaving the need to adopt alternate transaction processing systems. Hence, in a nutshell, complete automation is often unattainable with packaged software solutions.
4. The most eminent reason to not opt for a packaged solution is that they are rigid. There is hardly any packaged software company that allows customization. It’s not only rare to find a packaged software that caters to all your business-specific needs, but it also proves to be non-scalable in the long run.
Growth in your business and changes in the market will bring about an increase in your technology requirements. This will result in the need for a solution that can be customized with your growing business necessities.
Customized logistics software eliminates all the above-mentioned drawbacks of a packaged solution. Plus, it always comes with continuous technical assistance to simplify the technology transition in your company.
Let’s take a quick look at how a customized Transportation Management System can help you battle logistics challenges better.
How A Customized TMS Can Enhance Your Supply Chain Efficiency?
Investing in a customized TMS can enable you to create an Uber-like platform for your logistics business. Integrating the latest in web and mobile application solutions, you can create a platform that completely streamlines your driver, client, and cash-flow management.
Enabling centralized data management, transparent billing, delivery match capabilities, along with real-time monitoring and customer insights capturing; a customized software solution can be framed to automate your entire end-to-end logistics operations.
A custom-built mobile application can further enhance productivity with less paperwork, better transparency, easy communication, and improved customer engagement. Implementing a customized solution would also let you add in innovative features that help you automate critical tasks, improve team collaboration, and increase your overall company efficiencies.
Here is a shortlist of benefits that you can acquire with customized logistic software.
1. A customized software solution gives the advantage of integrating with smarter technologies to simplify the minute challenges faced by the industry. For instance, along with assigning and managing truck drivers, a logistics company also faces difficulties in maintaining and verifying driver documents. Integrating with smart apps like Camscanner can simplify these documentation verification complexities.
2. A logistics company with varying client needs might often find difficulties in choosing apt carriers for a given order. A customized solution gives you the benefit to add in features that simplifies such decision making by suggesting the best available carriers for the orders.
3. Although packaged solutions streamline drivers assignment and management, yet they blackout on some eminent functions that logistics companies struggle to maintain. For example, calculating the detention hours/rates of the drivers are likely the most critical task of a logistics company. Through a customized logistics software you can straighten such bends of the industry.
4. With customized logistics software, a logistic company can embrace a completely streamlined and user-friendly accounting system that generates automated invoices as well as tracks any misleads or accounting errors.
Customized logistics software can simplify your logistics operations more than you can imagine. If you are looking for a tech partner to help you add in these features and more to your logistics software, then you have landed on the right page.
Fingent is one of the leading custom software companies providing advanced and user-friendly web and mobile technology solutions for logistics businesses worldwide. Contact us today to know how our custom software solutions can enhance your business abilities.
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Here are 8 ways how a good transportation management system could make a difference to your business if you are a 3PL or NVOCC operator.
With the expansion of world trade and multinational business activity, more and more organizations are keen on operating globally and making their presence felt in the global market. Transportation and logistics play a huge role in helping such organizations expand their business and establish new business relationships. Large businesses prefer building their own teams to handle their supply chain & logistics requirements.
However, research reveals that more than 80 percent of all Fortune 500 and Fortune 100 companies use some form of 3PL (Third Party Logistics) services to handle their logistics and supply chain processes. This is because third-party logistics providers usually have a huge network, which offers a competitive advantage over in-house supply chains. Outsourcing logistics also help the organization by saving time, effort and money involved in maintaining the in-house logistics process.
3PL is, therefore, a highly competitive market and providers must compete to win and retain their clients. Providers typically specialize in transportation, warehousing, order management and other integrated services, which can be scaled or customized to meet the customer’s specific need.
Challenges faced by 3rd Party Logistics Service Providers
Effective utilization of time is one among the most critical factors that determine the success of any logistics service provider. 3PL providers should be able to support customers by minimizing the inbound lead time, i.e., the amount of time taken from the point of placing an order to the point the shipment is received by the customer. To achieve this, providers should be able to effectively communicate and coordinate with the shipping agents, transport carriers, customs agents, etc. on a prompt and timely basis.
Lack of Infrastructure
Lead logistics providers are 3PL providers without their own assets, who have specialized industry expertise along with low overhead costs. However, they have lower negotiating power since they have with them fewer resources to offer compared to other service providers in the market. In such a situation, the success of the 3PL provider depends on their ability to partner with independent transport carriers and offer competitive rates to customers.
It is a difficult task for small and mid-sized 3PL providers to keep track of information related to all their shipments. There are different types of documents involved in international trade transactions. These include purchase orders, bills of lading, air waybill, cargo insurance certificates, commercial invoices, packing lists, delivery note, certificates of origin, dock receipts, export licenses, etc.
Management of transport documents is a challenging task due to the administrative process involved, large volumes of documentation, transfer of the document and ownership of goods from one party to another. Logistics service providers must ensure that the right set of documents are transferred between the shipper, consignee, notify party, transport carriers and other parties involved in the transaction.
Lack of Reporting Systems
In most cases, the upper-level managers working with 3PL service providers and Non-vessel operating common carriers (NVOCCs) tend to focus on their core activity of transportation and logistics management. This leads to situations where they do not have enough visibility or insight into the other functional areas of their business. Depending on the size of the business, poor management of the business processes and resources could result in the loss of up to hundreds of thousands of dollars each year.
Benefits of a Transportation Management System (TMS)
3PL providers could utilize transportation management systems to refine their existing processes and improve overall efficiency. There are many ways of automating the logistics process, including tracking and monitoring each delivery. Some of the key features offered by Transportation Management Systems include:
Transportation management systems help logistics service providers (LSP) to streamline their order management process by integrating their ERP and distribution modules. This adds a lot of value to LSPs, especially in situations where they have to manage large amounts of shipment or order data from multiple sources. It also offers customers the ability to track the status of their orders or shipments.
Supply chain transactions involve various sets of standardized documentation flowing from the buyer to the seller, documentation required for trading or banking requirements, and also by customs authorities. In case the shipper, consignee or notifying party does not have a dedicated team to handle their supply chain & logistics process, LSPs play a vital role in managing the documentation and supporting them in complying to commercial laws like the Incoterms. Transportation management helps in automating the documentation process and allows for the generation and transfer of shipping documentation using the system.
Electronic Data Interchange (EDI)
EDI has become a crucial part of modern business, allowing for the electronic exchange of business documents between trading partners. It helps service providers to communicate with their trading partners and electronically transfer documentation like purchase orders and invoices. EDI solutions help by leveraging various transaction sets like:
- 204 – Motor Carrier Shipping Information: Used by shippers to tender an offer for a shipment to a full truckload motor carrier.
- 210 – Motor Carrier Freight Details and Invoice: Sent from the carrier to a shipper, consignee or third-party payment center for payment of freight charges.
- 214 – Motor Carrier Shipment Status Message: Used by transportation carriers, such as trucking companies, to provide shippers and consignees with the status of their shipments.
- 990 – Response to Load Tender: Used by motor carriers to indicate whether it will pick up a particular shipment previously offered by the shipper.
- 997 – Functional Acknowledgment: Serves as a receipt, to acknowledge that an EDI transaction or a group of transactions was received by the remote party.
Rate Sheet Management
Freight rates are made up of a complex combination including the type of load, base rate, surcharges, equipment charges and other additional charges. Cargo may be transported in various loads depending on the mode of transportation, for e.g., as FCL (Full Container Load) or LCL (Less than Container Load) in case of sea freight. Each mode of transportation could, therefore, have an implication on the rate of the shipment. Transportation management systems help LSPs to create rate sheets for the specific service they offer and assign them to a customer or vendor based on the contract and rates agreed. Shippers can access the system at their convenience and manage or review the applicable rates before they place the order.
Dispatch management provides the capability to dispatch, deliver and track shipments. It allows LSPs to track the shipments, review driver activity, locations of pickup and delivery, manage load types like FTL or LTL, split trips, etc. A good dispatch management software could help LSPs to consolidate shipments from various customers and review the dispatch process handled by different vendors, which in turn saves a lot of time. It offers a business opportunity for owner-operators and independent drivers, to engage with the 3PL or NVOCC provider and track their upcoming, ongoing or previous shipments by using the service providers system.
Smartphone-based GPS-tracking systems provide logistics service providers, especially trucking companies, with real-time information regarding their shipments. 3PL and NVOCC operators will be able to track the location of trucks managed by their vendors and assign shipments or orders to the relevant trucks based on their GPS location and route.
Warehouse management systems allow 3PL companies and NVOCC to manage customers, processes and billing schedules. The system enables access to real-time information and provides integrations with warehouse management technologies, including e-commerce shopping carts and QR or barcode scanning. The software also helps operators to manage different stock levels in warehouses, streamline the supply chain process, and satisfy customers by keeping them updated and informed on the status of their cargo.
Data Warehouse ETL and Reporting Tools
Logistics service providers have to handle large amounts of data related to shipments, their weights, sizes and contact details or returns on a regular basis. This leads to an incredible amount of information over time that has the potential to be analyzed for identifying business trends. This, in turn, could help the service providers to take important business decisions based on real-time data. It would also help conduct detailed cost-benefit analysis to improve profitability and optimize on-time deliveries to ensure customer satisfaction.
Timely and reliable delivery can mean the difference between repetitive business and a one time sale. Hence, the ability to plan, optimize, execute, analyze, and react to every logistics requirement is a critical factor that determines the success of any 3PL provider. Transportation Management Systems help 3PL providers to streamline their business processes and resolve any operational challenges that they are facing. It provides a competitive edge and improves their ability to manage and dispatch orders, with a lesser lead time. A good transportation management system could thus help 3PLs to reduce transportation costs, lower total cost of ownership and increase customer satisfaction.