If your operation is desperately looking for supply chain management tools, the process can be quite intimidating. There is a veritable ocean of possible solutions to choose from in today’s market. No one ever said having options was a bad thing, but too many options can make finding the perfect solution tougher than it needs to be.
If you’re looking to get a jump on gathering some information about some best in class logistics management software, our comparison guide can get you started.
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Logistics planning software takes many forms and is invaluable in the world of supply chain management. The rest of this guide will focus on what logistics management solutions are, what they can bring to managing third-party logistics (3PL) operations and how to choose between an integrated or standalone logistics management solution.
What Is Logistics Management Software?
Before we get into the in-depth discussions, having a working definition of logistics management along with some features and benefits of the software is key. If you’re new to the logistics world, this is the perfect place to start. Veterans, feel free to skip down the page to our more focused discussion on some higher level logistics management topics.
On a basic level, logistics management is all about strategy. Supply chains are composed of a variety of complicated moving parts, and when one of them starts to fail, the entire chain suffers for it. Logistics management attempts to lay out a thorough plan that avoids any such errors and keeps things moving accurately and quickly.
Both information and goods travel along supply chains and are vital to each other’s success. In order to gain visibility into how this important cargo travels, software for logistics management streamlines the planning and control of each necessary step.
We are going to take a look at three different types of software: warehouse management systems, enterprise resource planning (ERP) systems and SCM suites. As we said earlier, many operations (3PL providers included) can have a tough time finding the perfect fit. 3PL companies, in particular, need a software solution that gives them the specialized tools they need to succeed. In light of this, let’s see how logistics planning software helps manage 3PL.
Logistics Software and Managing 3PL
As a 3PL provider, managing an outsourced multi-warehousing operation can be difficult, but the right logistics management system software can guide you to success. Of course, this is easier said than done, considering the huge selection of third-party logistics software tools on the market. Nevertheless, it‘s worth your consideration, because a proper solution can turn a good operation into an optimal one.
According to a recent study from State of Logistics Outsourcing, the right third-party software can substantially reduce costs across the board. For instance, a high-functioning 3PL system reduces fixed logistics costs by an average of 23%. There are all kinds of different reasons for this, but the primary explanation is simply that things happen faster.
Supply chains are all about efficiency and real-time control because time is money. If you have a software solution that can pay rent, monitor machinery, conduct performance evaluations, send out invoices and log incoming deliveries, your operational routines are going to get faster. There’s no need to remember key tasks or prepare to complete them manually.
The Importance of Logistics With 3PL
In the time it takes you to identify and approach a task, a 3PL software will have already ticked it off the list. This is the beauty of automation, and it makes your warehouse quicker, cheaper and more productive. This is not to say that finding the right software is always easy. With so many logistics tools on the market, it can be difficult to make the right choice.
Ultimately, all companies have different requirements, so different aspects of the software are prioritized. For example, 55% of shippers judge 3PL software based on its scalability. They want to invest in solutions that grow alongside their company. Then again, 42% pick providers with great customer service, which is closely related to longevity.
If this is your first 3PL software purchase or you haven’t changed your software in a long time, browsing through the different 3PL providers can be a little daunting. Fortunately, there are some core features and functions that you can prioritize during your search. Plus, to make things simpler, we developed our own list of important considerations:
There are few downsides to utilizing 3PL software, but one of them is the fact that you’re working with another business. Obviously, this can’t be avoided. Whatever provider you choose will have its own objectives. In fact, it’ll share processes across a large customer base, rather than offering a bespoke service to all customers.
This isn’t a problem, as long as your provider offers the best possible technology and invests in applications that are inherently customizable. Find out how much the vendor spends on technology in a year. Look at how much of the annual budget goes towards innovation projects. You want to be sure that their IT strategy and roadmap are in sync with your own.
In many ways, this is the most important consideration of all. It is no secret that adding a new logistics management suite to an operation can be rather expensive. If you are looking to make the most out of integrating a new system it needs to be able to scale with your operation as it grows. A perfect logistics system will have no problem keeping up with your enterprise and can adapt to changing environments.
Ideally, you want a 3PL software with the capacity to incorporate new inventory almost instantly, because efficient inventory management is an essential part of infiltrating new markets. Even in the short term, scalability is important, because warehouses and distribution centers deal with fluctuating stock. From season to season, your inventory management might be very different. You need a 3PL software that shrinks and expands on cue.
Access to Vital Data
Now that there are so many 3PL software providers around, companies are looking for extra perks. They’re gravitating towards software systems that offer something a little extra, whether it’s connections to other supply chain resources, access to industry research or peer-to-peer events. Ultimately, it’s up to you to decide if those perks and incentives are valuable.
It doesn’t make a provider unworthy if they don’t offer them, but it’s certainly helpful to have access to insider knowledge and further business intelligence. Again, this is about longevity. If you’re going to stick with a 3PL software for several years, you should look at a 3PL provider that consistently offers great value for its customers.
The Changing Face of Third-Party Logistics
Traditionally, businesses have been reluctant to share too much information with third-party providers. This is something that may soon have to change, as customer demands become more complex and technology collects and collates more data. There are bound to be challenges and even risks, but close interactions with 3PL software providers can help your supply chain evolve.
Inclusion in long-term planning is not only empowering, but it offers a chance to cut costs, minimize waste, and build distribution systems that are fit for the future. It could be time to look beyond core features and select agile, flexible solutions with the ability to grow and change. If you want to reach the top and stay there, you must invest in scalability.
While some enterprises have been reluctant to jump on the 3PL bandwagon, third-party logistics are quickly becoming integral to warehousing portions of supply chains. As demand for optimal supply chain performance rises to meet a growing client base, 3PL providers are taking matters into their own hands and releases software suites with their needs in mind.
As 3PL companies step into the software ring with solutions that meet their requirements their services become even more attractive than they have been in the past.
Choosing a Solution
As we mentioned earlier, the variety of logistics management systems and the unique needs of businesses make decisions more difficult. However, this also increases the importance of choosing the right logistics management solution. In order to find the best logistics software suite, you need to know what you require out of your software for logistics and which type of solution to go for.
Defining Your Procurement Requirements
Before you dive headfirst into the sea of logistics management software, you need to know what issues a new solution should solve. Purchasing a brand new system without knowing what you need to fix is a great way to throw time and money out of the window.
Talk to the users of your current system and find out what does and doesn’t work; everyone that interacts with your software system should be included when considering a new solution. Ask yourself and your team some probing questions to properly identify what needs improvement and if now is the time for a new system.
Here are a few sample questions you could ask to get started. If you need a better idea of how to identify your needs take a look at our requirements template for some guidance:
Does a new procurement system fit into the budget?
Don’t be dazzled by a high price tag. It’s human nature to see an expensive product and then immediately assume that it has to be the best choice. This could not be farther from the truth when picking out a new procurement system. If you’re running a massive operation, the complexity of one of the more expensive logistics software systems may be a fit, but a smaller enterprise may find that the extra functionality only slows things down.
What are your pain points?
Before you start adding vendors to your shortlist, take a moment to identify where your operation is not performing up to expectations. If you know what you need to fix you can quickly identify logistics management software that won’t work for you. This way you can focus on a solution that caters to the aspects of your operation that need some work.
Is the acquisition of a new logistics management system time sensitive?
If your operation is in need of a logistics solution right now, then deployment and integration should be somewhere near the top of your list. A complicated on-premise integration may be to time intensive for an enterprise looking to get going with a logistics management system as soon as possible.
Figuring Out the Basics
Anyone running a warehousing operation is looking for ways to cut costs and increase speed while limiting errors; this is where a warehouse management system can step in. If you are considering a standalone solution that focuses on logistics, keep in mind that a full SCM based suite can tackle all operations instead of just one.
Not all standalone suites are completely isolated, some come with functionality that supports transportation management and warehousing. Most of the time, these extra functions included in standalone products are a bit limited. If you’re looking for a software solution that can handle the full range of supply chain management an SCM package is what you are looking for. This type of package covers all of your bases and handles everything from planning to executing processes across your entire chain.
While standalone products don’t come packed with as much functionality, they can still handle some processes like picking, packing and inventory control. On the other hand, a full ERP system solution helps boost data visibility which in turn can help managing users find out where their supply chains are under performing.
Some Valuable Features and Functions
Before picking out a software solution for your operation, you have decide if it solves your unique needs. If you take a look at some functionalities specially crafted for 3PL providers you can find some great examples of solutions that can boost your productivity and strengthen your supply chain.
Services That Add Value
If your operation includes processes like kitting or product assembly you would most likely benefit from a product that focuses on cutting costs for these processes. Here, a standalone logistics solution shines, but keep in mind that a very complex operation would work better with a full SCM suite. If your clients require special labeling practices a robust ERP suite may be more your speed.
Architecture Support for Multiple Clients
A warehousing operation commonly takes care of more than one client at a time. Considering this, your logistics or SCM software needs to be able to handle the purchase, shipping and inventory processes needed to satisfy multiple clients. Cloud-based models can be attractive with their low cost of entry and ability to safely store data, but be warned. You’re going to need more than the ability to handle a multi-client situation, so make sure that isn’t all you are getting.
Regardless of your choice between a full SCM suite or a standalone product, you’re going to need accurate tracking abilities. Whatever you end up choosing needs to be able to invoice customers and create service contracts quickly. 3PL providers often leverage invoicing tools to help give a clear view of what is being received and stored in an operation.
It isn’t exactly news that 3PL providers have to work in tandem with a variety of parcel carriers. Warehousing requires relationships with carriers like FedEx, and the easier this interactions happen the better off your supply chain will function. Finding a solution that automates the sending and receiving of shipping data should be a priority as the time saved from automating these tasks is very valuable. Not only that, but automation helps reduce the number of errors generated in this type of process.
Web Portals Access for Clients
Web portals for clients are very valuable as they give 3PL providers the ability to control inventory off-site. In this way, a 3PL provider can provide stock figures and important shipping records via remote access.
Inventory Management Through Vendors
If your operation offers inventory that vendors can manage, looking into a logistics solution that can automate stock replenishment requests and recording processes is a good investment. This way, the speed of your deliveries grows as clients can skip the long-form order process required for unique packages when they are repeating a shipment. Luckily, this sort of functionality can be found in many SCM based packages.
Choosing a Solution
Now that we have gone over some common features, we can decide which route is the best to choose. When it comes down to it, a standalone logistics solution or integrated SCM suite both work very well depending on the operations that use them.
A standalone logistics management system is a better choice when the complex functionality of an integrated SCM solution is not necessary. Overpaying for advanced functions that go unused doesn’t help anyone out and only wastes resources. If you are looking to optimize more of your supply chain that just your warehousing portion an integrated SCM suite is the better choice.
Complexity in a solution isn’t a bad thing in the world of logistics, what matters is how these complex functions strengthen your supply chain. If efficiency is suffering across the entirety of your operation or your clients require specialized shipping methods an integrated SCM package has your bases covered. Don’t undersell your needs, if a larger more complex solution is required go all the way.
If you take the time to pick a solution that fits your operation perfectly you will see an upturn in efficiency almost immediately. Find out what ails your supply chain and focus on resolving those issues with a software solution that scales with your operation.
The right logistics software can make all the difference for your supply chain. Identify what your operation’s must-have requirements are and select a program that gives you a boost where you need it. With the proper planning and execution, you can turn a sluggish supply chain into a well-oiled machine.
How has your supply chain grown after incorporating a logistics solution? Let us know with a comment down below!