How Logistics Software Reduces the Cost of Transportation
From tougher global trade conditions to growing driver shortages, 2018 is chock-full of challenges in logistics. One of them is freight management.
Shipping costs are moving skyward with a 4.9% rate increase announced by FedEx, UPS, and similar carriers. The trucker’s market alone keeps breaking records. DAT RateReview has revealed the average US trucking rates reached $2.32 per mile in June 2018 ($0.52 growth compared to 2017). July has seen another boost totaling $2.45 per mile.
The logistics industry experts explain this quick rise by the steady growth of the global economy. It is projected to reach 3.9% in 2018 the International Monetary Fund predicts. Another supply chain driver is e-commerce. Statista’s report says it can attain as much as $4.5 trillion by 2021. These trends bring a high demand for qualified drivers and carrier services and rising fuel costs ($70/barrel).
Transportation Management Software Benefits
Transportation or Freight Management Systems are gaining in popularity among logistics companies of all sizes. The freight management software market is predicted to expand from $10.76 billion in 2018 to $17.45 billion by 2023. This interest is stirred by strong returns on investments since the adoption of TMS saves between 5-10% of the transportation costs. The payback time usually takes 12 months increasing logistics budget savings.
TMS enables efficient management of freight distribution, planning, and settlement in real-time and across all operations. When integrated with the Enterprise Resource Planning’s (ERP) purchase system or similar software, it can smooth accounting, reduce inefficient data processing, and improve communication among supply chain partners. The core features allow tracking of fleets, planning of routes, keeping track of fuel used, calculating revenue earned from freight transportation, generating detailed freight reports, consolidating shipments, etc.
The next-gen TMS is even more beneficial. It can be used either on-premise or in the cloud. Some TMSs are subscription-based and some are developed upon request with a great bunch of customization opportunities like the ones built by the Innovecs Team. New platforms are powered by real-time metrics covering all modes of transport, be they land, ocean or air.
The uberization feature is another great aspect that can be enabled. It helps shippers pick up carriers they require and trace freight movements via cell phones. There are a number of ready-to-use marketplaces including Uber Freight, UShip and the like. TMSs can integrate with these applications making transportation management far easier.
Warehouse Management System Advantages
The Warehouse Management System is another multi-purpose, long-time logistics software solution. The stats revealed in Peerless Research Group (PRG) say 41% of the surveyed companies are going to upgrade or purchase WMS looking for features as real-time stock tracking (43%), inventory monitoring (36%), and effective labor-management (26%).
Surprisingly, 15% of the companies said they had been using WMSs for 15 years without updating the software. That said, the demand for powerful warehouse management solutions is still high. Statista predicts WMS market growth up to $4.1 billion by 2024.
The average WMS aims to simplify both outbound and inbound logistics. Its functions embrace anything from the order and inventory maintenance to tracking transportation unit appointments and status. Integrated with the core logistics software, WMS can help reduce transportation expenses thanks to increases in shipping accuracy, e.g. scheduling precise pickup times, shipping the right goods to the right customers, notifying carriers about future loads in advance, avoiding double charges for shipments, etc.
How can WMS implementation minimize transportation costs in logistics? Indirectly, through better labor allocation, storage usage, freight safety, delivery lead times, and inventory management. Efficient warehouse management means shipments are made on time and in the right quantity. There are no unscheduled deliveries, lost freight or other hassles resulting in extra shipping charges.
Off-the-shelf vs Custom Logistics Software
When a logistics company has made the decision to implement supply chain management software, the next step is to choose between out-of-the-box and custom solutions.
There is no one-size-fits-all approach. Every business has individual needs and impediments to overcome. Most likely, smaller carriers or storage owners should choose ready-to-use logistics software for a moderate subscription fee. However, these solutions often lack integration capacities and functionality tailored to their specific business requirements. As the business grows, this shortage may eventually turn into the biggest bottleneck.
With custom logistics software the price tag increases but developing a custom-built logistics software definitely pays off in spades. It can expand well beyond a standard set of operations and integrate with uber-like apps tracing freight via mobile phones.
At Innovecs, we have accumulated hands-on experience in delivering customized warehouse and transport management systems. We place a strong emphasis on meeting the business requirements and providing ongoing technical support of the software upon its deployment.
Within a year and three months, our software engineers have rebuilt a complex supply chain management software having 2 million lines of code and a full set of supply chain management functions including order and inventory maintenance, reporting, billing, labor management, warehouse zones assignment, etc.
If you are considering developing a custom solution, contact Innovecs. Our team can advise you on the most suitable technology solution and explain our engineering expertise in detail.