Shipping Management Software Vs Freight Brokerage: Which Is Better?

Many shippers spend nearly as much on shipping as they do on payroll. Consequently, they look for ways to improve freight management with the goal of reducing freight costs. When creating a logistics department would be too expensive, most shippers implement logistics software or hire a freight broker. Also known as shipping management software, logistics software allows shippers to become their own logistics provider by supplying them a comprehensive logistics function. Also known as Third Party Logistics (3PL), freight brokers make carrier arrangements on shippers’ behalf.

Both options can yield solutions that combine quick delivery time, excellent freight care, and affordable rates. But logistics software offers certain advantages that freight brokers often don’t, beginning with low service cost.

Low Service Cost

Not all brokerage options require a significant investment. But the ones that don’t are oriented toward specific logistics services (e.g. cross docking, and tracking and tracing), not comprehensive solutions. For complete management of the shipping process via 3PL, a shipper must use a customer adapter or customer developer, which could cost as much as maintaining a logistics department.

Excellent Customer Service

The number one complaint among 3PL customers is a feeling of distance from the shipping process. In many instances, this is the result of what 3PL is supposed to do: take the logistics function out of a shipper’s hands. But many shippers discover they want more control over shipping than they first believed. Logistics software eliminates distance between the shipper and the shipping process by allowing the former to become its own logistics provider.

Broader Shipping Options

A freight broker will provide more options than you could realize on your own, without the aid of logistics software. But those options could be limited compared to the options offered by logistics software. Some freight brokers use electronic posting systems, where available carriers are matched with available loads, to arrange shipments. While using these systems is a valid strategy, it should not be the only strategy, as it often is. Logistics software empowers shippers to form relationships with carriers who don’t use posting systems.

Control of Shipping

Almost every shipper wants control of the shipping process. But when creating a logistics department would be too expensive, many shippers relinquish the process – and control – to a 3PL provider. Logistics software gives you the same control over shipping as a logistics department would, but a fraction of the cost. If problems arise with the software, or if you need new logistics options, the software provider can resolve the problem or make the necessary changes.

Conclusion

The shipping process involves significant costs, which can be mitigated by implementing a strategic logistical solution for transportation management systems. Although freight brokerage is a valid option, it often lacks basic benefits that shipping management software always provides: low service cost, broad shipping options, and control of the shipping process. Logistics software is often advertised as a solution for small to midsize shippers, but it can also benefit large shippers who wish to save money by not hiring a team of in-house logistics experts.

LTL Software Versus Other Logistics Resources

LTL Software is logistics software that is designed for shippers who need Less than Truck Load (LTL) shipping arrangements. Unlike a Full Truck Load (FTL) shipment, in which a semi trailer contains the freight of one shipper, an LTL shipment combines two or more shipments from different shippers into a semi trailer. This arrangement can benefit shippers that have a small to medium shipping volume in one of two ways:

  • It can be more cost effective than parcel shipping
  • It can be more cost effective than FTL shipping

A potential drawback of LTL shipping is that, depending on the number of times a shipment is sorted and routed during transit, it could take longer to reach its destination than is acceptable. When freight has a wide delivery window, this issue doesn’t pose a problem. When it has a narrow delivery window, delivering it via an LTL airfreight carrier, or combining into a full truckload and transporting it to a break-bulk facility located in the region of its delivery may be better options. After arriving at a break-bulk facility, LTL freight is separated and sent to its destinations.

LTL Softwareand Other Logistics Sources

LTL Software is an alternative to two sources of logistics that can also arrange LTL shipments: an in house logistics department and a freight broker, also known as a Third Party Logistics (3PL) provider. As small and midsized shippers know well, creating an in-house logistics department to oversee a small to medium volume shipping process can be cost prohibitive. But by the same token, not having a logistics resource can make the shipping process unaffordable. Faced with this dilemma, many shippers turn to 3PL providers for logistical expertise.

Today, there are four types of 3PL providers that offer different types of service. Standard 3PL providers offer the most basic shipping services; service developers offer value-added shipping services; Customer adapters manage an already existing shipping process; while customer developers manage an already existing shipping process and propose new shipping solutions.

How does logistics software compare to the services offered by these providers?

It does not manage the shipping process, but it allows shippers to manage it in the same capacity, and with the same resource-based effectiveness, as the 3PL providers above. By using logistics software instead contracting with a 3PL provider, shippers can pay less for shipping, gain control of the shipping process and realize more shipping options. Some 3PL providers arrange shipments using an electronic posting system, where available loads are matched up with available carriers. But logistics software can present options that aren’t available in a posting system.

Conclusion

LTL software is an ideal solution for companies that need an affordable alternative to 3PL or creating an in-house logistics department, one that doesn’t sacrifice the resourcefulness that these options provide. To learn more about how LTL software could benefit your shipping process, and how you can benefit from implementing it on a Software as a Service (SaaS) model, consult a provider of logistics software.

Inventory Software Steps That Will Maximize Your Inventory Investment While Reducing Your Expenses

You might not think that your business needs to use inventory software, and maybe this is true if you are in the very beginning stages of running a business.

However, once you were truly up and running you would be doing yourself a terrible disservice if you were not putting in place a good inventory management system that would allow you to maximize the way you were doing things.

When a business first gets started or if it is still quite small the business is going to go through a lot of cash. This is usually the make or break time for a lot of businesses.

If they are unable to use cash the right way then they are not going to survive very long. It is getting tougher and tougher to stay in business if one is not able to have cash on hand when they need it.

Seeing as how you are going to need cash on hand all the time you cannot afford to have cash tied up at all. This is going to happen no matter what you do, but there are some areas where you can prevent such problems.

Inventory would be one of them. Using the right inventory management system is just the first step. Making sure you have the right software in place to run it efficiently is the next step.

Your goal is going to be carrying only as much inventory as needed based on customer demand. You might decide to carry a little bit extra for the purpose of bigger discounts from suppliers or to hedge against fluctuations in customer demand.

In any case the goal is going to be finding that sweet spot. You do not want too much, but you also will not want too little.

When things are done thins way it means you will not have to worry about having cash tied up in inventory. Now why is this important. You want to be able to use this money in other areas of the business.

This is really important for any business that is just getting started and having cash on hand will allow you to be prepared for unexpected things.

Inventory software also allows a business to reduce negative cash flow, because it is going to allow a business to keep down inventories.

At least it will allow a business to keep them right where they need to be. Excess inventories can mean doom for certain business, especially if they are not able to eventually move it.

What inventory software is really all about will surprise you because many businesses fail to understand how logistics software can really benefit their organization long term.

For instance, say you want to set up an inventory management system that is not going to consume a lot of your time right? Well if this is the case you cannot have a system that is overly dependent on other people.

You want to know that any and all information you need to ensure your system is effective can be quickly obtained by you.

Even if you have to rely on others you still want to know what information they will need in order to ensure they bring you back the information you need to input into the software.

Inventory software will help you along in this regard. It is designed to help you answer important questions and make needed changes.

It is made so that you are able to control your inventory the way it needs to be so you keep your costs down. In such a competitive business environment you need this.

The investment you might have to make in logistics software is nothing compared to the long term value you will get by using this program daily.