Amateurs Study Shipping Rates, Professionals Study Logistics

Omar Bradley offered a truism, that amateurs study tactics, armchair generals study strategy, and professionals study logistics. This is just as true in the world of business as it is in the military. Logistics is the art of getting supplies where they’re needed so other functions can happen. In the modern business world, logistics means freight shipping – both internally and externally. In this field, freight rates and carrier rates are the price of doing business.

Freight shipping is one of those expenses that can be minimized, but never totally eliminated. It’s also a manpower time sink, and because of this, more and more companies are outsourcing their freight needs to third party logistics companies. These are outfits that have people who do nothing but look over the assorted rates and package deals offered by the major freight carriers and try to find the best deal possible for their client, with a nice commission on top for them.

All in all, third party logistics management makes sense for organizations that are above a certain size (too small, and they don’t generate enough volume to be worth the trouble of maintaining the account) and below a certain size (at which point the company can have an inside staff that does the same function for less).

Alternatives to third party logistics offers are in house logistics software. Much the same way that travel agencies quickly became redundant with online booking services, logistics software vendors are trying to render the third party logistics company obsolete. Building automatic data scrapers that can do the basic work of comparing logistics rates to different parts of the country or world is fairly straightforward, as is a price search algorithm.

While these systems primarily offer a way to avoid third party logistics fees, they also offer a bit more direct control over your company’s shipping needs, and some managers and executives like that hands on feel. They can also be used to significantly automate a lot of routine functions in the shipping department and the mail room. They can also be used to identify process problems – there’s a saying that every time something was sent out overnight, someone higher up in the chain didn’t do their job correctly, and when you’re looking directly at the costs of expedited shipping, it becomes easier to focus on the process issues that lead to it, than when you’re looking at a third party statement of account.

Ultimately, which one works best is a function of your business’ needs and internal culture; some businesses simply don’t want to bring that job in house. Others need to. Both are viable strategies depending on what your operation’s needs truly are.

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.

Does Achieving the Best Shipping Solutions Require Hiring a Logistic Expert?

Shipping products without the aid of logistics is like journeying to an unfamiliar destination without the aid of a map; eventually, you get there, but it usually takes more time and money than you anticipated. Just as an uninformed driver makes more stops and takes more roads than necessary to arrive at his destination, an uninformed shipping process results in freight making more stops and taking longer routes than necessary, increasing the cost of the shipping process. Realizing this, shipping companies that don’t have an “in house” logistics department will seek the advice of a logistic expert. But the type of logistic expertise that they retain can also have a significant impact on the cost of the shipping process.

When a company doesn’t have its own logistic expert, it has two options for implementing shipping logistics: hiring a third-party logistics (3PL) provider, or implementing logistics software. Traditionally, shipping companies have opted for 3PL. But today, shippers are increasingly choosing logistics software over 3PL for two reasons: the software offers more shipping options and it costs significantly less than hiring a 3PL provider that offers the same level of service. For companies that are considering hiring a 3PL provider, it’s important to realize that not all 3PL providers are the same. Currently, there are three types of 3PL providers: standard 3PL providers, service developers, customer adapters and customer developers.

Stand 3PL providers offer transportation logistics, but not as one of their core competencies, which ends up making them attractive due to the low cost of their services. Service developers perform transportation logistics as their core competency, but typically emphasize in “value-added” services, such as cross-docking and specific packaging. Customer adapters oversee a company’s logistics process, but don’t specialize in innovative shipping solutions. Customer developers oversee the logistics process and do specialize in innovation solutions. But the price of hiring a customer developer is can be similar to hiring your own logistics experts.

Moreover, 3PL often places small and midsize companies in the position of hiring logistics services that don’t offer comprehensive, innovative solutions or attempting to hire unaffordable logistics services that do; a situation that makes companies realize the value of logistics software, which allows them to realize comprehensive, innovative shipping solutions that increase the timeliness of the shipping process while reducing its price by eliminating the following costs: TMS software costs, 3PL costs, gain shares, freight margins, common rate base licensing costs and annual software maintenance costs.

Logistics software is available on either a software as a service (SaaS) model or as an onsite software solution, with the former offering the advantage of remote system access. But in either case, the software allows its customers to make expert logistics decisions through an easy to use interface. Research shows that companies who implement logistics software can reduce their annual shipping costs by 10 percent after the first year.