A Logistics Management Program – How Does It Benefit the Shipping Process?
Whether you’re starting a new shipping company or looking for new shipping solutions, you’re likely to hear the phrase, logistics management program as you consult with various logistics providers, including logistics experts that you interview for in-house positions. So, what does a logistics management program amount to? In many cases, companies never find out. Instead of taking control of the shipping process, they outsource their logistics needs to a third party logistics (3PL) provider and leave well enough alone. As a result, these companies often overpay for the shipping process.
Compared to having your shipping managed from a distance (the number one complaint of 3PL customers is that they feel distanced from the shipping process), hiring a logistics expert is an excellent way to manage the shipping process. But with an experienced logistics expert commanding up to $90,000 a year, which is similar in price to hiring a 3PL provider to manage the shipping process, other options should be sought first. One the goals of a logistics management program is to reduce the overall cost of shipping, which includes the cost of contracts or salaries that facilitate shipping logistics. Consequently, using logistics software-the least expensive form of logistics management-makes the most sense. But how well does the software work?
- Logistics actually has two main focus directions, internal and external (inbound and outbound), although most companies only focus on one.
- Companies that outsource their logistics reduce shipping costs, on average, by about 13 percent.
Traditionally, shipping companies have logistics experts, whether in house of through 3PL in charge of the shipping process, which makes some companies unsure of their ability to realize the same benefits through logistics software. Yet, as companies continue to discover, logistics software doesn’t require logistic expertise of it users. Instead, the software performs the work of a logistic expert, allowing companies to choose from recommended shipping solutions using a user-friendly interface.
While cutting 3PLs out of the shipping process and avoiding increased payroll is a boon, logistics software saves companies the most money by revealing a broader range of shipping solutions that meet a company’s shipping needs based on shipping route analysis and optimization, freight optimization, and integrated shipping solutions. While a 3PL provider could technically offer the same advantages, the fact that 3PLs act in their own interest first results in a smaller range of shipping solutions, as solutions that significantly benefit the customer but not the provider are generally disfavored.