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.

Logistics Planning Software and Freight Shipping

Since the deregulation of the trucking industry in the 1980’s, trucking companies have offered an increasing range of shipping solutions that helps the manufacturer minimize shipping costs; one of which is less than truckload (LTL) shipping. In LTL shipping, companies that ship less than full truckloads of goods can save money by paying a fraction of full load shipping fees. For trucking companies, shipping earnings remain the same. They create a full truckload out of partial load shipments and receive payment from each company. For manufacturers, arriving at the optimal LTL solution usually requires the implementation of logistics planning software, which analyzes the cost of shipping and transportation needs in relation to product destination.

The obvious advantage of LTL shipping is that it allows companies to decrease shipping costs. But the downside is that products often take longer to reach their destination due to the multiple destinations implied by the shared load. In such cases, using logistics planning software to analyze a shipping situation instead of opting for standard LTL is the best way to integrate a solution that brings lower shipping costs while ensuring timely delivery. Whereas as LTL companies specialize in LTL, logistics software specializes in developing solutions that combine each element of the shipping process into a streamlined, cost effective delivery system. A company that requires freight tracking services in addition to simple pick up and delivery would benefit more from using logistics software than relying on the advice of an LTL shipping company.

Most companies that utilize logistics software consistently run a large number of products that are assembled at multiple locations before they arrive at retailers. At first glance, incurring the start up cost and service fees of logistics software might seem contrary to the goal of decreasing operating costs. However, studies show that companies who implement logistics software regularly reduce their shipping costs by ten percent in the first year alone. Exactly how is this savings created? In part, it results form the fact that logistics software eliminates costs associated with other logistical solutions, such as annual software maintenance costs, TMS software costs, 3PL costs, freight margins, gain shares and common rate base licensing costs.

While logistics software is popular among companies whose yearly shipping costs can amount to more than a small company’s annual earnings, it can also offer solutions for smaller companies. For example, a company that simply wants to improve delivery time can use the software to analyze road construction trends and highways traffic patterns. In either case, the software never fails to improve a manufacturer’s finances by making its system of delivery markedly more efficient.