The cost of freight transportation is second only to the cost of payroll for the average shipper. As a result, one of the first things a shipper thinks about when trying to improve its bottom line is lowering freight transportation costs. The precise selection and administration of shipping arrangements, both of which require a logistics resource, are the two keys to accomplishing a cost-effective shipping procedure. For operating a transport management system, there are three categories of logistics resources:
- An in-house logistics department is often used by a shipper who owns and operates its own fleet. Implementing a logistics department is generally impossible for small and midsize shippers due to the money necessary to sustain the department.
- 3rd Party Logistics (3PL)- Also recognized as freight brokers, 3PL providers help shippers and carriers work out shipment agreements. Although 3PL is less expensive than keeping a logistics department, it still necessitates the hiring of logistics experts.
- Freight shipping software- Freight transportation system can provide logistical solutions that a logistics department or third-party logistics provider would normally deliver. Freight transportation software is the most cost-effective logistics option available.
he popularity of logistics software has grown as a result of the introduction of Software as a Service (SaaS) solutions for the shipping industry. The program can alternatively be installed and maintained in-house, but using a SaaS approach avoids the costs of installing and maintaining in-house software.
Transportation Management’s Objectives
A Transportation Management System (TMS), which sits between an organization’s ERP system and its shipping process, has three purposes:
- Plan the transportation process, including mode and carrier of transportation selection, rate selection, load and route optimization, and so on.
- Keep track of the shipping process, including cost control, quality control, and vehicle tracking along the way.
- Track critical performance measures such as monetary productivity, cost per metric, and on-time delivery percentage.
These objectives can be met by an in-house logistics department, a third-party logistics company, or freight transportation software. The shipper must examine how much it needs to save on logistics resources and if it wants to manage the shipping process itself or have it managed by another party as it considers these possibilities.
Freight transportation software, as previously said, is the most cost-effective logistics resource. It’s also a resource that gives the shipper control over the shipping process, which 3PLs don’t do. 3PL is the best option for companies who want to outsource their shipping operation. Freight transportation software is the ideal option for firms who want to handle the shipping process without setting up a logistics department.
A transport management system is an important part of supply chain management since it affects the cost and quality of shipment. Shippers can use logistics software to manage freight transportation costs while maintaining high management standards. Contact a provider of SaaS logistics solutions today to learn more about the advantages of freight transportation software.