Before Henry Ford developed his first car in 1908, all deliveries were conducted by horse and carriage. Companies struggled with poor efficiency and low security with these shipment methods, but at that time, the market had nothing better to offer.
When the first cars appeared on the streets, they were immediately used for delivery of goods. This allowed to reduce the time needed to ship products and enabled companies to cut the logistics costs. The branch realized that implementing the latest inventions can have a positive financial impact.
At the end of the 20th century logistics implemented one more revolutionary invention, which dramatically changed the delivery process: specific software. Since that time, computers have taken over the planning and execution of different tasks, including manual and paperwork, and securing vulnerable information.
The implementation of logistics software is a part of the natural process of business evolution. If you can’t imagine delivering your goods in carriages now, not automating your logistics management will make you feel insane in just few years.
If you still aren’t using logistics software for delivery — it’s highest time to start, and this article will provide an overview of some interesting features that will not only optimize the working process, but also significantly cut your expenses.
So, let’s take a closer look at the opportunities that logistics software can provide to your business!
Advantages of logistics software
Businesses are constantly searching for a solution to help reduce logistics costs. While many businesses focus on bargaining for better prices from contractors, they don’t even consider implementing logistics software, which is a much more complex approach. However, a custom solution can offer a number of advantages.
- Automation of manual processes
The most obvious advantage of implementing a custom system is that it can replace or optimize manual work. Do your employees still have to call contractors to arrange deliveries? Do they manually compose the routes for the trucks? This work can be done much faster and more accurately by a software. A tender system software, for example, can replace routine calling.
- Precise calculations
Making mistakes is part of human nature. You can hire the best employees, but this won’t guarantee error-free work. But a software will! A high level of precision is especially valuable for companies involved in the in production and delivery of goods.
For example, a logistics app can calculate the exact arrival time for every destination by considering the traffic situation and other factors that can affect the speed of delivery.
- Proper planning and execution
Accurate planning is often underestimated, but is actually the first step towards a successful business process. Software will assist with planning and adhere to the plan by keeping track of the current situation, and by sending notifications and reminders.
The software can plan deliveries taking into account the company’s production volumes. If the estimated volumes aren’t enough to load a full truck, the system can automatically reschedule the loading to avoid inefficient truck loading
- Data security
Storing all documents in folders on endless shelves makes your data extremely vulnerable. Anyone can access, copy or replace them. Moreover, a natural disaster such as a tornado or flood can completely destroy all records. Cloud storage can keep your data safe. Firstly, it has no physical location so it can’t be destroyed or deleted without your approval. Secondly, you can manage access to vulnerable information and allow only eligible employees to access certain types of data.
For example, you can limit the access of your drivers to only information concerning the destinations and estimated arrival times. Drivers don’t necessarily need to know other information such as the cost of the goods they deliver.
- Dramatic reduction of expenses
All of the above-mentioned advantages result in savings. Process automation reduces the time needed to execute different tasks. Detailed planning and data security prevent from any unexpected expenses and potential losses. So, implementing logistics software offers a number of advantages and the savings can be reinvested to enable the company to grow!
Types of logistics software
If you have recognized the benefits that logistics software can bring to your business, you will probably face the difficult choice between a custom system and a SaaS, or software as a service solution. Here is the difference between the two:
- SaaS logistics system
SaaS solutions are built universal. They try to meet the needs of small to large businesses, include a lot of features and are slightly customizable. Ready logistics systems usually attract with monthly or yearly subscription and relatively low price. Some companies offer free trials or free plans for small businesses. The paid plans start with $15 and can reach several thousands of dollars per month - everything depends on the functionality and stability of the software.
- Custom logistics software
Custom software is developed with a particular business case in mind and is designed to perfectly fit all the processes of the company. A custom system can include specific features and can be developed within several months. It is more expensive, however, the cost is reasonable considering that the system is optimized and the automated processes significantly reduce the logistics budget. Moreover, the custom software doesn’t require existing business processes be changed to match the pre-developed features of a SaaS logistics system. The development company usually provides the client with a business analyst, whose objective is to analyze requirements, optimize the business processes in general and help with implementing the software. Such a comprehensive approach allows for the cost of custom software to be recovered quite quickly.
The choice between a custom system and ready SaaS is often difficult. SaaS logistics products attract with low price and are a compromise solution for small businesses which want to experience the benefits of improved logistics processes. As the company grows, the software also needs to evolve. That’s why, switching to a custom logistics software is the right choice in the long run.
Logistics software features
We have discussed workflow optimization, but how does it actually work? Let us take a closer look at various features of logistics software and explore the benefits of implementing these in the usual workflow.
Tender system for logistics partners
How do you choose a contractor to operate a particular route? It’s likely that your employees are contacting all your delivery partners, asking about available trucks and the price they can offer for a particular route. After comparing the possible options, they select the cheapest one, or make a completely subjective choice (like “Hey, this is the cousin of my neighbor, I let him deliver our goods”). Apart from potentially ignoring some important factors when choosing a contractor, there is another big problem — time waste. You are paying your employees for manual work, which can be avoided!
We had to face the same problem when we developed a logistics system for our client, UDK Gazbeton, a producer of aerated concrete blocks. We decided to strengthen their logistics software with a helpful feature — a tender system.
All the company’s contractors now have access to a single module, where the company posts its orders for delivery. Every contractor has an opportunity to offer a price for a particular route. The system automatically selects the most profitable bid and arranges the loading.
What did the company get in return? The whole process is automated and doesn’t need any human intervention. The only task required of the company’s employee is to post the delivery orders in the system. This enabled the company to reduce the number of logistics managers, and cut expenses.
Moreover, the algorithm behind the tender module analyzes the conditions and selects the best options among all bids. Therefore, any subjective decisions are eliminated.
Automatic truck-load planning
Sometimes it happens that the delivery is already scheduled and your volumes aren’t enough to load a full truck. As a result, the truck departs half empty, but the cost remains the same as a full load. You have to avoid LTL (less than truckload) shipping. Releasing a half-empty truck from your warehouse is like paying for delivering air! It’s just a waste of money.
Another problem is random loading order. This is especially bad when your truck has a combined route and has to deliver goods to several destinations. No doubt it has happened that products that had to be unloaded first were packed somewhere behind other goods. As a result, the unloading process took longer than expected, and the truck fell behind schedule. In this situation, there is an increased risk of damaging goods.
The problem of LTL is quite simple to resolve with the help of a logistics management system. If the volumes aren’t enough to load the full truck, the software can automatically reschedule the loading until there are enough products for delivery.
If you produce perishable goods (food, for example) and postponing the delivery isn’t an option, there is another way out. The system can find a company to cooperate the delivery with. As a result, you share the cost of the delivery, and pay significantly less than you would if you would release a half-empty truck. Additionally, you find business partners to collaborate with, which is an advantage as well!
The problem of random truck loading can also be solved with the help of professional logistics software. The system is able to consider all the destinations in a single route and plan the loading by using a LIFO (last-in, first-out) approach. The items that will be unloaded first should be packed last, and vice versa, the items that will be delivered to the last point on the route are packed first. This approach minimizes the time required for unloading. Moreover, the risk of the goods being damaged is dramatically reduced.
Automatic route planning
Automatic truck load planning requires precise route planning. Even the most experienced logistics manager isn’t able to plan a combined route with several destinations as accurately as software can, since there are too many factors that can affect route planning, such as an average speed or fuel costs. If there is a traffic jam, the shipment time increases, and so does the fuel expense. And, again, you are losing money.
Adding a feature for automatic route planning can save you several hours and cut fuel expenses, since logistics software is able to calculate an optimal route even more exactly than an experienced manager.
The route planning feature, usually based on Google Maps API or other map services, can aссess current traffic conditions and adjust the route “on the go”, enabling fast and economical delivery. Reducing fuel expense and delivery time will reduce the overall cost of delivery.
Combining production, warehouse, order and logistics management in one software system
Production and logistics are sometimes seen as two separate processes that never interact. Different software is used to manage different processes, and the business owners usually don’t see any problem in this. The situation isn’t as seamless.
Separating key business processes results in duplicated work, more frequent mistakes, and sustained and unnecessary expense. We have already described one of the examples: delivery scheduling depends a lot on production volumes and order placement. When these three processes aren’t connected by a single software system, the company’s processes turn out to be completely unoptimized, resulting in LTL or random loading order (read: additional expenses), which could be minimized with suitable software.
The aim of enterprise software is to connect all the departments into one system and enable the computer to optimize the processes as efficiently as possible.
We can configure the computer to analyze production volumes to optimize delivery schedules. We can instruct it to analyze orders to create combined routes and manage truck loading. We can use artificial intelligence and machine learning to make this processes even more independent from human interaction and more exact at the same time. The more processes of the company are gathered under one software roof, the more efficient the optimization, and therefore, the more money the software can save your company.
QR code scanning for quick loading and delivery
Lack of information about products that need to be loaded and delivered can cause misunderstanding and mistakes. Just imagine a warehouse with hundreds of boxes ready for delivery, and four trucks that are covering different routes. Certain boxes should be loaded in certain trucks, however, manual processes often result in mistakes. Confused workers accidentally pack a few boxes in truck 3 instead of truck 2, and a long chain of mistakes begins that result in additional expense.
Implementing QR code scanning is another important step towards optimizing your logistics processes. A label with a QR code, which includes various product information, can be placed on each box to eliminate this type of mistakes. The most important logistics data is the destination within the combined route. Scanning the QR code before loading can ensure that the product is loaded according to the plan.
In addition, the logistics software can create an optimal item placement map, the main aim of which is to ensure quick and safe loading and unloading, considering the destination of every single product. QR codes are then integrated with the item placement map. After scanning the QR code, the employee will receive instructions to ensure the correct placement on the truck according to the LIFO approach.
This technology is extremely beneficial for companies with large production volumes. When several trucks are loaded at the same time the mistakes are very likely to happen. The QR code scanning will make the loading process quicklier, more exact and more efficient.
Delivery status updates
When working with third party logistics contractors, it is always nice to know where your shipment currently is, whether the items have already been already delivered, unloaded, etc. Calling the driver or the client to ask about the current delivery status takes time, costs money, and more important, distracts employees from their current work.
A logistics software can help you to keep track of your shipped products by updating their current status in real time and sending delivery notifications. The system recognizes the QR codes on the items. When these are scanned upon loading the system notifies you, the GPS tracker is able to share the current location of the truck and estimates the approximate arriving time. QR codes are scanned again upon unloading at the destination warehouse. And you are notified that the products have been successfully delivered.
Some warehouses aren’t equipped with QR code scanners, in which case the delivery status can be updated manually with a single tap in the application by the truck driver or a warehouse employee that receives the delivery. To minimize manual actions, the application can automatically change the delivery status when GPS notifies the system that the truck has left the warehouse. However, in all cases the result remains the same — you always receive up-to-date information about the delivery status and can be sure that your products are safe.
Planning equipment maintenance
Equipment breakdown is a major problem for production and logistics. It always happens unexpected and can cause significant delays which result in money loss. Dissatisfied clients that didn’t receive their orders on time is another drawback of sudden breakings.
But any company can save 12-18% by implementing preventive maintenance instead of repairing equipment after breakdowns have occured.
Of course, logistics software isn’t able to make equipment work forever without a breakdown. But it can help you to keep it in the best possible condition. How? By scheduling regular equipment inspections, which is provided by CMMS (computerized maintenance management software) as a separate module of the logistics system
The inspections help to identify any problems before they results in a major breakdown. These can be fixed with minimal effort. The system can also order the required parts to make the repairs.
Software can be helpful not only for diagnostics, but for repair as well. When a breakdown occurs, an employees can scan a QR code on the tool to get immediate instructions to make the repair. If the repair requires professional skills, the software can automatically notify the maintenance team that help is needed in the particular area.
Implementing these CMMS features can improve the reliability of your equipment by 35% to 50%.
Tracking the productivity of employees
In our article on cutting logistics costs we mentioned inefficient labour as one of the factors that steadily drain your finances. However, the productivity of employees is sometimes too subjective and difficult to track. You can’t monitor the work of every single employee all day long.
In addition, training of new and existing employees is an important factor to maintain productivity and quality. But, again, they take a lot of time and are sometimes not really efficient. It is almost impossible to pay enough attention to every employee, work with his mistakes, give sufficient feedback.
Fortunately, logistics software can be helpful in this area as well.
The system can help set KPIs (Key Performance Indicators) for every single employee. Those involved in logistics will have to work with the software, and the program will track and analyze their productivity, and notify you if the performance of an employee needs your attention.
What will all this work with employees result in? You will identify weaknesses in your staff which incur a high cost. Later, you can either train these employees and work on their productivity, or farewell them and stop paying for low-quality work.
You can also enable the system to train new employees. Online training and tutorials, tips for working with the software, various reports and notifications — all these techniques are available to improve staff efficiency. The software will provide timely and accurate feedback, which is very important to prevent mistakes at early stages.
What does working with documents look like in your company? No doubt, you store huge folders full of paper reports and other documents on endless shelves. Your employees spend a lot of time to create these documents, enter and update the data, conduct manual calculations, and they make routine mistakes… Isn’t this too complicated for the 21st century?
If you were attentive, you should have guessed what can save your company from drowning in a sea of paperwork. Specialized software, of course!
The modern trend is to move the data from physical mediums to the cloud. The advantages of this are clear: firstly, the data is safe and can be accessed only by authorized users; secondly, working with the documents becomes much faster and with fewer mistakes; and thirdly, you can free a lot of space that was previously occupied by the shelves.
But, apart from these obvious advantages, implementing logistics software can bring clear financial benefits. Firstly, it will significantly reduce time spent on paperwork, as most of the manual tasks can be handled by the software, which works faster and more accurately, and doesn’t require an hourly payment. The system can generate reports in seconds, automatically send invoices and print QR codes with encrypted information about the products.
Secondly, the software minimizes the human factor and therefore reduces calculation errors, which in turn reduces the financial risks.
Data security is one of the most important factors in running a business, since your data is your key asset which generates revenue. If it falls into the wrong hands it can cause significant loss, and could even completely ruin your business.
How can logistics software secure vulnerable data? There are a lot of ways to do this. First of all, storing all documents and reports on the cloud can protect your data from being physically stolen or leaked. Secondly, it is possible to protect the data with passwords, encrypt it and limit access depending on the position or responsibility of the employee.
For example, drivers only receive a detailed route with the destinations where the truck will be unloaded, but they don’t have access to the price or information about the products. Warehouse staff will have exact instruction about the products that should be loaded on the truck, and in which order. But they don’t know where the products will be delivered or how much the client will pay for them.
This type of security will protect your company from data leaks, which could result in your clients being lured by the competitors offering lower prices, more attractive offers, or something else.
Paying close attention to data security is a risk management strategy, which could prevent huge financial losses and damage your reputation.
As you see, modern software offers many advantages and opportunities to improve logistics processes. But this doesn’t mean that it’s all you need! On the contrary! Customizable software can release the potential of all your departments, significantly increase working efficiency, and reduce errors.
A single system can include modules for production, order and stock management, logistics, finance, etc. Implementing all the functions in a single software system can result in getting the most out of the program. And the best thing is that modern technology allows the system to be fully customized to match the company’s processes and implement unique features that can’t be found in any solution now present in the market.
There are many techniques that enable to cut logistics costs for small to large companies. But all they work better with specialized software. A custom logistics system can replace a lot of manual work at low cost, resulting in significant productivity improvements. The computer calculations are precise and exclude the human factor. The data processed by the software is secure, preventing loss, theft or leakage. The system can even manage equipment inspections and maintenance to prevent serious breakdowns. As a result, your investment in custom logistics software will generate even more revenue than expected!
Do you have ideas for features that would be really helpful in logistics software? Share it with us! Even if it is a niche solution, if it brings value to just one business - we will definitely add it to our list!