Your Guide to Software Selection

How to Use and Choose Logistics Management Software

When you’re a logistics company on the hunt for top-class logistics management tools, knowing where to start can be a little daunting. There’s a huge range of options available right now. While it’s great for businesses to have a lot of scope and choice, this also means that finding viable software solutions can get tricky.

There are three main types of logistics management software: Warehouse Management Systems, Enterprise Resource Planning (ERP) systems and Integrated SCM suites. It’s often difficult for companies, in particular third-party logistics companies, to make the right selection because they require specialized capabilities that may not be provided by all three types of logistics management software. In light of this, let’s take a look at how to use and choose your next logistics management software platform.

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Managing 3PL with Software

The decision to outsource eCommerce warehousing is a big move, but it’ll be a successful one if you make the right choices. Of course, this is easier said than done, considering the huge selection of third-party logistics software tools on the market. Nevertheless, it‘s worth your consideration, because 3PLs have the potential to transform a supply chain.

According to a recent study from State of Logistics Outsourcing, the right third-party software can substantially reduce costs across the board. For instance, a high-functioning 3PL system reduces fixed logistics costs by an average of 23%. There are all kinds of different reasons for this, but the primary explanation is simply that things happen faster.

Supply chains are all about efficiency and real-time control because time is money. If you have a software solution that can pay rent, monitor machinery, conduct performance evaluations, send out invoices and log incoming deliveries, your operational routines are going to get faster. There’s no need to remember key tasks or prepare to complete them manually.

Why You Should Make Logistics a Top Priority

In the time it takes you to identify and approach a task, a 3PL software will have already ticked it off the list. This is the beauty of automation, and it makes your warehouse quicker, cheaper and more productive. This is not to say that finding the right software is always easy. With so many logistics tools on the market, it can be difficult to make the right choice.

Ultimately, all companies have different needs, so different aspects of the software are prioritized. For example, 55% of shippers judge 3PL software based on its scalability. They want to invest in solutions that grow alongside their company. Then again, 42% pick providers with great customer service, which is closely related to longevity.

If this is your first 3PL software purchase or you haven’t changed your software in a long time, browsing through the different 3PL providers can be a little daunting. Fortunately, there are some core features and functions that you can prioritize during your search. Plus, to make things simpler, we developed our own list of important considerations.

Tech Specs

There are few downsides to utilizing 3PL software, but one of them is the fact that you’re working with another business. Obviously, this can’t be avoided. Whatever provider you choose will have its own objectives. In fact, it’ll share processes across a large customer base, rather than offering a bespoke service to all customers.  

This isn’t a problem, as long as your provider offers the best possible technology and invests in applications that are inherently customizable. Find out how much it spends on technology in a year. Look at how much of the annual budget goes towards innovation projects. You want to be sure that its IT strategy and roadmap are in sync with your own.  

Scalable Solutions

In many ways, this is the most important consideration of all. Implementing a brand new logistics system isn’t a cheap affair. To get maximum value out of your investment, you need to pick scalable functionalities. In other words, even if your company starts to grow at a rate much faster than expected, your software should be able to adjust and adapt.

Ideally, you want a 3PL software with the capacity to incorporate new inventory almost instantly, because efficient inventory management is an essential part of infiltrating new markets. Even in the short term, scalability is important, because warehouses and distribution centers deal with fluctuating stock. From season to season, your inventory management might be very different. You need a 3PL software that shrinks and expands on cue.

Business Intelligence

Now that there are so many 3PL software providers around, companies are looking for extra perks. They’re gravitating towards software systems that offer something a little extra, whether it’s connections to other supply chain resources, access to industry research or peer-to-peer events. Ultimately, it’s up to you to decide if those perks and incentives are valuable.

It doesn’t make a provider unworthy if they don’t offer them, but it’s certainly helpful to have access to insider knowledge and further business intelligence. Again, this is about longevity. If you’re going to stick with a 3PL software for several years, you should look at a 3PL provider that consistently offers great value for its customers.

The Changing Face of Third-Party Logistics

Traditionally, businesses have been reluctant to share too much information with third-party providers. This is something that may soon have to change, as customer demands become more complex and technology collects and collates more data. There are bound to be challenges and even risks, but close interactions with 3PL software providers can help your supply chain evolve.

Inclusion in long-term planning is not only empowering, but it offers a chance to cut costs, minimize waste, and build distribution systems that are fit for the future. It could be time to look beyond core features and select agile, flexible solutions with the ability to grow and change. If you want to reach the top and stay there, you must invest in scalability.

Choosing Between Standalone Logistics Management and an Integrated SCM Suite

As we mentioned earlier, the variety of logistics management solutions and the unique needs of businesses make decisions more difficult. However, this also increases the importance of choosing the right logistics management solution. And that decision starts with deciding whether standalone logistics management, ERP or Integrated SCM offer you the most value.

Getting to Grips with the Basics

Ultimately, warehouse management tools are built to increase the productivity of warehouse operations. Therefore, the long-term goal is to save money by speeding up work routines and getting products out faster. The major difference between standalone logistics and integrated SCM is that the former doesn’t accommodate other supply chain operations.

It’s true that some standalone software includes access to transportation management tools. However, these capabilities are limited, and you need a full SCM setup to effectively oversee supply chain management. It covers everything from supply chain planning and execution to demand planning and gives you the ability to streamline transportation routines.     

Standalone solutions are less dynamic, but they still cover the control of inventory and the refining of warehouse functions like picking, packing, slotting and shipping. ERP systems, on the other hand, increase transparency by making it easier to track and monitor operational processes. It’s important to note, however, that not all ERP systems include core logistics tools.

The Key Features and Functions

To decide which solution is best for your business, first you’ve got to know what they can do. We recommend taking a close look at some of the specialized functionalities which 3PL companies can use to boost their bottom line and improve their supply chain management.  

Value-Added Services

Businesses that provide customers with value-added services (such as light assembly or kitting) should look for a system that helps them record and cost these processes. In this case, standalone logistics management is a valuable choice, but you’ll also find such capabilities in high-level SCM solutions. For specialist labeling, it may be necessary to invest in a comprehensive ERP suite.

Multi-Client Architecture

The majority of warehouses handle more than one customer. Therefore, they need logistics and supply chain software which can accommodate inventory and purchase order processes for a (potentially) large number of clients. If you’re looking at cloud-based tools, be careful when shopping. You want to be sure that the system has the right chain management architecture and not just a multi-client deployment model.

Costing and Invoicing Control

Whether you decide to work with standalone logistics management or integrated SCM tools, accurate inventory tracking is vital. The software should help you formulate, process and apply service contract policies quickly and easily so customers can be invoiced on time, every time. To offer maximum value, your 3PL invoicing tools must provide a clear window on receiving, putaway, storage and shipping tasks.

Parcel Carriers

It’s common for 3PL companies to work closely with mainstream parcel carriers. Services like UPS and FedEx are integral to warehouse routines, and the smoother these interactions go, the more productive the business can be. Some SCM systems offer the chance to automatically send and receive shipping data. This saves time and reduces the number of operational errors, as well as ensuring on-time delivery.   

Client Web Portals

Client and customer web portals can be incredibly valuable because they give 3PL companies full inventory control even when off-site. Inventory figures, product histories and shipment records are all accessible remotely with the right kind of logistics software.

Vendor-Managed Inventory

Businesses that offer vendor-managed inventory management should think about investing in software that automatically receives, records and processes replenishment requests. It speeds up the progress of deliveries by a substantial amount because clients don’t have to go through the standardized order system every single time they need a repeat shipment. You’ll find this capability in many supply chain management SCM solutions.   

The Bottom Line

After examining their core features, we’ve come up with some recommendations for what we think logistics management vs. integrated SCM amounts to. While comprehensive SCM systems are no doubt useful, they are not necessarily essential. That is unless you’re keen to optimize supply chain operations beyond basic warehousing.

Otherwise, a standalone logistics system should be enough to handle third party logistics, costing and invoicing, multiple client architectures and automated shipping data. It’s also a great choice for businesses that want to be transparent with their customers as a way to build stronger customer service.

For instance, best of breed software makes it easier for customers to view and browse warehouse inventory. More importantly, it gives businesses the chance to seize a competitive advantage by eliminating inefficiencies in their supply chain. Each day-to-day operation becomes faster, smoother and more affordable.

See what solutions rank the best in our Supply Chain Management Software Analyst Report.
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