In the manufacturing industry, the discipline of logistics focuses on efficiently moving products from the manufacturer to the buyer. For large manufacturers, logistical operations can represent a large expense, especially when logistical elements are managed separately instead of being integrated into one solution. In an attempt to take the time and guesswork of out executing logistics, many companies totally or partially outsource their freight optimization needs to third parties. A complete outsourcing amounts to hiring a company to move products throughout the entire supply chain, while a partial outsourcing involves letting a third party manage the transportation of goods through the “stages” of the supply chain. However, implementing logistics software is a more cost effective way to achieve freight optimization that offers the same level of quality as a third party logistics provider.
There are several factors that contribute to a manufacturer’s total shipping costs, including warehouse fees, inventory fees and freight carriage fees. To minimize these fees, a manufacturer might choose to ship by air carrier instead of in tandem with freight carriage, significantly reducing warehouse fees by moving the goods from manufacturer to buyer in a matter of hours. However, to save the most money, companies have to examine all three cost areas with an eye toward developing an integrated cost savings solution. In developing such a solution, there are two basic issues that manufacturers must address: finding the right mix of freight carriage, inventory and warehouse services and finding the best price for each one.
Logistics software can help by providing an analysis of service combinations in relation to individual service cost. For small to midsize companies that deliver goods from the assembly line directly to retail outlets, logistics software can offer a basic analysis of routing options and freight rates. But companies that use multiple warehouses and multiple supply chain locations may require more, such as production scheduling analysis that develops manufacturing plans with regard to multiple supply chain locations (i.e. company’s whose products are assembled at more than one location before reaching the retailer).
The basic advantage of logistics software is that offers refined shipping solutions that meet the needs of a variety of manufacturing situations (and does so at a lower cost than hiring a third party logistics provider). For example, some solutions may focus on a particular freight carriage issue, such as analyzing how to increase delivery time by studying construction schedules and highway traffic data, while other solutions may focus on offering an integrated solution for all logistical concerns, including carrier loading, weight distribution, cube optimization and shortest path to destination. Studies show that manufacturer’s who implement logistics software regularly realize a 10 percent decrease in shipping costs after the first year.
Whether your company has its own trucking system or uses a third party, logistics software can help reduce your delivery costs without compromising punctuality, efficiency or freight safety. If you need to simplify your delivery process and reduce your cost of shipping, consulting with a logistics software provider is the best way to arrive at a solution that accomplishes both at the same time.