Digital supply chains retake center stage as a global necessity for “smooth global sailing”. They remain a major factor for company success and marketability. What makes its success front and center in importance? Logistics management software.
According to a Gartner report on top trends in logistics, logistics companies allocate 73% of their IT budget focused on growth opportunities and enhancing internal performance.
But only 30% of companies meet their digital transformation goals, and another 44% show limited improvement.
The ROI doesn’t look great. Why such limited success? Logistics software is complex and challenging. It requires expertise in both business processes and software development.
A company must be well-prepared for digital transformation. Regular software audits and fine-tuning must be a part of the plan—a small, but integral part of a bigger plan.
To do this, let’s build a bigger picture. This guide analyzes in detail how:
- Logistics management software works.
- You ensure sustainable improvement.
- Software development providers increase your ROI.
What is a Logistics Management System?
A logistics management system—logistics management software—is a full-fledged solution companies use to automate, streamline, and optimize their processes.
Companies use digital technologies to manage supply chain activities, including:
- warehouse and inventory management
- supplies and suppliers
- order processing
Logistics management systems enable businesses to collect data and turn it into meaningful insights.
Read how logistics software has made a difference for one simple startup:
When Amazon launched in 1997, it had two fulfillment centers. Today, Amazon is valued over 1.48t, the world’s fifth most valuable company. Amazon is one of the Big Four, along with Alphabet, Apple, and Meta. The numbers speak about themselves:
The largest postal services, like UPS and FedEx, do not provide anything like this.
The secret of Amazon’s commercial success is a perfect and scalable logistic scheme supported by Amazon’s custom logistics software solutions that are exclusively Amazon centric.
Who Needs Logistics Management Software?
Logistics companies comprise about 10% of the US GDP.
Traditionally, companies in the following categories handling logistic processes are first in line to use logistics management software:
- Transportation companies
- Retailers (brick & mortar and online)
Companies can address the following challenges with the help of software:
- Reduce expenses and increase profits by optimizing inner processes and systems.
- Digitize their logistic processes due to an increased scope of work. Manual processing is no longer possible or takes too much time and resources.
- Expand: add more features, improve user experience, or update.
- Stay competitive in the logistics market or to enter this market soon.
- Discover new, profitable ideas.
What Questions Does Logistics Management Software Handle?
Logistics management software optimizes all processes related to logistics or enterprise operations:
Software for logistics management also often includes additional modules to manage the company structure:
Custom vs. Off-the-Shelf Software: Which is Better for You?
Two logistics management software options are possible: off-the-shelf and custom solutions.
You can search the market for off-the-shelf solutions to find your best logistics management software. Those solutions might work well enough. Or they might not. The guaranteed method for logistics management software is one tailored to your specific requirement. For greatest peace of mind and success, you need a custom application.
Choosing a custom application means your input is integral in both the design and development of the logistics software specifically suited for your company.
You matter. What you want and what works best for you matters.
An Example of Logistics Management Software
What does software for logistics management look like?
Let’s review a logistics management solution for a hypothetical transportation company.
- Define the purposes of the logistics management software.
- Identify who will use this application and where.
- Stipulate the technologies suitable for this case.
A carrier company wants an application to go in lock step with the whole process of transportation and delivery, starting from the order placement and finishing with receiving feedback from the customer upon delivery completion.
Software application users are:
- customer (uses app privately)
- delivery department manager (uses app in the office)
- dispatcher (uses app in the office)
- driver (uses app on the route)
Customers and drivers prefer using the application on their mobile phones. The manager and dispatcher use it in the office on a desktop or PC.
Considering all the above factors, it is possible to suggest a cloud-based solution that interacts with mobile applications for the customer and driver and a web-based application for the office personnel.
Schematicallсy, the desired logistics software can be pictured like below:
Logistics Management Software: Key 2023 Features
What software do logistics companies use?
In 2023, a logistics system must be:
- cloud based
- AI powered
It must be based on the newest technologies to meet the needs of continuous process improvement. Upgrades might be required for products that were released several years ago.
Key logistics management software features include:
Logistics companies continue investing heavily in cloud-based software. On-premise solutions are rare. Cloud apps ensure equal, 24/7 access to the data for distributed teams and departments.
Software developers maintain, update, and upgrade cloud solutions in the background and with minimum impact on the company’s routine. All that end workers must do is refresh the page.
Automated logistics management software (ALMS) is used for optimization and increased efficiency. Companies look for solutions that enable them to introduce new business models, increase agility, and ensure automated operations at scale.
ALMS helps scale operations. Repetitive tasks are automated. This addresses labor shortage more effectively.
Predictions: warehouse automation market will surpass $41B by 2027.
Real-time transportation visibility is the key priority for shippers and service providers. It becomes a customer expectation rather than a wish, according to a Gartner study. Problems exist that companies and their customers have little information on the shipment status once it leaves a warehouse.
Real-time tracking decreases risks and uncertainties. Customer services become transparent and predictable.
98% of business executives find it important to increase data analysis within the next 1 – 3 years.
Among other things, logistics planning software using Big Data enables logistics providers to improve last-mile deliveries, optimize costs, and eliminate unnecessary losses. Companies investing in quality information coming from various sources produce meaningful insights.
AI augments the capabilities of analytics team. In its Technology Trends Outlook 2023, McKinsey estimates the potential economic value of AI between $17T and $26T. AI analyzes previously collected data and refines predictions and forecasts based on identified recurring patterns. It helps control processes, determine staffing needs, increase revenue, and more.
Benefits of Using Logistics Software
Driving factors behind the constant use of all available logistics management software features:
- surging costs
- need for predictability and visibility
- challenges finding reliable labor
- faster order fulfillment
- the need to pick the “right” item
- meeting ever-increasing expectations from service level
A well-executed logistics management system ensures the following benefits:
Cost saving is the top benefit. For instance, industrial suppliers can double their profits through optimization, thus reducing supply chain costs from 9% to 4%. The software helps them calculate optimum routes, ensure maximum vehicle loads, and minimize inventory holding time.
Real-time tracking decreases supply chain management risks. Businesses receive an overview of shipments, inventory, and supply chain performance. Nothing gets lost. Yet, 62% of companies provide limited visibility. 15% provide nothing.
But contrary to their actions, 82% believe visibility is of big importance.
Businesses must reconsider their supply chains to adapt to ongoing disruptions. As an example, to decrease risks, 29% of Shopify Plus merchants receive products from several suppliers. Among other activities, 35% of brands are looking to digitize manual processes across supply chains by implementing inventory management software, scanning apps, and more.
Logistics software programs boost the bottom line in several ways. They help businesses determine the best distribution center and shipment route, thus improving services. Companies can react more efficiently to specific, seasonal demands. Eventually, workforce management improves due to accurate shift planning and balancing.
75% of suppliers believe the supply chain is the key factor to the quality of provided customer services. For example, B2B order management software for food manufacturers enhances order visibility by providing information to their customers on shipment costs, specific delivery details, available items, and more. Client loyalty increases.
What Makes Custom Software a Better Option for Logistics Companies?
Each logistics company makes its own choice in the dilemma of off-the-shelf vs. custom logistics management software.
Many are comfortable purchasing an off-the-shelf solution. Yet, ready-for-use solutions might be limited, falling behind a company’s growing needs.
The top driving factors for custom logistics development are:
- need to switch to more expensive subscription plans that provide less value than expected
- meeting specific service levels
- need to track more pieces
- inability to keep up with competitors who automate more effectively
- need to integrate with specific (and specialized) software
In its turn, custom logistics management software ensures:
- Best possible adjustment to workflow
Do you want to do anything differently from your competitors? You might be unable to achieve this using off-the-shelf software. Instead, custom software meets your unique rules and processes. You update software flexibly when those change.
Custom software adapts better to a company’s specific needs. It does not slow down when the number of shipped items and their variety grows. Or when the number of users working in the system increases. Software is better prepared to handle seasonal spikes.
Companies depend on third-party policies when using off-the-shelf modules. They have little influence on product development. A company retains full control over the collected data and product evolution when it makes its software.
Logistics companies use several solutions and databases for their activities. Data flows and integrations can prepare challenges when systems by different vendors must exchange information. Custom solutions can be adapted quickly.
Support is limited and slow in the free and least inexpensive plans, while vendors charge extra for premium support services. Hence, support costs might skyrocket for a yet-small-but-growing business that needs constant, urgent fine-tuning.
Choosing the Right Logistics Management Software for Your Business
To choose the right option for your business between off-the-shelf vs. custom logistics computer program, you must understand your business goals. Knowing your goals ensures you are better able to meet them efficiently and cost-effectively.
Here are important aspects to keep in focus on when you define the next step in your digital strategy:
Custom: An initial investment in software development is high. However, costs can be saved by starting with prototype development.
Off-the-shelf: Upfront costs are minimal because an off-the-shelf system is already developed. Integrations and tuning might be necessary.
Custom: The feature list is optimal. You extend and improve functionality each time you make changes in the workflow.
Off-the-shelf: You will need to adapt to the available feature list. Some features might be redundant; some might be missing.
Custom: Building what you envision could be slow with an inexperienced provider. Yet, working with an Agile development team means you can launch mission-critical functionality fast and then focus on expansion and improvements.
Off-the-shelf: The software is ready for implementation. Integrations might be required depending on a company’s workflow.
Custom: Ensure a minimum service level by hiring a managed team. The team does regular updates and maintenance work, eliminating potential issues.
Off-the-shelf: Be prepared to allocate a budget for support if response time is important. Specific extensions might be cumbersome or impossible.
Custom: Custom software has the best scalability and expansion. Remember to hire experts in logistics software development who design flexible architecture for you.
Off-the-shelf: Vendors provide limits in subscriptions. It might not meet your business growth plan.
The bottom line:
Off-the-shelf software provides a head start. Custom software helps grow and excel.
How IT Craft Delivers Logistic Management Software
IT Craft developers are here to help you decrease operational costs while increasing the level of your services.
Here is how we help you create your custom logistics management solution:
You need software that best caters your specific needs. We work with you to determine the best way to integrate warehouse, transportation, planning, and operations into a cohesive system.
- Experts in digital transformation
No need to stop operating while the development team works on software. Our team methodically replaces software parts with new source code, ensuring improvements do not affect the company’s processes.
API connects software parts and different pieces of software to establish seamless data exchange. IT Craft builds and improves an API to streamline processing, automate operations, and decrease infrastructure load, i.e., maintenance costs.
Software downtime costs $9,000 per minute on average (estimate from 2022). Costs skyrocket for large enterprises. Our DevOps engineers analyze software infrastructure for bottlenecks and weak points, implement an improvement plan, and focus on 99.8% and higher uptime.
The client envisaged a cloud-based solution to streamline shipment management. The software automates multiple steps while decreasing uncertainties.
The IT Craft team delivered an MVP portal on time, helping win over first users. It focused on feature expansion and product scaling, keeping up with the client’s growing needs.
Summarizing Tips for Logistics Management Software
The best time to fine-tune your software system is now.
Logistics is a large and dynamic global industry that is very receptive to technical innovations. It adapts such technologies as operational scalability, big data processing, and AI. And we are not talking about drones and robots!
To make all these factors work for your company, you need the essential foundation: Logistics management software.
Modern programming technologies allow the creation of functional software applications with extensive data processing, as logistics requires. At the same time, it provides a clear and intuitive interface optimizing work for the end users.
IT Craft specializes in providing custom software solutions for businesses. There are logistics companies among our many happy clients. We provide them with up-to-date logistics software tailored to their specific needs, combining user demands from one side and industry standards from the other side.
IT Craft: the Swiss Army Blade of IT Solutions