To the ordinary layman without the experience of owning a business that deals in manufacturing, the process of shipping may appear to be as easy as selecting the right company to haul your products from the point of manufacture to point B.
For the industry players who own manufacturing firms, there are a lot of challenges that they have to overcome like choosing a carrier that offers the best rates while delivering goods in the timeliest manner. If you plan on opening a manufacturing business, one of the first hurdles to your success will be finding the best freight management solution.
There are numerous freight management solutions for managing and executing the shipping process. Below, we look at the three most common freight management solutions in terms of how they apply to small and midsize manufacturing companies.
Hiring a Team of Logistics Professionals
To adequately address your transportation logistics, you'll have to apply logistics expertise to the shipping process. For many companies, the answer lies in hiring a team of in house logistics professionals. From a business standpoint, the first consideration of whether or not to hire full time logistics experts is always the payroll expense.
Although large companies that own their shipping fleet regularly employ a team of logistics experts, the salaries that logistics experts command can be prohibitive to smaller companies. If you find yourself in the position of having to compromise on other aspects of your operation in order to hire logistics professionals, it's probably best to seek an alternative and wait until your company grows big enough to afford increased payroll.
Hiring a Third Party Logistics (3PL) Provider
Outsourcing transportation logistics to a 3PL provider is a common practice among small and large companies alike. Instead of having logistics experts in the house, you have them at a remote location when you opt for 3PL. 3PL providers exist in four forms:
Standard 3PL providers and service developers specialise in offering particular shipping services but not comprehensive shipping solutions.
Similarly, customer adapters fulfil a more managerial role than conventional 3PL providers and service developers but they don't specialise in innovative shipping solutions. Customer developers specialise in innovative shipping solutions. In the long run, the level of service that you receive results in a cost that is equivalent to hiring your own logistics expert.
Implementing Logistics Software
Logistics software, also known as truckload transportation management software, allows companies to become their own logistics provider by accessing an easy to use interface to choose the best shipping options for their company's needs.
Logistics software is available on a SaaS model and as an internal software solution. In both cases, the software is designed to reflect a company's unique shipping needs based on the careful logistical analysis.
Logistics software doesn't require logistics to operate and it's less expensive than outsourcing to a 3PL because it's priced as a software service and not as a consulting service. Logistics software is ideal for small companies due to the costs that it reduces from the traditional shipping process, including gain shares, annual software maintenance costs, TMS software costs, 3PL costs, joint rate base licensing fees and freight margins.
Research shows that companies can reduce their annual shipping costs by 10 per cent after the first year of implementing logistics software.
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