For most manufacturers, the second biggest operating cost next to payroll is the cost of the shipping process. If you dream of starting a manufacturing company and making it big, you'll eventually realize that maximizing your bottom line has more than to do with how many products you sell; it also has to do with how economically you're able to ship your products. The more products that companies produce, the more their shipping costs increase, which has lead to a competitive carrier industry that offers several shipping options for companies of all sizes. To arrive at the best shipping solutions, companies have three basic options: they can hire in house logistics experts; they can outsource to third party logistics (3PL) providers; or they can implement freight optimization software-also known as truckload logistics software and logistics software. Below, we look at these options to determine which ones suit which companies best.
Hiring In House Logistics Experts
Because finding the cheapest shipping solutions without compromising shipping quality is predicated on logistics, it makes sense that a company would hire its own logistics experts. However, hiring a team of logistics professionals can result in a payroll increase that small companies can't afford, leading them to examine whether 3PL or logistics software would be more affordable. If your company has grown to the point where it's on the brink of purchasing its own shipping fleet, hiring your own logistics experts is probably an affordable proposition, and it will bring the benefit of having your shipping process managed internally by devoted employees. But if your company can't afford a payroll increase, there are other shipping options that can offer logistics expertise at a more affordable price.
Hiring a 3PL Provider
Hiring a 3PL provider is traditionally how shipping companies implement logistics without paying for fulltime logistics experts. But before your outsource to a 3PL provider, you have to make sure that you're outsourcing to a provider that meets your shipping needs. There are four types of 3PL providers: standard 3PL providers, service developers, customer adapters and customer developers. Standard 3PL providers and service developers are extremely affordable, but they don't take a comprehensive approach to the logistics function, instead offering particular services. Customer adapters take a comprehensive approach to the logistics function, but they don't develop innovation solutions, instead functioning in a managerial capacity. Customer developers take a comprehensive approach and develop innovative solutions, but hiring a customer developer can be as costly as hiring your own logistics team. Unless your company is looking for a specific service offered by a standard 3PL provider or a service developer, chances are that the narrower range of shipping solutions that comes with using 3PL isn't worth the price.
Implementing Freight Optimization Software
For shipping companies of all sizes, implementing logistics software is quickly becoming the most innovative and affordable shipping solution. The software is developed and marked by software companies that employ logistics experts and are overseen by business veterans of the shipping industry. Logistics software is available on a SaaS model and as an internal software solution. In either case, logistics experts tailor the software to sync with a company's unique shipping process, which the company then controls by accessing the software's easy to use interface. Logistics expertise is not required of logistics software users, and its pricing structure as a software offering makes it more affordable than paying
for logistics consulting services. In terms of hard numbers, research shows that companies that implement logistics software can realize a 10 percent reduction in their annual shipping costs at the end of one year.