In this post, we demonstrate how logistics management Software (or LMSs) may add value by automating procedures and using data to make educated decisions. If you’re outsourcing logistics operations, you’ll also learn how to interact with 3PL businesses.
What is the definition of logistics management Software?
Logistics usually operates in two directions: forward and backward. When we talk about logistics, we typically imply procedures like receiving and processing orders, verifying and preparing inventory, packaging and picking an item, dispatching it, and choosing a transportation route that will deliver the product to a consumer as fast and effectively as feasible. Any procedures including managing faulty or broken shipments, repairing things, and reusing or recycling things are considered to reverse direction.
In today’s digital era, firms utilize logistics management Software, which is a collection of software tools that optimize all processes, from placing an order to delivering it to a customer’s doorstep. There are several ways to introduce and integrate the logistics management Software LMS into your organization:
1. Develop, buy, and manage your own logistics management Software LMS software.
2. Outsourcing — hiring a third-party logistics (3PL) firm to handle all of your logistics needs: “Using a 3PL allows you to get up and running quickly without having to teach your personnel about new procedures, equipment, or software,” says Matthew York, an SAP sales and distribution, logistics execution, and warehouse management analyst.
Modules that make up a logistics management Software
Management of orders
Creating and revising inventory, managing customer support, taking payments, checking for fraud, and handling documents between manufacturers, suppliers, warehouses, and shipping firms are all part of receiving and processing an order online.
Orders, inventory, supplier, and customer data must all be synced in one system to successfully handle orders and minimize duplicate handling mistakes. Order management software (OMS) collects orders from all of your sales channels and tracks them from placement to delivery confirmation. This is your major connection hub, where all order information is shown, including routes, locations, inventory, warehouse connectivity, and accounting integration to make invoices and take payments, among other things.
An integrated OMS is connected to your CRM and inventory database to supplement the sales funnel and give information to accounting and marketing departments. Connectivity to prominent marketplaces, vendor inventory, and multi-currency possibilities are among the additional features.
Management of inventory
Inventory management is responsible for regulating and recording the number of items available for sale in the supply chain. Receiving, storing, and tracking inventory while coping with its quick and continual changes necessitates the management of extremely precise product information. As a system, automating the management from traditional spreadsheets to inventory management systems (IMS) provides the desired clarity by centralizing all data in a single spot.
Any inventory changes are tracked and reported by IMS. It maintains replenishment equilibrium, preventing stock-outs and surplus inventory. The system keeps track of low stock levels and automatically reorders each product. Meanwhile, forecasting product demand, it decreases the danger of ordering too much.
A collection of systems for managing, regulating, and automating warehouse operations is known as warehouse management. Receiving products, transferring them, using KPIs to manage warehouse personnel, ensuring safe working conditions, and employing software and technology to find and track objects are all part of this process.
A warehouse management system is a collection of tools that automate the process of managing items from arrival at the warehouse through storage and tracking inside the facility, as well as order management and dispatching. “Warehouse management software can provide a major break with fulfillment and stock tracking,” says SAP analyst Matthew York. In the case of 3PL firms, Matt adds that they also provide a large storage room for an organization’s items.
WMS is usually in charge of the following operations: warehouse layout. This feature provides for optimizing storage space, regulating inventory placement, and increasing the flow of things and labor by prioritizing the regions of the shipping queue that require special attention by providing a comprehensible 3D map of the warehouse structure.
Picking. The software, which is linked to the scanning equipment, assists in locating products across the warehouse. WMS tracks the barcodes given to things and directs order assemblers to the required items via an efficient picking path. Pickers double-check the lot selection to verify it is correct; the system confirms it by scanning the linked barcode. In terms of speed, the batch picking function can save time by allowing you to pick several orders in a single pass.
Packing. To ensure a safe shipment and a better unwrapping experience, orders might have special packaging needs. The WMS ensures that the packaging is done in the proper sequence and as effectively as possible, in accordance with the company’s regulations.
management of labor. A labor management system incorporated with the WMS is used to supervise the human component of warehouse operations. First, the system uses workforce planning and scheduling features to allocate jobs to specific warehouse employees. This enables you to monitor productivity and pinpoint underperforming shifts or employees. The task history environment displays an employee’s whole history of actions, which may be used to analyze peak labor, optimize workflow, and discover solutions to problems. It will boost production and efficiency in the long run while cutting labor expenses.
Strategy for transportation planning
After the order has been constructed and wrapped, the next step before it leaves the warehouse is to optimize the shipping, which includes:
Selecting a delivery method From a choice of possibilities, the logistics management Software LMS chooses the optimal transportation logistics option for your freight needs. Dry van freight for non-refrigerated commodities to refrigerated freight for temperature-sensitive items; less-than-truckload (LTL) freight for cost-effective shipment of smaller loads to heavy freight for larger loads and bulk freight for vast quantities of raw materials, etc.
The carrier network is being connected to the logistics management Software LMS links shippers and carriers, giving everyone involved visibility to discover the optimal shipping choice. Transportation procurement tools can help you choose the lowest-priced carrier. These tools help in customizing a client’s request for a proposal, answering questions, receiving proposals, and evaluating bids.
3PLs, on the other hand, normally have no assets of their own and instead connect suppliers’ shipping needs with competent fleet providers. You may learn more about how fleet management software works and what value it provides by reading our article on the subject.
“3PLs have a vast database of both corporations and individuals that offer shipping services,” Matthew York says of non-asset-based logistics. They may give a better possibility of having work done since they are not confined to their own assets. “( Matt describes 3PL as a one-stop-shop that relieves you of a lot of logistical stress.
Custom costs and documents for worldwide fulfillment are being defined. Despite the fact that international shipping involves a lot of paperwork and constantly changing export control requirements, the logistics management Software LMS can make it a lot easier. The system estimates value-added taxes, cross-border fees, and freight forwarding expenses in numerous languages and currencies. logistics management Software LMS also controls required shipping paperwork, assuring compliance with both domestic and international regulatory procedures.
Management of transportation
Transportation management software is the major software suite for solving freight transportation demands and managing all shipment data (TMS). Companies intending to use TMS systems are searching for the following capabilities:
Management and scheduling of deliveries. Through their individual, online TMS accounts, clients may plan their shipments. Population density, vehicle type, and capacity, as well as predictive traffic analytics, are used to estimate delivery times.
TMS supports on-time delivery by automating asset tracking and sending out timely warnings to both shippers and customers when a shipment is late.
Cross-docking This characteristic defines a delivery style that avoids the requirement for warehouse storage since the items are transported directly from the producer to the client. This can shorten delivery times while reducing labor costs and warehousing space. Cross-docking, on the other hand, risks losing inventory management. As a result, efficient cross-docking requires comprehensive inventory management mechanisms.
Logistics for the final mile The distance between a distribution center or facility and the end customer might be anywhere from a few blocks to 50 or 100 miles. Last-mile logistics uses parcel or small package carriers to deliver goods to customers. Read our post on eCommerce delivery and shipping carriers to discover more about how to integrate with them.
According to Tom Craig, president of LTD Management, a logistics consulting firm, last-mile logistics, which provides same-day and rapid delivery services, is a significant differentiating aspect in the market. “They are leveraging logistics as a tool in their velocity,” Tom says of Amazon. They’re bringing logistics in-house as part of that speed emphasis. It’s known as “reverse outsourcing.” This is both a problem and an opportunity for third-party logistics providers to rethink their function and position in the end-to-end supply chain. “
order management. Clients are given access to an online portal that monitors shipments on the road and alerts them to any transit exceptions or unexpected delays, giving them complete visibility into product movements.
Location tracking is usually followed by reporting in a real-time vehicle position database. Another package monitoring option is to report the object’s arrival or departure and keep track of the object’s identification, location, time, and status.
Customers, as well as vendors, require visibility into the delivery process. They can follow the progress of the items in a matching application if they have an order ID.
Accounting for transportation. TMS keeps clients informed about their shipping costs by centralizing all shipment-related documentation. By allocating expenses, assigning billing codes for accountability and budgeting objectives, and creating and paying freight bills, the system streamlines accounting.
Logistics in reverse
Managing consumer returns back to the producer is a logistically difficult operation. As a result, using a reverse logistics system (RLS) to simplify repair, return, and product reallocation operations are worthwhile.
Monitoring of data When a return is made, the location of the product and the reason for the return must be recorded. RLS can help you keep track of what things have been returned, why they were returned, and if they were delivered back to the client.
status is returned. You will boost client satisfaction by offering them visibility into their returns. Providing quick feedback on the return activities for their purchase on the returns portal or via e-mail/SMS alerts is an excellent method to achieve this.
tracking of quality assurance. When there are quality concerns and items need to be quarantined, recalled, or repaired, the system will alert the necessary personnel.
Analytics for logistics
The software can assess shipping history and enhance clients’ operations using analytics and big data, lowering logistical costs and reducing cargo delivery times. The software may generate computer models to forecast supply chain difficulties and develop performance measurements and KPIs using business intelligence.
Because the logistics management Software LMS captures so much data, it should be put to good use. A logistics analytics software’s (LAS) reporting capabilities contribute to greater visibility and control over future logistics outcomes.
Freight accruals keep track of the cost of transporting your products to a consumer. They make it easier to figure out what the company’s real net revenue is at any particular time.
Carrier reports may help you find the lowest-cost carriers, track their performance, such as on-time pickups and deliveries, and ensure that your routes are compliant.
KPI reports give a quick overview of the company’s overall performance, concentrating on the most important metrics.
How can logistics management Software be integrated?
As previously said, there are two approaches to digitizing logistics functions: employing the logistics management Software LMS on its own or combining it with a 3PL. Different integration methodologies are required for these methods.
logistics management Software LMS integration
Using any module from the logistics management Software family necessitates some basic integration with a company’s ERP system (ERP). Inventory management, order fulfillment, accounting, human resources, customer and supplier relationship management, and other activities are all integrated into ERP. It features a common database that allows for synchronized reporting and the automation of different back-office activities, so any warehouse or transportation management services would fit right in.
You have the option of using the logistics management Software LMS in-house in one of the following ways:
Using your ERP provider’s logistics management Software LMS Check to see whether your ERP software has logistics features. SAP, for example, has a large ecosystem of APIs, extensions, and open connections that may smoothly extend your ERP.
Using information technology, In most circumstances, you’ll need to integrate systems from many vendors, which implies integration should be hardcoded. In this case, ensure that your IT personnel are capable of handling the workload or outsourcing integration to external services.
Create your own logistics management Software LMS. If you have the time, resources, and a use case for creating and engineering your own logistics software (logistics management Software), you can hardwire it into your ERP.
Using third-party logistics
When a company wishes to outsource all or part of its distribution and fulfillment activities, it turns to third-party logistics businesses. You must take care of data exchange technologies and give them connections in order for them to have access to and the capacity to manage and alter your inventory.
Before integration, if a client needed information, they had to go via the accounting manager, who then had to go through so-and-so until they discovered the answer, and so on. Integrated systems now allow for direct engagement with customers since they can see all shipping information throughout the product life cycle. “Within the ERP, the 3PL may be established as another facility tied to your local sales organization,” says Matt York. This allows you to see and control your inventory at the 3PL. “
So, how should 3PL integration be approached? Vinodh Nithyanandam, integration manager of XPO Logistics, one of the major providers of transportation and logistics management Software services, was contracted to address this topic.
Three integration strategies have been identified based on expert opinion.
Electronic Data Interchange allows for integration (EDI). EDI is a method of exchanging structured documents between business partners. EDI standards, or EDI document formats, define what information belongs wherein an EDI document. For additional details, see our page on EDI installation. while discussing various modes of transportation connections. ANSI X12 and EDIFACT are common EDI standards in the 3PL business.
A fundamental part of integration is EDI communication mechanisms, which describe how data from one system is sent to another. The following are some of the most prevalent communication methods:
- Individual connections in point-to-point EDI
- Value-added services on the EDI Network
- FTP, VPN, SFTP, FTPS, and AS2 are Internet communication protocols.
- Web EDI is accessed with a typical Internet browser.
- Using an external professional to handle the EDI environment is known as EDI outsourcing.
Because of its simplicity and availability, Vinodh feels EDI is the ideal approach for the time being: “Because most vendors support EDI, there is a higher return on investment.”
Application Programming Interface (API) suite integration API-based integration systems two systems by understanding and translating data between their APIs. FedEx Supply Chain, a prominent third-party logistics service in the United States and Canada, uses APIs to integrate with eCommerce systems. Customers can design their own APIs to connect to their system, and they welcome connection proposals.
Vinodh acknowledges that API offers a number of benefits over EDI. He does, however, point out that because API is less common, it takes longer to finish the integration: “Most of the time, API requires bespoke programming, so there is always some rework, whereas EDI is an ANSI standard.”
Jake Rheude, vice president of Red Stag Fulfillment, says that APIs normally require some customization. In the meantime, Jake emphasizes the importance of APIs in “ensuring that inventory data is the same whether it’s on a client’s Shopify-based website, the warehouse where items are housed, or in the delivery truck on the route to a customer’s house for delivery.” Red Stag uses an API to link its WMS to the backends of numerous online channels, enabling omnichannel presence (Amazon, client’s website, social media, and so on).
Non-EDI format files are used for integration. File-based integration, as opposed to direct connection, allows data to be transmitted between multiple databases or operating systems as a file (XML, JSON, flat file, CSV, etc.).
In certain circumstances, file-based integration is the most practical option. Legacy software, for example, frequently lacks APIs for integration. “The shipper and 3PL may collaborate, but there won’t be genuine integration,” Tom Craig says. As it would require going beyond the buyer-seller relationship and bringing the 3PL in-house. ” He refers to this type of collaboration as “an arm’s-length friendship.”
Technological Change: Drivers
A 2016 Globe Economic Forum report on digital transformation in logistics recommends a few technology-driven measures to help the industry grow and stay competitive with the rest of the world.
Crowdsourced routes and customer-owned cars, including shared transport and warehousing, and adopting Analytics-as-a-Service are all examples of short-term and low-complexity efforts.
The circular economy, urban logistics, and boosting cross-border operations with technology are among the medium-term ideas for the next 2–5 years.
Finally, today’s trendiest logistics themes include drone deliveries, autonomous trucks, and 3D printing, all of which fall into the long-term category.
Because we tend to focus on far-reaching technologies that have yet to penetrate the industry (Amazon has been testing its drone delivery service since 2013), it makes sense to focus on the digital supply chain solutions we already have – smart systems bring automation to every warehouse, vehicle, and office, advancing all supply chain sectors.