Special Report
Wheels of change
Smart Business Los Angeles | May 2009
Page 2 of 3
Min Shi
assistant professor
department of management, California State University, Los Angeles
Why logistics software is important
The addition of software to your logistics department will optimize daily and long-term transportation plans and scheduling, carrier selection, route planning, inventory management, and small parcel shipping, which can reduce costs.
While a software investment may cost at least $10,000, improving your shipping processes will allow you to serve more customers and increase profits in the long run.
“Developing a correct and effective logistics strategy means knowing your customers and the company mission,” Shi says. “Connecting this through software will be your best bet to make sure you’re meeting their needs and keeping track of your goods and minimizing your costs. Much of this software used for logistics is Web-based. This means there’s nothing physical to purchase, you simply gain access to the information cataloged and updated digitally. Software also allows you to have a backup plan if plan A doesn’t work out. Relying on one carrier will become your problem if something happens with their fleet or business.”
A common transportation management issue has businesses keeping more inventory on hand than necessary. This typically happens when stock is manually cataloged instead of tracked with software. This means more of your money is sitting in warehouses instead of in your pocket.
“This economy has been like getting bariatric surgery,” says James Moore, vice president of sales for Ryder System Inc. “If you lose 100 pounds all at once, your clothing isn’t going to fit anymore, and that’s what’s happened with many companies’ networks. They are now way larger than what they need to be and their one-time assets are now financially draining them. If efficiency is a problem with your transportation process, software will help eliminate errors and make the most of all efforts.”
Human error is a big part of what can go wrong in logistics. Depending on the volume of orders you are receiving, this can add up. The use of software can eliminate these errors and make your inventory and tracking easier to manage. Software can also determine the best carrier for a particular type of shipment and contractual agreements.
“The implementation of systems and software rapidly changed customer demand,” says George Hynes, president of Logistic Edge LLC. “Companies are seeing smaller orders and more dot.com orders of one or two items at a time instead of mass orders through business-to-business retailers. This changes the way shipping is conducted and there is a software application that can help companies adapt to these alterations and remain flexible.”
