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What Companies Need to Know About Logistics Software Development

Logistics software is important to companies for two critical processes: receiving raw materials and inventory from suppliers, and sending products to customers. As with other business processes, a technology platform increases efficiency and enables companies to provide the exceptional customer service that results in higher revenues and profits. Additionally, logistics software provides companies with real-time [...]

Vina Legault

By Vina Legault

Principal, Client Solutions - Colorado and the Rocky Mountains

10 min read

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Logistics software is important to companies for two critical processes: receiving raw materials and inventory from suppliers, and sending products to customers. As with other business processes, a technology platform increases efficiency and enables companies to provide the exceptional customer service that results in higher revenues and profits. Additionally, logistics software provides companies with real-time information about the status of deliveries and inventory and helps reduce transportation expenses. 

These benefits are why the logistics software market is expected to reach $18.31 billion by 2030, according to Market Research Future. The research firm notes that these platforms are making increasing use of artificial intelligence (AI) to predict demand, optimize inventory, and ensure accuracy in shipping. 

In the sections below, we take a closer look at logistics software, including what it does, how it can improve supply chain management, the kind of software your company might need, and why custom logistics software development might be helpful.

What Features Are Used in Logistics Software?

Specific functions of logistics software include managing processes with suppliers, retailers, and customers so that materials and other items are delivered in the right amounts at the right times to ensure an optimal flow of materials and products sufficient to meet customer demand. These software applications also provide analytics that help improve the flow of materials, inventory, and customer orders. 

Logistics software may be used at all points along the product procurement or development process through to fulfillment. Processes that may have been performed by separate teams in the past can now be performed in a single integrated platform. For example, customer requirements and sourcing may previously have been two different operations. With software, they can be coordinated to ensure customers are getting their preferred materials or brands.

The following are common management modules included within logistics software platforms.

Analytics

The analytics function uses data to provide suggestions across all the other software components, as listed below. This module is useful for scaling, improving efficiency, and increasing revenue. Companies can get a high-level understanding of the entire logistics process and make changes to improve efficiency and reduce costs.

Inventory 

This function enables users to manage inventory and raw materials using barcodes, RFID, or QR codes. In addition to location, users can learn information like the value and condition of each piece of freight. This module can be used to predict future needs and create orders accordingly, to optimize costs, improve delivery time, and keep customers updated.

Suppliers

This function helps users identify potential suppliers and work with them to ensure smooth operations. Additionally, businesses can manage the flow of materials and inventory from the point of origin to or from their location. This function helps to cut out intermediaries who add unnecessary complexity and costs to the process. This component provides another way to ensure customers have the most up-to-date information about the status of their packages.

Warehouse 

This function helps users manage all activities within a company’s warehouse. It tracks the movement of products and materials and provides analysis for things like space usage. Tools within this module may include price customization, invoice creation, notifications, and barcode scanning. 

Additional Functions

Typically, these functions are brought together in a dashboard that displays the most important information. For optimal functionality, users can adjust the dashboard to show the information they need most frequently. The software also uses the following tools:

  • Alerts provide notifications when the user is required to take action, such as when cargo is delayed and other parties must be notified. 
  • GPS tracking shows where vehicles are at all times, keeping team members and customers informed about the status of deliveries. 
  • Payment functionality enables customers to securely check out with their purchases. 
  • Reporting allows users to gather data they need to make better decisions and stay informed about the most important aspects of their logistics operations. 
  • Route optimization uses mapping data to determine the fastest routes for vehicles, to ensure the most efficient deliveries. 
  • Vehicle management enables planners to select specific vehicles to put into use as needed, providing the best delivery method for the situation. 

Key Benefits of Logistics Software

The features mentioned above can result in many benefits to companies that use logistics software.

Improve the Customer Experience

Customers see the delivery process as part of the service you provide. When it is slow or faulty in some way, customers remember and may reach out to your competitors for their next purchase. Even worse, you may lose some customers entirely as well as the referrals they might have made to family and friends. Social media doesn’t help the situation. When a customer is dissatisfied with this aspect of your service, they are likely to share their experience.

With a smooth delivery process, however, you can retain more customers and gain new ones based on word of mouth. Advanced logistics software can even help you go above and beyond the expected delivery service by providing specific real-time updates about where packages are and when they are expected to arrive. This level of service is becoming more of a must-have as customer expectations change. 

Reduce Costs

Analytics features can help logistics software users compare different options. For example, they can compare the costs of different shipping companies to make the best decision about which one to use. Users can also easily see where the most money is being spent in the logistics chain, offering an opportunity to cut down on those expenses.

Free Up Time

Many processes for logistics can be automated with software. So, you can manage this aspect of the company without as much human intervention. Things like billing and inventory are more automated. This benefit is helpful for two primary reasons. One, it reduces human error. Two, team members are freed up to focus on more high-level tasks.

Manage Digital Assets

Logistics software can help you manage things like data and documents. The software can retrieve data from various sources and then run it through various components to arrive at useful conclusions. You can also store documents such as invoices. With all of this information in one place, the work becomes much more efficient and saves time.

How the Right Software Can Improve Supply Chain Management

At a high level, the right logistics software can improve a company’s supply chain management by increasing end-to-end visibility of materials, inventory, and customer orders. The ability to track freight and packages in real time enables companies to eliminate or sharply reduce the problem of misplaced or late deliveries that can be costly, especially as these expenses add up over time.

One of the key tools in modern supply chain management is sensor technology, which enables systems to track packages. Another improvement is in relationships with suppliers and vendors. With the right software, companies can find the right partners to provide the best service to customers. These partnerships contribute to the high-level goal of end-to-end visibility and quality. Partners can help each other ensure that deliveries are made efficiently and quickly. Another technology that can be involved in this process is blockchain, which some companies use to exchange information and build trust.

Software brings these elements together and provides solutions when problems arise. The technology can also help to make predictions and avoid such problems in the first place. In addition to data analysis, machine learning is useful in this process, as it can help identify issues such as inefficiencies in route planning, challenges with regulations, or environment, social, and governance issues such as ensuring sustainability in operations. 

How to Choose the Best Logistics Software for Your Company

The following steps will help you get the best logistics software for your company’s needs. 

Identify Goals 

Determine what problems need to be solved in your company, including those that might not necessarily seem at first to be related to logistics. For example, your customer care team might know very well that late deliveries are a big problem for customers. In fact, this might be the biggest issue that customers call in with. Yet, you might not necessarily know that unless you ask that team or gain access to analytics that show this data.

In this case, the identified goal might be to increase on-time deliveries by 100%. This example reveals the importance of getting the entire company involved. While you may have considered logistics a discrete function in the past, modern business operations require a whole-company approach. Before taking any steps to purchase logistics software, don’t forget to get executive buy-in and input from anyone who will be using the system.

Other goals might include reducing vehicle maintenance costs, reducing the number of staff needed for logistics operations, or increasing efficiency across the company. Once you have these goals identified, try to determine what features and functions might help.

Ask for Recommendations

Ask other companies like yours what logistics software they use and what they like about it. Be sure to ask about things like usability, customer service, and functionality. You can also get recommendations online by searching for the best logistics software. Keep in mind that online recommendations may be less reliable because they are often published or supported by companies that supply this software. 

Perform Research

Compile a list of potential vendors and research their offerings. Keep in mind the goals you’ve already established and make sure that the solutions you are examining have the necessary features and functions. In addition to those functions, each platform should be able to integrate with your existing technology stack. And, of course, it must be within your budget.

Narrow the Search

Based on your research, narrow the search to two or three final candidates. Find out if you can use the software on a trial basis or, at the very least, get a demonstration. Now is the time to take advantage of any resources each vendor might have available, such as a sales presentation. Once you have seen the software in action, make your final decision.

Why Custom Software Is Better for Logistics Companies

While you may find a perfectly suitable commercial off-the-shelf (COTS) logistics software application for your company, those solutions might not have all the features you need or may have a lot that you don’t need. When this is the case, you can consider designing custom software. 

Your first thought on reading that idea might be that it’s prohibitively expensive. And it’s true that there is a high initial cost for custom software development. However, there are many benefits to offset the cost, including features that might actually save you money in the long run. For example, custom software is designed to grow with your company, so you will not have to buy a new application if future needs go beyond your current solution. 

Additionally, such software is designed specifically for the needs of your company, so you won’t have to find ways to work around COTS software features that don’t quite fit. The software can be designed to integrate well with the technology you already use. Additionally, you get enhanced security, because most breaches happen with COTS software that hackers can easily learn about. The following video highlights some of these benefits and more.

The process of finding a vendor to custom design logistics software is similar to that of searching for COTS logistics software in some ways. For example, it is helpful to get recommendations, do online research, and narrow down your search to two or three of the best options. However, once you choose the company, there is a series of additional steps, as listed here.

Consider Service Quality 

You’ll need to consider factors above and beyond the software features and basic customer service. The company you choose to design your software should be very in tune with your needs and goals. You will also need to make sure that the company you choose can work with you in the way that you need. For example, there are many excellent software developers in various regions of the world who could do an excellent job. But if you want a team that can work with you in person, you will need to limit your search to your local geographic area.

You will also want to make sure that the software company has plenty of experience, especially with companies in your industry. During an interview, the team should be respectful and highly responsive to any questions you might have. You should feel as though they are not just a service provider but a partner in helping your business succeed.

Refine Your Goals

Knowing what you want to achieve with logistics software is even more important when you are having it designed specifically for your needs. The custom design team should help you refine your goals and should ask pointed questions to narrow down exactly what you want. 

The following are some questions to ask internally before meeting with any software development firms. You may not share all of this information with vendors, but it will be helpful for you to know as you move forward. 

  • What problems are we trying to solve? 
  • What exactly is the deliverable we want at the end of the project?
  • What features must it have?
  • What features would be nice to have? 
  • Who needs to be happy with the outcome? 
  • Who will be using the solution? 
  • What technologies must the new software integrate with? 
  • How involved do we want to be in the development process?
  • What is our deadline?
  • Which is the highest priority for us – quality, price, or speed?
  • What are our preferred communication methods? 

Know What to Expect 

While you want to believe the software vendor you choose will do a great job and have your best interest in mind, it never hurts to put everything in writing. In the contract, make sure there are clauses for things like what happens if the project gets off track and what kind of ongoing maintenance and enhancements are included with the service. Also, learn about the vendor’s communication practices, development methodology, and how they will manage any proprietary information they have access to.

The Value of the Right Solution

Companies that rely heavily on shipping face numerous challenges in today’s business environment, especially following the supply chain crisis that occurred during the COVID-19 pandemic. Obstacles include labor and shipping shortages, increasing freight costs, increasingly complex systems, and changing customer expectations. The right logistics software can help to manage all of these issues. The key is making sure the solution you use is compatible with your needs and existing technology.

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