Buying logistics software is getting more complicated and there's more at stake. There are a variety of factors to consider in making the choice: the functionality of the tools, the price, delivery model, the reputation of the vendor, the level of users' sophistication and integration with existing systems are all key factors.
To help logistics software buyers and users make a more informed decision, Purchasing recently reached out to a host of software suppliers, consultants and users to get their insight on how to select and implement logistics software. Here's what a few of them said.
Tip #1 Know what problem you want to solve
Mike Regan, CEO of Tranzact Technologies in Elmhurst, Ill. and vice chair of the Institute of Supply Management's logistics group, says logistics software buyers need to have a clear and specific understanding of the problem or process that the desired software is going to address. Sounds simple right? Regan says it's surprising how many logistics organizations skip this step.
“Having worked with hundreds of companies and logistics organizations both as a software provider and through ISM, I can tell you that far too many times they do the equivalent of walking in to the show room and simply saying: 'I am interested in buying a car.' But there's a big difference between a Bentley and an Impala.''
Look to your 3PL for software
Logistics software today can come from a variety of sources: it can be developed in-house, bought from a point solution provider (installed or on-demand), added on from your ERP vendor, or, more often today, as a value-add from a service provider or 3PL.
Roy Cashman, COO of 3PL Transplace in Plano, Texas, says for companies with robust internal resources with the ability to configure software and manage its day-to-day operation effectively, buying logistics software may be the right alternative. However, he warns that day-to-day management will require significant time expenditure from potentially key strategic resources.
“Utilizing software from a technology-advanced 3PL can allow you to tap resources from a provider that is already experienced in manipulating the software as well as its day-to-day use, which can speed implementation and time-to-value,” Cashman says. “This approach also frees internal resources for more strategic projects and allows them to focus on managing at a high level such as monitoring performance.
Achieving economies of scale by using a 3PL's software is another consideration, Cashman says, and a key point to consider is flexibility. “If your requirements change at some point and you no longer need a 3PL but still need logistics software, are you able to leverage a 3PL's software without buying its services?”
Evaluate a software provider for value-added services
It's the flip-side of tip #2, but more logistics software and technology providers today are branching out in the services arena. According to the recent Transportation Management Benchmark Report from Aberdeen Group, “Some enterprises are starting to look to their transportation management solution providers to bolster their internal staff capabilities via managed services. These services can be viewed as a lighter-weight alternative to full business process outsourcing and can come from a software vendor, consulting firm, or logistics service provider.”
The Aberdeen report found that 45% of companies say they are interested in considering managed services for transportation planning, and 44% would consider using them for shipment monitoring and problem resolution. Twenty-nine percent of those polled are interested in using managed services for transportation procurement.
On-demand vs. installed: Depends on the process
The decision between selecting on-demand logistics software and installed may have more to do with the process being automated than with price or ease of use.
According to Johanna Boller, vice president of enterprise software product management at Pitney Bowes, “Due to the more standard nature of on-demand solutions very often there is less flexibility to tailor the application to unique processes. This is often a key factor in determining if an on-demand application can meet the needs of a logistics organization. Potential buyers should closely evaluate the process tradeoffs that may be needed for on-demand solutions versus the flexibility that comes with traditional installed software.”
Boller says traditional installed solutions let users control servers and hardware and network infrastructure. “For a mission critical application such as shipment execution software, you can't afford to have any delays in systems response times at peak shipping periods.”
Consider the level of collaboration required from the software
One of the primary benefits of software in general is the increased collaboration it can provide and logistics software is no different. The ability for logistics carrier, buyer and supplier to collaborate on a shipment's status via the Internet has revolutionized the idea of “on-time delivery.”
Warren Patterson, senior vice president of product strategy and development at SMC3 says logistics software is definitely becoming more collaborative, where information sharing between purchasers and providers of transportation services is key. He's a proponent of hosted/Web-based software that allows information to be shared electronically while access to that information can be systematically controlled.
“Shippers and 3PLs are looking to focus on the results of their processes and not the worry of maintaining all of the functions and links required to work with a large, diverse and constantly evolving carrier community,” Patterson says. “On-demand access via the Web means product updates are instantaneous and seamless to the user. What's more, the product administrator on the user's end can better control who has access to the product as well as levels of access.”
Aberdeen's report says, “Make sure the system used for inbound freight management (which often takes the form of a supplier transportation portal) is architected to be scalable across lots of vendors and is built for high performance and ease of use.”
Advanced evaluation
Six questions to ask your logistics software provider
1. Does the solution have a built-in process for notifying key individuals of important milestones and other events in the process? A technology solution should help users through intelligent prompting wherever possible and it should be a proactive process based on user input. Prompts are not necessarily required in all steps but when designed into the appropriate workflow they can be very beneficial.
2. Is the data that’s exchanged complete and accurate? Any data provided should be complete and programmatically error checked at upload time wherever reasonably possible for inconsistencies and load errors. Efforts should be made from your technology solution to automatically check data for required fields, missing data, and other potential error and data integrity conditions.
3. Are there automated processes for analyzing data? Data analysis should be scenario-driven by allowing the shipper or 3PL to vary certain conditions and elements that form the basis of a result. Dynamic scenarios allow the user to see and work with a broad range of complex criteria that can be more easily managed and compared. Also, the ability to save and recall these settings can be very helpful as a means of comparing results.
4. Are there accurate processes for analyzing specific data? The type of data analyzed by transportation professionals varies widely, from simple carrier service points to complex LTL pricing scenarios. It’s important to understand the type of data you are working with so that you know the solution you’re purchasing is best suited to your specific data analysis needs.
5. Can process results be viewed at a detail level? Too often solutions present only summarized results. The solution should provide the means to make data associations with common data markers or reference points.
6. Does the solution effectively manage complex processes? An effective Web-based technology solution should save time and reduce costs along each step of a process, no matter how complex.
Source: SMC3
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