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Benefits of a Freight Management System

The number of tasks, processes and details that go into shipping of goods can be overwhelming. While timeliness and efficiency are important, logistics management should factor in other important tasks such as saving money, improving efficiency and making cost-effective changes to the supply chain. For a small to mid-size shipper, these can be especially critical.

Saving money without compromising on quality can be tough but a Freight Management system (FMS) can deliver on all these fronts, as long as the shipper chooses the right one and knows how to best use it. Here is why a small to mid-size shipper should seriously consider subscribing to an FMS.

Cost savings and less investment

With a proper FMS in place, a shipper can save 5-10% of the initial cost and control inventory and prevent wastage.

eAccording to a report published in June 2018 by global analytics solution provider Quantzig, a traditional logistics management system brings in huge costs in terms of invoicing and manual work. These costs can add up to as much as $11 per freight invoice when the overall costs would be significantly lower if an FMS is in place. Additional ways to reduce cost:

  • Another way for shippers to save costs is to outsource freight accounting services. In fact, many cloud FMS solutions are both scalable and customizable which make their adoption easy for plug-and-play systems.
  • An FMS can help cut down on the number of employees who liaise with the shippers.
  • Traditional FMS solutions cost more, especially with the incessant hardware and software updates that need to be implemented both at the shipper and the client ends. But with the advent of web-based FMS solutions, users get to reap more benefits at lesser costs.

Shipping it right

The first Amazon book order was made on April 3rd, 1995. Jeff Bezos did not have the book in hand at that time. He bought it from a brick-and-mortar store and parceled it to the customer — John Wainwright. Needless to say, it took a couple of days before the book reached the customer. Customers today are not so patient. They expect same-day delivery, scheduled delivery and on-demand delivery as a default service. In fact, they are even willing to pay higher shipping rates to get their order delivered when they want it. When serving these time-sensitive customers, the eCommerce fulfillment function must work with agility. Centralized warehouses with rigid delivery routes optimized for fuel efficiency is no longer feasible. The mainstream practice is to extend the last mile delivery with alternate delivery modes.

Customization and scalability

A robust FMS helps a small to mid-size shipper customize to meet individual needs without incurring huge upfront costs. Freight service providers also work hand in glove with carriers on projects that demand large shipping volumes. An FMS provider can help negotiate lower operating costs per head for small and mid-size shippers, especially when shipping less than a truckload! An FMS comes with round-the-clock analytics and data, thus helping businesses access a bigger pool of carriers. Also, FMS providers offer access to thousands of contracted carriers which gives businesses plenty of options to choose from and find the best quote that suits each and every task.

Analytics and data

A shipper can have access to real-time performance data based on geography, location and other specifications when an FMS is in place. Real-time data helps ease the decision-making processes based on carrier performances and rule out data entry errors, if any. This helps an organization make the most of its inventory and get real-time visibility to shipment statuses. Data about critical lead times can help pick leaner stock and choose the best shipping options that will scale to the kind of service you will need. Year-over-year data on savings in terms of money and time can also help make better decisions. An FMS helps you eliminate the manual labor of sending unwanted communication, when all you need is a single digital platform. The shippers can compare rates in real-time and make important decisions based on this data. By connecting your warehouse management system (WMS) to your FMS, you can get a deeper visibility of your end-to-end supply chain.

The Cloud Benefit

Until recently, employing an FMS used to be extremely cost-intensive. However, every FMS application today is a cloud-based program which the shipper can lease and use from multiple vendors. Cloud-based programs give access to remote locations and shipments, and come with their own IT team and experts.

Cloud computing ensures the safety of data and the shipper need not worry about file security or losing valuable data on shipments. Even a small organization can have access to advanced tools and can provide its customers high-tech services. A cloud system also helps an organization scale gradually.

Business growth

For small to mid-sized organizations, having an FMS is a huge competitive advantage. It can provide the benefits of a large-scale shipping organization without the hassles, overheads or paperwork involved in running one.

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