3PL Logistics Software: 6 Pitfalls It Should Help You Avoid

Outsourcing last mile deliveries to third-party logistics (3PL) providers is a strategy many businesses employ in order to better focus on their competencies. After all, managing in-house fleets and drivers can be quite taxing, especially if the enterprise has limited expertise and bandwidth for logistics operations.

That said, many businesses worry about losing control of the delivery experience when they outsource to delivery partners. Operating costs can also spiral out of control when a company outsources deliveries. As a 3PL provider, the best way you can compete for success in the market is to allay customers' fears about those things happening. 

How do you make that happen? Start by investing in advanced 3PL logistics software that helps you avoid these common pitfalls:

6 Pitfalls 3PL Logistics Software Helps Avoid

1. Relying on Conventional Processes

Logistics management now has the ability to be more seamless than ever, thanks to digitization. However, many companies still rely on manual planning methods and outdated technology, both of which prevent them from becoming more competitive.

The latest technological tools enable companies to load trucks more easily, track drivers and orders, communicate with customers, and optimize routes. Relying on new tools even allows your business to seamlessly share routes and other information with clients. 

In contrast, legacy technology and manual processes won't offer the above-mentioned benefits. Some businesses even find themselves spending considerable amounts yearly to upgrade their existing legacy functionality—all with minimal returns. In this way, 3PL logistics software is a more sensible investment. Why? Because the best 3PL software provides all the needed features to help make logistics operations more cost-effective and efficient.

2. Lack of Route Optimization

Route optimization plays a crucial role in ensuring that goods are received by customers within promised delivery windows and in minimizing last mile delivery costs.

3PL software offers logistics firms the most cost-effective routes by factoring in different variables in its calculation. These factors can include historical traffic patterns, driver skill and speed factors, service time factors, customer requests, and much more.

Manual planning takes countless hours and is often inaccurate. In contrast, your 3PL software's route planning and optimization feature should provide route plans in just a matter of seconds. Users only need to set their established parameters, import orders, and let the system do the work.

3. Lack of Visibility on Drivers

The right 3PL software solution also comes with tracking and visibility features to help fleet managers and dispatchers monitor drivers and vehicles on the road in real-time. 

Real-time tracking helps ensure that drivers are complying with the route plans. It helps fleet managers identify drivers who are making unnecessary and unscheduled stops and are idling too much. Just as importantly, it can show the status of each order relative to the delivery window that was promised to the customer. In this way, dispatchers can more easily spot looming delivery exceptions and act proactively to prevent them from throwing plans off track or irritating the customer. 

Compare this to 3PL solutions that don’t offer an easy way to see what’s happening in the field in real time: Typically, you won’t know about missed or late deliveries until it’s too late to do anything about it. Customers will leave negative Yelp reviews complaining about the delivery service, but your last mile operations will remain a black box that’s impossible to optimize.

4. Not Offering Customers Real-Time Updates

Customers place high importance on order visibility and transparency, and businesses that fail to provide customers with delivery status can expect high customer churn. Luckily, sharing order and delivery information is quite easy with the right logistics software system. 

An advanced software solution can provide a customer portal feature, enabling customers to know their delivery package status with a few clicks. It should also provide automatic updates and notifications to inform customers when their orders are already out for delivery or about to arrive. Automatic updates also reduce the number of customers calling the customer service team—which has the potential to cut down your back office costs considerably, all while boosting the satisfaction rates of customers who really don’t want to have to call in. 

5. Guessing at Transportation Expenses

Companies factor logistics expenses into their product costs. Those that only estimate or guess transportation costs ultimately affect their product's value by either making their prices too low or high or making cost estimates based on past metrics. As a 3PL, it’s your job to provide clarity into this element of the supply chain. 

High estimated travel costs will decrease the demand for the products while estimating costs too low will cause losses. Several factors can make transportation expenses go up. These include driver shortages, high fuel prices, and regulatory mandates, and demand volatility. Unfortunately, many businesses make the mistake of using last year's figures for their product pricing.

You need the right 3PL logistics software in order to eliminate the guesswork in calculating transportation costs. This is partially a factor of robust data integration and reporting, but it’s also largely based on your ability to gain visibility into each order after the fact. The ability to determine delivery operations costs accurately also empowers firms to make competitive bids for new contracts so that they don't bid too low that would cause losses.

Here, there are plenty of opportunities to get creative. For instance, the route planning feature of your software might enable you to model new geographies or other business changes so managers can determine accurately how much changes to delivery operations could cost in terms of fuel expenses and driver wages. This gives you the ability to make more data-driven decisions. 

6. Not Keeping Track of Market Trends

The logistics industry is constantly evolving with players finding ways to better manage their transportation and delivery operations. Sadly, many enterprises don't keep track of delivery logistics trends closely enough to take advantage of new opportunities. 

Businesses can easily avoid this mistake by paying more attention to what their clients, competitors, and partners are working on. It also pays for companies to be more mindful of the trends within their operations. The right software for 3PL providers helps in this area by offering data and insights on fleet management and other supply chain topics. An advanced 3PL freight software offers data in easily digestible formats to empower executives to make data-driven decisions.

In the end, delivery management—even for 3PLs—is complex. But enterprises can overcome these challenges and avoid committing the above pitfalls. All it takes is to invest in the right 3PL logistics software.