Building a Logistics Management System: The Why’s and How’s

Though a major operation of many businesses, logistics still needs to catch up in functioning seamlessly. Warehousing and transportation often stay in a tussle when updates are delayed, keeping the warehouses either too full or absolutely empty. As digital transformation has disrupted many sectors across industries, it can also help play a role here. A Logistics Management System is the solution!

Building a Logistics Management System can directly impact your company by automating processes and using data to help you make informed decisions. Logistics management software not only saves your expenses and makes the processing of orders easy but provides you with greater visibility on how things are operating on every front.

While the pandemic does have a role to play in accelerating the adoption rate of logistics management software solutions, a 35% increase was already noticed after 2017. As digital transformation in logistics management reached $11,794.24 in 2019, it is expected to touch $23,607 by 2027, having a CAGR of 8.5%.

With a number of logistics software companies available, you can easily select one to get a logistics management system developed as per your custom business requirements.

Convinced about the solution yet? Keep reading with us as we discover more about logistics management software’s benefits, features, modules, and development requirements.

What is a Logistics Management System?

Logistics, in every business, typically operates in forward and backward directions. Forward movement mostly includes:

• Accepting and processing orders
• Reviewing and setting up inventory
• Picking and packing items
• Dispatching them
• Choosing a transportation route that will deliver the goods to a customer as quickly and effectively as possible

Backward or reverse movements often include managing returned or broken shipments, fixing things, and reusing or recycling.

Businesses employ logistics management systems, a mix of software tools that optimize all operations, from placing an order to delivering it to a customer’s door, to manage and automate these activities in a digital environment.

What are the Benefits of a Logistics Management System?

Effective management is essential for any firm to succeed in business. You may not only provide shipping, warehousing, and delivery services that are quick and secure, but you can also boost the worth of your company. Especially if your organization is expanding, you require a powerful software program that will enable you to increase productivity by optimizing your logistical planning procedures. This is where building a logistics management system helps.

Higher Profitability

Businesses can thoroughly understand their operations through automated logistics management, which improves client connections and lowers the need for maintaining surplus inventory. This helps to increase the order fulfillment rate, which, in turn, raises the business’s profitability.

Greater Productivity and Efficiency in Delivery

Logistics focuses on increasing operational efficiency without affecting profit margins. Developing a logistics management system can eliminate resource waste, meet quality requirements, and reduce failures, deviations, and defects.

Reduction in Operational Expenses

The logistics management solutions aid in analyzing historical data to provide route optimization that lowers fuel consumption and improves asset utilization while lowering operational costs and raising company effectiveness.

Increased Customer Satisfaction

Businesses that develop a logistics management system may provide better customer service and a seamless shipping procedure for a better customer experience that will increase brand loyalty and reputation.

For instance, for one of our US-based clients, who is a global manufacturer of heavy construction and

mining equipment, our team deployed an innovative data-driven logistics and supply chain management system. The system delivers sophisticated data analytics, which the company uses to generate useful insights and be more responsive to customers’ needs. The system also provides 60% enhanced visibility into process execution, thus improving the operational efficiency of the company by 30%.

Improvements to Intermodal Operations

Intermodal operations involve transferring freight using two or more different modes of transportation to get it from the source to the customer. Standardized containers are employed in a logistics management system to lower the risks associated with intermodal operations, lowering costs and enhancing transportation’s dependability, safety, and environmental friendliness.

Advanced Route Planning

Logistics management software development uses a smart route planning tool that enables firms to choose the optimal routes for shipping their products in order to reduce empty miles, avoid traffic jams, and assure on-time delivery to customers. Incorporating AI in logistics within this software not only refines route optimization but also dynamically adjusts to real-time conditions like weather changes and sudden traffic alterations, further enhancing delivery efficiency and reliability.

[Also Read: IoT In Logistics And Supply Chain – Benefits, Use Cases & Challenges]

What are the Common Modules of Logistics Systems?

Logistics management system development is now a practice of multiple sectors, be it transportation or warehousing. Check out these logistics management system modules that provide multiple features to aid your operations.

Order Management Module

Producing and revising inventory, managing customer support, accepting payments, detecting fraud, and handling paperwork between manufacturers, suppliers, warehousing, and shipping businesses are typically included in receiving and processing an online order.

Orders, inventory, supplier, and customer data can sync in one system to manage orders efficiently and prevent double-handling errors. All your sales channels send orders to your order management software (OMS), which collects and tracks them from when customers place them until the delivery confirmation.

It is your primary point of connectivity where all of the order’s details are visible, including routes, location, inventory, warehouse connectivity, and accounting integration to generate invoices and process payments, among other things. An integrated OMS is linked to your CRM and inventory database to complete the sales funnel and offer data for the accounting and marketing departments.

Warehouse Management Module

The warehouse operation aids in maximizing storage capacity, controlling inventory placement, and enhancing the flow of goods and labor force. The warehouse running module includes tasks including receiving products, moving them, using KPIs to manage warehouse staff, creating a safe working environment, and using software and technology to discover and monitor objects. Additionally, it tracks barcodes and uses an effective picking path to guide order assemblers to the necessary items.

Transportation Management Module

The supply chain’s effective logistics are built on the transportation management module. Such features as fleet and freight tracking, route consolidation and optimization, multi-modal transportation, performance monitoring, and seamless data flow across logistics and carrier management should be present in this module. Logistics management systems do this while also assisting you in automating maintenance and promptly addressing any issues that may arise.

[Bonus Read: How to build a transportation app like Moovit?]

Inventory Management Module

Controlling and recording the quantity of merchandise available for sale is the responsibility of inventory management, a crucial link in the supply chain. Product information management must be extremely precise in order to handle the receipt, storage, and tracking of inventory while managing its frequent and quick changes. So, automating the transition from conventional spreadsheets to inventory management systems (IMS) provides the necessary clarity by consolidating all the data in one place.

An inventory management software provides many benefits like monitoring and reporting any changes to the inventory and setting up automatic reordering for each product as low stock levels are detected. It keeps replenishment in balance, preventing stock-outs and surplus stock. Meanwhile, forecasting product demand lowers the chance of ordering too much.

Analytics and Reporting Module

Huge amounts of data are available through digitization. This module transforms data into useful insights that empower managers to make smarter decisions that boost productivity.

The analytics and reporting module should include functions like business intelligence that help the company find its dead weights and boost productivity.

Manufacturing Module

When you develop a logistics management system, the manufacturing module helps keep warehouse stock reserves up to date, ensuring that the goods are shipped and delivered on time, minimizing costs and risks while maximizing asset/investment returns.

Freight Management Module

Since manual freight management is no longer effective, a reliable and well-managed freight management system module is a requirement for building a logistics management platform.

Additionally, the carriers use the self-invoice option in accordance with their own demands. This module assists you in managing invoice disputes with a settlement mechanism. Additionally, by calculating freight costs, you are able to estimate prices and organize your finances.

Reverse Logistics

The logistics of managing returns from the consumer to the producer are difficult. Therefore, it is worthwhile to implement a reverse logistics system (RLS) that aids in streamlining the procedures of product reallocation, return, and repair.

Services for return logistics include the following:

Monitoring of information: There needs to be a record of the location of the merchandise and the reason for the return if any. RLS can assist in managing this data so that you are aware of the things that have been returned, the reason they were sent back, and whether they were transported back to the consumer.

Status update: Customers will be more satisfied if you provide them access to their returns information. Giving immediate feedback on the return activities for their purchase on the returns portal or by using email/SMS notifications is an excellent approach to accomplish this.

Tracking for quality assurance: The system will alert the necessary parties so they can take action when quality problems occur, and products need to be quarantined, recalled, or repaired.

[Also Read: Understanding Load Planning Software Features and Cost]

Logistics Management Software Features

Before you create a logistics management system, list the key features you want in it that will suit specifically your needs. Here is a list of a few essential LMS features.

Multi-client architecture: This would enable organizations to manage several clients in various activity phases of the logistics while sharing the same information and database.

Better demand forecasting: By better forecasting the price and demand of the items, businesses will be able to plan resources without running out of supply, which will assist in minimizing inventory.

Finance Integration: This function will aid in effectively managing transactions and accounting.

Easy warehouse management: This function will aid in better managing the storage and movement of the goods that drivers deliver to customers on schedule.

Processing orders and billing: With this function’s help, companies can create orders and bill customers electronically.

Bill of lading production: By using the LMS’s bill of lading generation capability, companies can produce receipts that will quicken the flow of transactions involving the shipment of goods between the shipper and the logistic company consignee.

Fleet management: For improved coordination of shipment transportation, this function aids in identifying more effective delivery routes.

[Know how much it costs to develop a fleet management system]

What More to Integrate to Benefit from an LMS?

Managing logistics processes is a challenging undertaking that requires the use of all available tools. The following is a list of the most popular ones.

Cloud storage: With cloud storage, tracking deliveries across several supply chain sectors becomes easier and more convenient. Additionally, cloud-based logistical solutions securely preserve your data and can even prompt you to complete essential duties.

APIs: The entire world has been digitalized, including the transportation hub. It is necessary to gather and effectively manage massive amounts of incoming data. The best tools to handle it are the APIs. In this manner, shipping APIs can be your dependable assistants for accurately tracking the delivery date and averting supply chain problems.

Payment gateways: Your customers will be able to pay for your services online with the aid of such integration. Stripe or PayPal can help with your payment concerns. But keep in mind that every project is different. Therefore you might require the advice and support of a knowledgeable IT provider while integrating a payment gateway. You can also go for creating your own payment gateway with the help of your partnered technology company.

Third-Party Logistics: You can outsource functional logistics from the warehouse to delivery with the aid of third-party logistics (3PL), saving yourself some time so you can focus on other organizational issues.

Tech Stack Needed for Developing a Logistics Management System

Building a logistics management system requires a strong technology stack that will be resourceful to create a secure and efficient solution. Here is the tech stack you need.

How Do You Build a Logistics Management System?

Now that we have established that having an effective logistics management system is the need of the day for business sustainability and have also listed the modules, features, and tech stack that go into developing a robust system, it’s time to gain some understanding on the logistics management system development process.

Also Read: Why Building Trucking Dispatch Software Is Critical for Solving Logistics Challenges

Define the Objectives

Decide what you want the logistics management software to achieve before you do anything else. In addition to automating routine activities, you should consolidate various business operations into a single platform to enable seamless order execution.

The following are some of the most typical objectives logistics companies have while creating logistics software:

• Real-time logistics tracking
• Inventory control
• Planning and enhancing a route
• Accounting and contract upkeep
• Vendor control
• Comprehensive analytics and reporting
• Portal with several users, such as one for logistics managers, one for suppliers, one for delivery personnel, etc.

Get a Team to Custom-Make the Solution for You

While you can buy an off-the-shelf solution, custom-making the software will change the game for you. You should hire a logistics management software development company that can assist in creating flexible, complicated solutions to manage various logistics operations and activities. The custom LMS can easily adapt your company’s objectives, which will enable you to gather the most crucial and accurate process performance data.

Construct Modules and Learn about their Features

You can now begin creating the functionality and modules you require. Low-code technology is people-centric, so you may incorporate business users and IT specialists. While creating the software, you can ask for input and make changes as you go. Together, developers and end users can work on the project. The end result will be software that is more successful once it is adopted.

Become a Part of the Wider Environment

It’s time to integrate your logistics software with other IT systems. You can link with, for example, Google Maps using advanced integration tools like APIs, giving your drivers real-time traffic updates and turn-by-turn route guidance. For instance, you could combine it with the financial system to ensure proper order and billing or with your human resources program to hire additional delivery executives during busier periods.

How Appinventiv can Help You Build Your Logistics Management System

The first thing you need in custom-building a digital solution for your business is-

• A company that you can rely on
• A company with the right technology resources
• A company with experience in what they are doing

Guess what? We check all the boxes. We’ve worked with multiple companies (including leading brands like IKEA, Adidas, KFC, and more), building digital solutions for all their problems, and we can happily do the same for you. We love listening carefully to each problem and curbing them with the help of innovative technologies combined with our team’s expertise.

As a leading logistics software development company, we excel in what we do. Try it out for yourself. Book a free consultation.

FAQs

Q. Why choose a custom logistics management solution over an off-the-shelf one?

A. Having the right solution served to you requires a little conscious effort. An off-the-shelf logistics management solution, while may sound cheap and convenient to you, might not fulfill your custom requirements or adapt to your business’ goals.

Therefore, choosing a custom logistics software development company is always the right choice as it helps you scale your product and business whenever you demand.

Q. What are the popular technology trends being followed in the development of logistics management software?

A. The most common technology trends being followed while building a logistics management system include:

• AI: It helps deal with structured and unstructured data and achieve goals.
• AR/VR: Innovations in AR/VR can be implemented in logistics to make operations smoother and safe.
• Warehouse automation: It enhances the working process and operational efficiency.
• Blockchain: It makes the system more secure and transparent. Customers are able to track the entire route of their delivery through this.
  [Check complete details on how blockchain is disrupting the supply chain management]
• Smart Vehicles: These prevent accidents, inform timely about speed and fuel levels, and thus, reduce mishaps in the delivery and transportation process.

Q. What are some of the user roles in a logistics management system?

A. The main handlers of the logistics management solution with permissions and access are:

• Client: to get a quote and schedule shipping
• Head Office Manager: to supervise the smooth functioning of logistics
• Booking manager: to supervise daily shipping and order processing
• Warehouse manager: to feed updates about warehouse operations
• Administrator: to hold the highest administrative responsibility and regulate everyone else’s access to the LMS
• Driver: to feed updates about delivery and transportation

Q. How much does it cost to build a logistics management system?

A. A logistics management system development cost might range anywhere from $40,000 to $250,000 or even more depending on the overall complexity of the product – features integrated, tech stack used, modules implemented, etc.

THE AUTHOR

Sudeep Srivastava

Co-Founder and Director