Transportation Management Software: In-house or Outsource?

May 28, 2024 by
Transportation Management Software: In-house or Outsource?
ABI-VNM - Abivin Vietnam, Phạm Nam Long
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transportation management software: in-house or outsource

Outsourcing is a popular term in recent times. Given the rapid development of technology and the startup ecosystem, outsourcing is an opportunity for businesses to take advantage of external resources to simplify specific jobs and operations inside.

Logistics is considered a traditional industry with manual work and has not achieved optimal efficiency. Therefore, more and more businesses are looking for digital transformation tools to optimize their operations.

So between in-house development and outsourcing, which option brings more benefits and value to the business? Let's take a look at six reasons why companies should outsource transportation management software.

1. Outsourcing the software saves the cost

According to Deloitte's 2020 survey, 70% of respondents said that cost reduction is a top priority when outsourcing services.

Unlike building the software in-house, businesses will save a significant investment, including the costs of infrastructure, product research and development, recruitment and training, system maintenance, software upgrade and improvement, etc.

Outsourcing saves on software development costs
Outsourcing saves on software development costs

Specifically, when outsourcing, the supplier will manage the entire work and can make the necessary changes depending on the requirements. Businesses will not have to spend too much on infrastructure development, system maintenance, or periodic software upgrades and improvements.

In addition, recruiting and training new employees is a complex and lengthy process. They have to go through multiple rounds before receiving an official offer. Afterward, they have to learn about the internal rules in the company, project goals, work processes, etc. Usually, new employees will take about 1 to 2 months to get used to a new workplace.

By outsourcing transportation management software, businesses will reduce recruitment and training costs above.

The supplier staffs have a lot of experience in applying technology to optimize logistics activities for businesses. Therefore, they clearly understand the company’s problems and can recommend the most suitable and cost-effective solution. Meanwhile, the company plays the role of a supervisor and makes requests, helping to ensure efficiency and work progress.

2. The optimization algorithm is difficult to develop

Logistics is the fulfillment and control of the entire cargo from beginning to end, including receipt, storage, packaging, transportation, and delivery.

For each logistics activity, businesses will need to solve a different problem. For example, in terms of transportation, the question is how to optimize the delivery plan, satisfying many constraints such as delivery time, vehicle weight, delivery distance, etc. On the other hand, with warehousing, inventory management is always too tricky to resolve.

The difficulty of developing an optimization algorithm
The difficulty of developing an optimization algorithm

Technology is the perfect solution to handle these problems quickly and efficiently. However, it is impossible to optimize all logistics activities in just a single platform.

Each problem, given multiple conditions, requires tailored solutions. The optimal algorithm for transportation management software will not be the same as the optimal algorithm for warehouse management software. Algorithm programming also requires a lot of experience and time to research and test the market. Therefore, building your internal software does more harm than good when businesses have not verified the optimal and practical capabilities that it will bring.

Indeed, businesses should look to external software vendors. They have built software that is good enough to be applied in many companies. They offer the most specific and appropriate plan to help businesses optimize their logistics activities. They have a team of experienced staff who are always ready to support customers anytime, anywhere.

3. Outsourcing the software connects businesses with talented and experienced staff

Outsourcing allows businesses to access talented and experienced staff
Outsourcing allows businesses to access talented and experienced staff

Outsourcing allows businesses to connect with the best people with expertise and experience in both technology and logistics. As a result, you don't have to retrain your existing staff or hire new people with specialized skills to build software.

Technology is the most optimal solution to meet the increasing requirements of the market. However, given a specific and traditional industry like logistics, building transportation management software will not be simple without people who are good at technology and knowledgeable about the logistics market, especially those who have a lot of experience solving optimization problems.

Therefore, outsourcing software helps businesses solve their human challenges and select the right people for each specific project.

4. Outsourced software is ready for businesses to use

Today, the ability to innovate quickly without sacrificing quality is a critical factor for businesses to keep up with competitors, including applying technology.

It takes an average of 4 to 9 months for a business to build software, from concept to testing and actual implementation. Suppose companies focus on internally building the software. In that case, it will cost a lot of time and cost and affect the efficiency of current logistics activities, especially if the business is on the rise in terms of vehicles and customers.

Outsourced service software is ready for businesses to use
Outsourced service software is ready for businesses to use

Meanwhile, outsourced software is ready for business to use. First, it is built and developed based on thorough research from the market and customers’ needs. In addition, it has been applied in many businesses and has proven to be effective and feasible in logistics optimization.

As a result, businesses can speed up their development and improve their competitive advantage.

5. Outsourced software allows businesses to focus on developing core competencies

Building your transportation management software costs a lot of time and resources for businesses, not to mention additional investments in particular technologies, mobile devices, system improvements, and many other costs.

As a result, it is difficult for companies to focus on developing their core competencies to stay competitive.

Outsourced software allows businesses to focus on developing core competencies
Outsourced software allows businesses to focus on developing core competencies

For example, a 3PL company will focus more on improving its processes and supply services: How to adjust warehousing and transportation services according to customers’ needs, satisfying many delivery requirements for their products? How to apply innovative technology to help customers optimize logistics activities and save costs and time?

Indeed, transportation management software is a tool for 3PL companies to improve customer service quality.

Rather than investing in a completely new technology field, such as building their software, businesses should focus on their primary expertise to best serve customers and create more value-added for both sides.

6. Outsourced software minimizes risks for businesses

Outsourcing transportation management software can help businesses reduce risk in many aspects.

Outsourced software minimizes risks for businesses
Outsourced software minimizes risks for businesses

First of all, when outsourcing, experienced experts from the supplier can detect shortcomings in the current logistics management and operation of the business. In addition to providing existing technology software, they can also suggest new ideas and customize solutions to optimize operational efficiency and logistics costs for the organization.

Moreover, software development makes business operations easier. A good application can increase an organization's efficiency, improve customer loyalty, and generate more revenue.

When there is a new need, businesses often look to breakthrough solutions. However, companies often lack the time and knowledge to learn about how to convert existing tools.

Therefore, outsourcing helps companies significantly reduce the risks in software development themselves, and at the same time, shortens the time to apply technology to business operations compared to the internal development process.

Contact us now for a free trial of Abivin vRoute - The proprietary Dynamic Route Optimization and Transportation Management System

ready to optimize your logistics activities more efficiently
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