How to Build an ROI Case for New Logistics Software

by | Industry

Achieving success in the logistics business requires people, processes, and technology to interoperate flawlessly. If, at any time, you fall behind on any one of those three key points, your company is at risk.

You have the vision, you’ve recruited the right people, and you’ve put strong processes into place. But, if you’re still working with antiquated logistics software, then you’re putting undue stress on the whole system and the people that work so hard to operate it.

The logistics industry has evolved over the years. Has your software adapted to incorporate new technologies, trends, and capabilities? Is it easy to maintain? Is it giving you a competitive edge? Or is it holding you back?

To take your freight forwarding, 3PL, or other supply chain business to greater heights, you need modern and efficient logistics software.

 Key Takeaways

  • By the year 2027, the SCM software market is expected to reach over $37 billion, so thoroughly evaluating the options is both challenging and important.
  • Cloud-based logistics software minimizes ongoing and upfront maintenance and management costs. Plus, hosting software in the cloud gives you a predictable cost structure.
  • The ultimate goal for any modern logistics software solution should be to improve the overall productivity and profitability of your business.
  • Customers expect more visibility and control than ever. Automated tracking and visibility systems not only meet your customers’ need for information at their fingertips, but also reduce the load on your customer service teams.

According to Statista review, last year, the worldwide SCM (Supply Chain Management) software market was worth over $15 billion. Moreover, according to Allied Market Research, the current growth rate of that SCM (Supply Chain Management) software market is CAGR (Compound Annual Growth Rate) of 11.2 percent. By the year 2027, it is expected to reach over $37 billion. That means that you have your work cut out for you when it comes to evaluating the best logistics software to fit your unique needs and making a case for an investment in modernization.

As with any investment in your business, the ultimate goal when selecting new logistics software is to generate a fast, strong high ROI (Return on Investment). It is not enough to just follow your intuition or be swayed by shiny new technology. Whether you’re the one making the final decision about where and when to spend or you’re faced with presenting a case to your company leadership about logistics software you want budgetary dollars for, you need to build your ROI case. Where will this investment help us cut costs? How will it help us increase revenues?

A well-designed cloud-based logistics software system brings many benefits to your business. Let’s investigate how modernizing your logistics systems can generate a strong and fast ROI.

ROI case for logistics software

Minimizes Costs

As technology has evolved to new heights, it acts as an enabler of more efficient and seamless business processes. As you evaluate the best solution for your company, consider cloud-based logistics software systems. On-premises software puts an added strain on your time and budget, requiring your team to take on the cost and work of server, software, and infrastructure maintenance.

You have enough on your plate when it comes to running a logistics business. With cloud logistics software, you do not have to buy, operate, and maintain any extra equipment and servers.

Cloud-based logistics software has been shown to minimize your maintenance and management costs, both upfront and ongoing. Plus, hosting your software in the cloud gives you a predictable cost structure.

No more late nights and surprise bills when a server goes down – your cloud software provider takes care of it all. Think of it as a concierge service for your logistics software!

This approach reduces your expenses because of the following:

  • You gain freedom from having to maintain software and hardware upgrades and maintenance, saving you time to spend on more strategic work
  • You will enjoy a low upfront investment without the need to acquire servers and additional hardware
  • You will benefit from easy scalability, where resources can be added seamlessly as your business grows
  • Your data is extra secure, with redundancy and added security features in place by experts in the field of cloud logistics systems

How much are you spending in acquiring, operating, and maintaining hardware for on-premises supply chain software? How much time is spent on upgrades, addressing issues, and performing maintenance? If you expand to a new location, can your infrastructure support the growth, or will you need to allocate time and budget to making accommodations? Is your security on point, or are you at risk of a data breach? Have you experienced downtime because of power failures or internet outages? Are you able to run your operations remotely when necessary? All of these are costs to consider when evaluating your current situation and how moving to the cloud can help.

Improves Productivity and Profitability

According to the supply chain management review, 79 percent of high performing supply chain businesses generate revenue more significant than the average. Regardless of the software provider you select, the ultimate goal for any modern logistics software solution is to improve the overall productivity and profitability of your business.

From warehouse operations to accounting, customs paperwork to final-mile delivery, a strong, end-to-end logistics system will help you and your team perform everyday tasks faster and in a more organized, efficient, and automated manner.

A modern logistics solution makes it very easy for your staff to understand and perform all their assigned tasks efficiently. Some of the ways that new logistics software can help improve your productivity are as follows:

  • Enables stronger collaboration between different functions, teams, partners, and agencies
  • Digitizes and centralizes previously manual processes like faxes and emails
  • Removes redundant efforts like typing the same information into two systems
  • Knows your pain points and helps you to reduce risk factors and errors
  • Connects various systems like customs agencies, agents, and couriers
  • Automates many manual processes

Helps You Delight Your Customers

An efficient logistics system increases the productivity and the performance of your business, but did you know that it can also provide many features that help you to provide an exceptional customer experience?

Modernizing your systems is not only about improving operations. It can also help you delight your customers, improving retention and turning your client base into a referral engine for new business.

As your business scales, you need to process a higher volume of orders just as quickly and efficiently (or more so) than you did on day one. Over time, it becomes critical to have automation in place to provide the best customer care experience. Customers want everything faster, cheaper, better these days, and the right software will help you meet these high expectations without running your teams into the ground and eroding your profit margins.

Plus, customers expect more visibility and control than ever before. Automated tracking and visibility systems not only meet your customers’ need for information at their fingertips, but also reduce the load on your customer service teams.

A cloud-based supply chain software allows you to delight your customers in the following ways:

  • Fosters collaboration and communication between teams
  • Helps you get things done faster and more efficiently, keeping costs low
  • Minimizes the communication gap between you and your customers
  • Automates processes and keeps customers informed
  • Gives customers the transparency and self-service tools they want
  • Enhances and improves your customer care strategy

Reduces Costly Errors

In the logistics industry, errors can range from minor to catastrophic. Your customers count on you, often to run their businesses. They entrust you with their livelihood. From inaccurate invoicing to customs filing issues, one wrong digit or one forgotten form can cost you – not only in dollars, but in days of lost productivity.

Worse, when you disappoint your customer, you can lose them forever. And in these days of social media, bad news can travel fast. Reputations have been ruined over honest mistakes, so it’s wise to automate business processes throughout the supply chain where possible to eliminate the risk of human errors.

Here are some common reasons logistics software reduces the chance of costly errors:

  • Eliminates the need to manually enter data in multiple systems
  • Digitizes processes like faxes or emails that could get lost in transmission or caught in a spam filter
  • Automates calculations and other manual tasks that could be prone to human error
  • Integrates and streamlines your business processes and makes up to date, accurate information accessible to all stakeholders
  • Provides transparency and visibility, playing a vital role in error reduction

In Summary: Your ROI Case for New Logistics Software

At the end of the day, no two ROI cases will look alike. What moves the needle for your business might not make a difference for another. You know your business best, but a great technology partner can help you uncover hidden opportunities that you might not have considered before.

Plus, the return on investment you get from your software depends on more than just its features and functionality: effective change management will ensure that the solution gets properly configured, tested, loaded with data, and integrated with third-party systems so that you can maximize your return. At the end of the day, it’s the system that gets USED that will bear fruit, so getting employees on board and fully trained will also make a difference.

In this article, we shared some of the most common ways that logistics software can cut costs and help you to grow your business. Whether you are a freight forwarder, 3PL, warehouse operator, or other logistics enterprise, you can benefit from having the right technology to run your business. As anyone who has taken on a DIY project around the house can attest, having the right tools for the job makes a world of difference. Although there is a cost associated with a software upgrade, you would be amazed at how quickly that investment can bring returns.

Ready to digitize and modernize your logistics operations?

See how Magaya can help.