How to build a logistics management software that streamlines complex business operations?

The COVID-19 pandemic, the Russia-Ukraine war and recent earthquakes in Turkey and Syria have had a tremendous impact on logistics companies and global supply chains, bringing a decline in market capitalization. Businesses had to readjust their strategies and processes to sudden and global changes.  

Despite the market decline, however, these crises also created opportunities for transportation and logistics companies to innovate and enter new markets. To become resilient to future uncertainties, logistics players must remain flexible in responding to changing conditions if they want to ensure further business expansion. One way to boost this resiliency is to invest in IT resources and logistics management software. 

This article offers a comprehensive overview of custom logistics management software, its benefits, modules and features, as well as an outline of the development process involved in building and implementing this kind of software. Let’s start with the definition.

What is logistics management software?

Logistics management software is a type of software solution designed to streamline and optimize the various processes involved in logistics and supply chain management. It encompasses a range of functionalities such as transportation management, warehouse management, inventory management, order management, freight management, and other aspects related to logistics.

Logistics management software is used by any business and organization that performs logistics operations. That specialized type of software offers clear visibility and control of the movement of goods, materials, and information from one point to another. Above all, it provides tools and features that allow businesses to make informed decisions with regard to planning, executing, and monitoring logistics activities.

More specifically, logistics management software benefits from location-based services to optimize routes, track shipments, manage carriers, fulfill orders, forecast demand, optimize warehouses and generate reports based on data analysis. 

Depending on the specific software solution, it may be cloud-based, on-premises, or a combination of both, and may integrate with other business systems such as enterprise resource planning (ERP), customer relationship management (CRM), and transportation management systems (TMS).

Leaders in logistics management

The below diagram by Gartner shows the leaders of the logistics management segment, with Oracle topping the list. These companies benefit from the latest technologies, such as AI and machine learning to provide enterprise level software for better decision-making.

Why invest in logistics management software?

Managing logistics operations is a complex and challenging task, as managers have to be prepared not only for the changing market conditions and tough competition, but also unforeseen factors such as natural disasters or global catastrophes. Some of the biggest challenges in logistics management include:

Rising transportation costs 

These costs can account for a significant portion of overall logistics expenses. Freight rates, fuel costs, carrier selection, and route optimization, can be challenging due to unstable market conditions or global inflation. Fluctuating fuel prices, dynamic carrier rates, and complex shipping requirements can impact logistics costs and require constant monitoring and optimization via a dedicated logistics management software.

Unforeseen risks

Logistics operations are exposed to various risks, such as disruptions in transportation, natural disasters, labor strikes, geopolitical instability, and regulatory changes. Managing risks in logistics operations, including risk assessment, mitigation strategies, and contingency planning, can be challenging.

Changing customer demands 

Changing customer demands, such as shorter lead times, increased customization, and higher service levels, can impact logistics operations. Meeting customer expectations while maintaining operational efficiency and cost-effectiveness requires agile and adaptable logistics management strategies, especially for last mile delivery optimization.

Ensuring sustainability 

Increasing focus on sustainability and environmental regulations can impact logistics operations. Compliance with regulations related to emissions, carbon footprint, waste management, and sustainable transportation can pose challenges in logistics management, requiring companies to adopt eco-friendly practices and stay abreast of changing regulations.

Continuous lack of visibility 

Lack of visibility into the movement of goods, inventory levels, and transportation status can pose challenges in logistics management. Limited visibility can result in delays, inefficiencies, and difficulties in coordinating logistics operations. Ensuring end-to-end supply chain visibility, especially in multi-tier and global supply chains, can lead to better, informed decision-making. However, implementing a dedicated software is a complex task, which is why many companies haven’t fully adopted the digital transformation of their processes.

What are the benefits of custom logistics management software?

Logistics management software is a type of software used by businesses and organizations to efficiently manage and optimize their logistics and supply chain operations. It is designed to streamline processes, improve visibility, and enhance decision-making related to the movement, storage, and transportation of goods, materials, and resources.

Some key features of logistics management software may include route optimization, shipment tracking, real-time visibility into inventory levels, demand forecasting, automated order processing, supplier management, and reporting and analytics.

It is used by various industries, including manufacturing, retail, e-commerce, distribution, and transportation, to manage their complex logistics operations. It can be deployed on-premises or accessed through cloud-based solutions, depending on the organization's requirements and preferences.

Competitive advantage

In today's competitive business landscape, efficient logistics management can be a key differentiator. Companies that invest in advanced logistics management software gain a competitive advantage by improving their supply chain operations, meeting customer demands more effectively, and optimizing costs.

Higher profitability

Logistics management software helps businesses optimize their supply chain operations and make data-driven decisions. These lead to optimized logistics processes, reduced costs and improved customer satisfaction, which translated to increased sales and profitability.

Greater productivity and efficiency

With a dedicated logistics management software, you can automate delivery processes, including planning and scheduling, and improve communication with all stakeholders. This leads to greater operational productivity.

Reduction in operational expenses

Logistics management software helps optimize costs in various areas such as transportation, warehousing, and inventory management. It enables you to identify cost-saving opportunities, negotiate better rates with carriers and consolidate shipments.

Increased customer satisfaction

Logistics management software designed to help you improve delivery performance and reduce order management errors. This leads to increased customer satisfaction, repeat business, and positive word-of-mouth, which can also drive higher sales and profitability.

Improvements to intermodal operations

Intermodal operations (those that involve multiple modes of transportation, such as truck, rail, air, and sea) can benefit from a dedicated logistics management solution by gaining real-time visibility that helps with planning and optimization. The software can streamline communication, automate documentation and compliance, enhance analytics and reporting, and integrate with external transportation management systems.

Advanced route planning

Logistics management software can help with advanced route planning by leveraging route optimization algorithms, integrating real-time data, balancing and consolidating loads, managing fleets, providing data visualization and mapping capabilities, generating reports and analytics, and integrating with other systems. With these functionalities, you can optimize routes, reduce transportation costs, and offer better customer service.

Enhanced visibility and control

Logistics management software provides real-time visibility into the movement of goods, inventory levels, and other logistics-related data. This helps businesses make informed decisions and take timely actions to optimize their logistics operations. For example, the software can proactively help you to identify bottlenecks in the supply chain.

Better inventory management

Logistics management software helps optimize inventory levels by providing real-time visibility into inventory levels, demand forecasting, and automated order processing. The tool is vital for helping businesses avoid stockouts or overstocking, as well as the resulting costs.

In turn, optimum inventory levels can help businesses improve order fulfillment rates, which leads to greater profitability.

Data-driven decision-making

Logistics management software provides data and analytics that enable businesses to make data-driven decisions. By analyzing logistics data, businesses can identify inefficiencies, bottlenecks, and areas for improvement in their supply chain operations. This helps in making informed decisions to optimize logistics processes, reduce costs, and increase profitability.

Improved operational efficiency

Logistics management software can automate and optimize various logistics processes, such as transportation management, warehouse management, order management, and inventory management. Automating manual tasks, reducing paperwork, and streamlining processes helps businesses improve their operational efficiency.

Scalability and flexibility

Logistics management software is designed to handle logistics operations of varying sizes and complexities. It provides scalability and flexibility to adapt to changing business requirements, such as increased order volumes, changing shipping locations, or new shipping methods. This enables companies to efficiently manage their logistics operations as their business grows or evolves.

What are the common modules of logistics software?

Logistics software is actually a broad category that encompasses various modules with its dedicated features and functionalities, depending on the specific use case and industry. These are the most common components of logistics software:

Order management module

The order management component of logistics software is responsible for overseeing and managing the entire order fulfillment process, from order creation to delivery. It typically includes various functionalities that help to automate order-related tasks. With this feature, you can streamline the order fulfillment process.

Warehouse management module

This robust module is responsible for managing and optimizing warehouse operations to ensure the inventory is handled effectively. It typically includes various functionalities that help to streamline warehouse processes. It may also include features for managing warehouse labor, optimizing storage space, and integrating with other systems such as barcode scanners. The warehouse component helps to reduce errors and improve the overall efficiency of supply chain management.

Transportation management module

Transportation management entails all activities related to the movement of goods, so the dedicated software will offer support with carrier selection, shipment scheduling, routing, and tracking. It may also include features for managing freight rates, creating and managing shipment documents, and optimizing transportation routes.

Inventory management module

As the name suggests, the inventory management component of logistics software is designed to help businesses manage their inventory levels and ensure that they have the right quantity of products on hand to meet customer demand. At the same time, the software minimizes inventory management costs.

Supply chain visibility

The core of this module is the provision of real-time visibility into the entire supply chain. It allows you to track shipments, monitor inventory levels, and gain insights into the performance of suppliers, carriers, and other stakeholders. It may also include features such as analytics, reporting, and dashboards for better decision-making.

Analytics and reporting module

This module provides reporting and analytics capabilities to analyze key performance indicators (KPIs) related to logistics operations, such as on-time delivery, transportation costs, inventory levels, and warehouse efficiency. It may include features such as data visualization, custom report generation, and data integration with other systems.

Manufacturing module

This component is dedicated specifically to cater for the needs of manufacturing businesses. It helps them to optimize production processes, manage materials and resources, ensure quality control and comply with regulations. It improves visibility and coordination of resources, increasing operational productivity and efficiency.

Freight management module

This module is specifically designed for freight forwarding companies and helps manage tasks such as quoting, booking, and tracking shipments across various modes of transportation. It may also include features for managing customs documentation, calculating freight charges, and handling international shipments.

Reverse logistics

Reverse logistics focuses on managing the flow of goods and materials in the reverse direction, from the customer back to the original source (manufacturer or retailer). Reverse logistics involves activities such as returns, repairs, recalls, recycling, and disposal. The reverse logistics component of logistics software includes the features necessary to support the returns process.

Fleet management

This module is focused on managing a fleet of vehicles, including monitoring vehicle location, managing maintenance schedules, optimizing routes, and tracking driver performance. It may also include features for managing fuel consumption, vehicle inspections, and compliance with regulations.

Logistics management software features

Small businesses may only need a basic system to keep track of their orders and inventory. However, larger businesses will likely require robust solutions with complex functionalities, such as supply chain optimization and real-time tracking. Regardless of your needs, note that implementing logistics management software requires not only in-depth knowledge of technology in use, but also the logistics management processes.

We list some common features of logistics management software below. The list, however, isn’t extensive and the exact features of your tool should be tailored to your business goals and needs.

Shipment management

This feature is designed to streamline and automate the process of managing shipments, from creation to delivery. It typically includes a range of functionalities that facilitate efficient shipment planning, execution, tracking, and reporting. It may also include features for generating shipping labels, managing shipping documents, and calculating freight rates.

Transportation optimization

The role of this feature concentrates on optimizing the planning and execution of transportation operations. It typically involves advanced algorithms and techniques that analyze multiple variables, such as shipment details, carrier capacities, load consolidation, transit times, and costs, to determine the most optimal transportation plans. It can help you improve efficiency, reduce costs, and enhance service levels. One of our biggest clients, Trans.eu, relies heavily on this feature.

Warehouse management

This feature focuses on streamlining warehouse operations, including inventory management, order fulfillment, warehouse layout and design, and picking and packing processes. It may include features for managing stock levels, automating replenishment, optimizing storage space, and integrating with barcode scanners or RFID (radio frequency identification) technology.

Carrier management

A dedicated feature for managing relationships with carriers. It will help you with carrier onboarding, performance tracking, and contract management. A robust version of this feature may include components for direct communication as well as managing rates, compliance, and others.

Freight audit and payment

With the freight audit and payment feature, you can manage the auditing and payment of freight invoices from carriers. It may include components for automating the audit process, verifying rates, and identifying billing discrepancies, helping you ensure the payments are accurate.

Supply chain visibility

The dedicated software offers real-time and comprehensive visibility into the entire supply chain, allowing businesses to monitor and track the movement of goods, information, and funds across the entire network. It can help you gain a clear understanding of the performance of all stakeholders and give you information on the status, location, and performance of shipments, orders, inventory, and other key supply chain elements. It’s essentially a critical dashboard for better decision-making in logistics.

Order management

This feature helps manage customer orders, including order entry, tracking, fulfillment, and status updates. It may include features for managing returns, cancellations, and order modifications, as well as integration with e-commerce platforms or other order management systems.

Reporting and analytics

Reporting and analytics capabilities must be included in logistics management software to analyze KPIs related to logistics operations, such as on-time delivery, transportation costs, inventory levels, and warehouse efficiency. A solid reporting and analytics system will offer data visualization, custom report generation, and data integration with other systems.

Compliance and documentation management

This feature helps manage compliance requirements, such as customs documentation, regulatory compliance, and documentation for international shipments. It may include features for generating and managing shipping documents, tracking compliance deadlines, and ensuring adherence to regulatory requirements.

Communication and collaboration

The communication and collaboration feature facilitates interactions among stakeholders involved in logistics operations: carriers, suppliers, customers, internal teams and others. It may include functionalities such as messaging, notifications, and document sharing for streamlining the communication and making the coordination of logistics processes easier.

Real-time analytics

Thanks to cutting-edge technologies such as RFID chips, managers and industry leaders now have access to highly advanced real-time analytics and tracking capabilities. This allows them to provide customers with precise information on the location and estimated delivery time of their products, as well as identify and address potential issues with greater speed and accuracy. In addition, these tools enable managers to pinpoint any disruptions to productivity or efficiency, ultimately allowing them to optimize their operations and create an ideal company structure.

Integrations

Logistics management software often needs to integrate with other systems such as Enterprise Resource Planning (ERP) systems, transportation management systems (TMS), or third-party carriers to exchange data and streamline operations. Dedicated integration features facilitate interoperability between the different systems and smooth data exchange.

Tech stack required for developing a logistics management software

Here's an example of a tech stack that could be used for developing a logistics management software:

• Front-end: React and Node.js for building the user interface and user experience (UI/UX)
• Back-end: Node.js, Java or C# for building the server-side business logic
• RESTful APIs for communication between frontend and backend
• Database and Data Management: PostgreSQL or Microsoft SQL Server for relational database management, MongoDB or Cassandra for NoSQL database management
• Cloud deployment: Amazon Web Services (AWS) for cloud hosting, scaling, and deployment
• Kubernetes for container orchestration and management
• Mobile app development: React Native or Flutter for cross-platform mobile app development
• API Integration: REST or SOAP APIs for integrating with external carriers, suppliers, and other logistics partners
• Security and authentication: Encryption techniques for securing sensitive data, such as SSL/TLS for data in transit and data encryption at rest
• Testing and debugging: Unit testing frameworks such as JUnit or NUnit for automated testing. Debugging tools included in e.g. Visual Studio or IntelliJ IDEA
• Data analytics and reporting: Business intelligence tools such as Tableau, Power BI, or custom-built analytics solutions for data analysis and reporting
• ​​GIS data: OpenStreetMap or Mapbox
• Admin panel: AdminJS or other technology, when building at scale
• Project management: Jira or Trello for project management and task tracking, Slack for team communication and collaboration

This is just an example of a possible tech stack for logistics management software. The actual tech stack will vary depending on the specific requirements of the project, the expertise of the development team, and the technologies preferred by the organization. It's essential to carefully analyze the project requirements, consider factors such as scalability, security, and integration with external systems, and select appropriate technologies to build a robust and efficient logistics management software solution.

How to build a logistics management software?

Developing a logistics management software involves several steps. The development process will consist of the following:

Defining project requirements

You have to begin by clearly defining the requirements and objectives of the logistics management software, so that you can then determine the right business model and monetization strategy. This will involve identifying the key functionalities, features, and performance requirements based on the needs of the logistics operations and stakeholders. We can organize a dedicated product workshop to help ensure you avoid major mistakes in this phase.

Planning and design

This stage involves creating a detailed project plan, including timelines, resources, and milestones. Design the UX and UI of the software, keeping in mind the importance of ease of use, efficiency, and effectiveness in managing logistics operations.

Choosing the right technology stack

Select the appropriate technologies for the software, based on the requirements, scalability, security, and expertise of the development team. This may include programming languages, web development technologies, database management systems, cloud computing platforms, mobile app development technologies, and other relevant tools and frameworks.

Development

Develop the backend components, including the server-side business logic, API integration, database management, and security features. Simultaneously, develop the frontend components, including the user interface, user experience, and client-side functionality, using the chosen frontend technologies. Likely, you will need to develop a mobile app alongside your web app.

Testing and debugging 

Implement comprehensive testing and debugging processes to ensure the quality and reliability of the logistics management software. This will involve unit testing, integration testing, performance testing, and security testing, among others.

Deployment and launch 

Deploy the logistics management software on the chosen hosting environment, such as a cloud platform,on-premises servers or a hybrid cloud solution. Conduct thorough testing and validation to ensure the software is functioning as expected. Once everything is in place, launch the logistics management software and make it available for users.

In addition, the process of creating a logistics management software may include integrations with external systems (should you be using any) as well as offering support and training to the end users, so that they are able to effectively use the software. User guides and training sessions may have to be prepared for this purpose.

Please note that the development process may vary depending on the specific requirements, scope, and complexity of the logistics management software you will require. Collaborating closely with stakeholders, following best practices, and conducting thorough testing and validation are crucial for successful logistics management software development. 

We are well prepared to also augment your team with our dedicated logistics experts at any stage of the development process.

Building a custom logistics management software with RST

As you can see, creating a logistics management software is a complex process that requires not only technical expertise and experience in location-based service development, but also a thorough knowledge of the logistics industry, with all its intricacies and specific requirements. We can offer you extensive expertise we have accumulated throughout over 20 years of working with Trans.eu, Europe’s 2nd largest logistics platform, as well as with startups, such as Bussr, BetterTaxi and many others. We’ve developed a custom mapping solution for Trans based on OpenStreetMap that helps the company save thousands of dollars in map usage costs every month. We can safely say we are fully prepared to help you with your logistics management solution. Contact me directly at magda@rst.software with any queries and I will take it from there.