What is the Cost for Custom Logistics Software Development?

Transportation is the backbone of the global economy, and is a necessity for all the industries.

The transportation and logistics industry is always keen to adopt technologies to streamline their operations. Many transporters prefer using fleet management solutions while others are opting for custom logistics software development. However, both options have their pros and cons. But, we’ll go through it in the later part of this article.

What is a Logistics Management Software?

Logistics Management Software is an umbrella term for all sorts of software solutions that help T&L (Transportation and Logistics) companies deal with both inbound (procurement), goods handling (warehousing), and outbound (shipping) activities. The ultimate goals of logistics management softwares are to: ● ● ● ●

Improve shipping efficiency Make logistics process transparent Reduce transportation cost Enhance customer satisfaction

Market Overview for Logistics Management Softwares Emerging technologies such as cloud computing, Internet of Things, and AI, facilitate a flourishing future for the logistics management software market. The demand for logistics software solutions is increasing due to availability of emerging digital technologies for a much lower price as compared to the past. Hence, more and more Transportation & Logistic

businesses are realizing significant business value in investing in logistics management softwares.

Researchers estimate that logistics software solutions can save five to ten percent for the transportation expenses. And Transport & Logistic companies seem positive to reap these benefits, as the global market for transportation management is estimated to reach $30 billion by 2025. The market size was $9.6 billion in 2016, and will grow with a compound annual growth rate (CAGR) of 13.6 percent.

The following report by Statista, shows the world’s top freight transportation companies (in terms of annual revenue) in 2018. The report also stated that transportation and logistics management software implementation helped companies achieve such results.

Deutsche Post DHL believes that conventionally, logistics management softwares was accessible only to large Transport & Logistic companies due to the implementation complexity and the cost associated with setup and management. However, the rise of new technologies and their integration capabilities, have significantly reduced the time and cost required for these software solutions. As a result, companies of different sizes have now started adopting logistics management software solutions.

In June 2018, DHL group compiled a radar for technology trends in logistics. The diagram depicted the technology trends that could potentially influence the transportation and logistics industry in the next decade.

DHL also stated that Big Data analytics, Internet of Things, Augmented Reality, Cloud Logistics, Robotics and Automation, AI & AR, Low-Cost Sensors, and self-driving vehicles are among the upcoming technology trends that will positively impact the transportation and logistics operations.

Where Can Logistics Softwares Help Businesses?

T&L companies leverage several software solutions such as transport ERP solutions, CRM, warehousing softwares, and other shipping management softwares. However, all of them cater to unique business needs and challenges, but their primary functions are quite similar:

1. Planning With the advancement of technologies, logistics softwares can now be easily integrated with several enterprise systems including warehouse management software, CRM, account softwares, inventory management system and more. The seamless integration allows managers to plan for most efficient transportation scenarios.

Using several parameters including distance, time, the number of stops, cargo type, and cost, a transportation and logistics management system can quickly plan loading schemes, define optimal routes, and calculate the cost.

2. Execution By utilizing real-time monitoring capabilities, logistics management systems can ensure perfect execution of shipment delivery from point A to point B. The carriers, drivers, customers, and managers can see the real-time status of freight traffic, and can also access the information regarding customs clearance, metrics, automobile health status, delivery delays and more.

When cargo is moved using several types of transportation mode, it becomes necessary to maintain contact with the transportation services such as (airports, seaports, customs, etc.).

The logistics management softwares can provide easy communication with all the participants and automate document processing.

The related parties will get updates about the cargo arrival time (early, delay, or on-time) in advance via an application that they can prepare the necessary documents. This will eliminate the need for your cargo to queue up for loading or delivery.

3. Analysis Thorough analysis or transportation data is very crucial to make effective decisions on cargo transportation.

Almost every transportation and logistics software solution provides key performance indicators (KPIs) on cost per mile and shipping units. This delivery performance monitoring helps managers to improve their service quality.

The 4 Types of Logistics Mobile Apps

1. Fleet Management Solutions Fleet management solutions are for transportation and courier delivery businesses that want to manage their fleet via mobile and web apps. These software solutions allow fleet managers to access all the information related to their vehicles and deliveries in real-time.

The users will track fleet locations, health status, insurance renewals, and many other things to make informed decisions. The fleet management solutions help fleet managers assign truck/deliveries to the drivers and see how they are performing.

2. On-Demand Logistics Apps On-demand logistics apps are for businesses like Uber and Ola. These software solutions would require building dedicated mobile apps for customers and drivers and an admin panel that helps manage operations. On-demand logistics apps require several features to satisfy users' demands and generate revenue for the business.

3. Warehouse Management Softwares Warehouse management softwares solutions have been existing for the past couple of decades. What has changed now is that now they are utilizing advanced technologies to automate several warehousing tasks, such as inventory management via RFID technology.

Warehouse management softwares solutions help supervisors easily store and access the information regarding the goods stored in their warehouse. These software solutions also act as ERP (Enterprise Resource Planning), by managing the workforce in the warehouse. They can provide insights about the time of operations, laborers working on it, daily attendance, and even the performance.

4. The Extended Logistics Software For businesses that require software solutions to manage all the transportation and logistics operations, all-in-one logistics management software is required. An all-in-one logistics management software, helps fleet operators manage everything from the item storage in warehouses, to the fleet of vehicles and the drivers associated with it.

Cost of Developing Logistics Software There are several factors that affect the cost of custom logistics software development. The factors include features you want to add to your application, the platforms you want your presence in, the technology stack you wish to choose, and even your operations' geographical area.

The transportation and logistics industry has widespread applications for technology implementation.

There are various types of apps and software solutions with different business models, and thus, their features and goals will be different.

Hence, it is essential to draft a requirement document, first and then share it with either your in-house development team or a third-party software development company that will calculate the exact amount you will be required to invest in for your logistics software. But to give you a ball-park number for the cost of custom logistics software development, the cost varies between $30-$40k.

5 Advanced Features For Your Custom Logistics Software Although the features for every type of logistics management app will distinguish, there are certain advanced features that you should consider incorporating into your software solution:

1. Geofencing Almost all the logistics softwares can leverage Geofencing technology. This feature allows the logistics software solution to trigger alerts when the shipment is about to arrive. The notifications can be delivered to both the receiver and the fleet managers.

Not only the shipment arrival, but Geofencing features can also help fleet operators to restrict dangerous areas for their fleet. If you want to read more about the use of Geofencing in transportation, read the following article: Geofencing for logistics softwares.

2. Real-time location tracking Goods en-route need to be continuously tracked to ensure security and improve transparency.

Almost every type of logistics app that deals with goods en-route needs to have the real-time location tracking feature. This feature will allow both the fleet managers and the customers to see the live location of the deliveries.

3. Smart Contracts Since the advent of blockchain technology in industries other than FinTech, smart contracts have been a talk of the transportation and logistics companies. Coupled with IoT (Internet of Things) technology, blockchain can ensure safe cargo shipping, even in cross-border trades.

The smart contracts system is an online agreement among all the parties (seller, buyer, mediating bank, BOL generating bank) involved in a trade. It is similar to a conventional trade agreement; the only difference is that the terms and conditions are written in computer codes, which facilitate undisputed financial transactions among unknown parties.

4. Sensor Integration Sensor technologies have been around for a long time, and many industries are utilizing them.

Sensors, including RFID and IoT, help T&L companies in several areas of business. For example, by using RFID sensors, the warehouses can automate the process of counting the number of units/goods in stock. And sensors like IoT level monitoring can help in knowing the stock of liquid inventory.

However, integrating sensors into your logistics software solution is expensive. Hence, you only opt for it after assessing the ROI (Return on Investment).

5. Role-based information access Not every user in a transportation and logistics environment needs to have access to all the information. Hence, the logistics management software should have a role-based information sharing system.

For example, the delivery drivers won't require access to trade agreements, while the customer won't need to see the seaport documents. The role-based access management will also allow the privacy of information.

Benefits of Having Custom Logistics Software A logistics management system brings benefits to carriers, shippers, warehouses, goods manufacturers, e-commerce companies, on-demand platforms, and many other associated parties. Transport & Logistics companies that correctly deploy custom logistics software solutions can reap the following benefits: ● Process Automation. Manual process automation means that logistics businesses can execute work faster and more efficiently. ● Eagle Eye View. The logistics software solution carries all the information, and hence, every participant in the logistics process is able to access the assigned information.

● Cost Efficiency. Due to the automation of processes and human error elimination, businesses can achieve higher cost-efficiency. ● Service Quality. The availability of real-time data analysis helps fleet managers make informed decisions based on the insights generated.

Off-the-Shelf vs. Custom Logistics Software Development Although the upfront cost to start using off-the-shelf logistics software solutions is low, the cost will accumulate to an enormous amount in the longer run. However, it is still better for some small-scale transportation and logistics businesses to try off-the-shelf logistics software solutions and realize the benefits.

But if you need a solution for your specific business requirements, custom logistics software development should be your pick. Custom-built solutions tend to be perfect for mitigating specific challenges for enterprises.

As experts said, and I quote, "Your software solution should align with your business process, not the other way around." Hence, you shouldn't just adopt a rigid logistics solution. The logistics solution should be aligned to your business process accordingly.

Conclusion When it comes to building a successful custom logistics software solution, you should consider outsourcing the development process to companies that have proficiency in developing logistics software solutions. Your approach should be to create the requirement document first and then reach out to an experienced development partner.

If you have trouble deciding what feature you should incorporate into your app and what their cost will be, feel free to reach us at contact@nimbleappgenie.com. We'll provide you with the quotation, which will include the feature-wide cost of development, so that you can decide which features are worth investing in.

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