Choosing Shipping And Distribution Software
What to get and why you need it.
October 24, 2012
It often surprises me to hear how many growers don’t use adequate software for shipping and distribution. Sometimes they don’t use any software for shipping and distribution — just spreadsheets, paper and a whiteboard.
Why? For most growers, the cost of shipping and distribution is among the highest for line items. The return on investment of logistics software and automation, however, is one of the shortest you will find. In some cases, the investment is returned in a matter of days — or during your next shipment run.
If I were to give you the following offer, would you take it? You give someone $1 on Monday, and by Friday, you will have reduced your costs by $2?
Of course you would. In the same way you use automation for your greenhouse or shade house operations, like watering, heating, air flow control, potting, etc., you should also look at every area of your operation to automate shipping and distribution.
After you automate, you will wonder why you didn’t do it sooner. For example, how many of you still have a person walking around turning watering systems on and off all day, every day? Nobody does this. You just set the automated systems and, from time to time, you make adjustments.
The same is true for shipping and distribution. Large and successful growers use a transportation management system (TMS) that can automate and control 90 percent of the shipping and distribution needs of a typical growing operation. The software shows how to load the trucks, optimize the loads, route the drivers, assign the right trailer and driver, manage fuel and smoothly coordinate third-party carriers and drivers that supplement your own trucks. From loading to dispatch to delivery, every aspect is fully controlled — and the transportation costs are managed and reduced. Moreover, the reporting and analysis capabilities are worth their weight in gold when it comes to tweaking your distribution operations to further reduce costs.
Types Of Transportation Management Systems
Growers generally have two options when it comes to a TMS: a packaged system and a stand-alone system. Your size and sophistication — and annual load
volume —will determine which is right for you.
A packaged system is usually a module or add-on to your existing Enterprise Resource Planning (ERP) system. Now, I know that very few growers use a true ERP. Most growers use a system that manages inventory, growing cycles, invoicing and input management, which is used to track the expense to get the plants to a marketable state and determine the right price to charge. Many of these software applications have very basic shipping and distribution management built in. These are often good enough for general use and for smaller growers, such as those outside of the annual Greenhouse Grower Top 100 Growers list.
Because these shipping and distribution modules are built by your software vendor, they are usually integrated into your other operational processes. This means you can move plant material that is ready to be shipped from the inventory area of your software to the shipping area and then to the billing area in a seamless manner.
The downside is that many of these shipping and distribution modules are nothing more than a display that shows a status change of the plants from “in inventory” to “being shipped,” and they don’t actually manage the process at a deep level, such as optimizing the loads, routing the trucks, managing third-party drivers and carriers and allowing detailed cost reporting. Therefore, you may not be able to see your true landed cost of the final material after it was shipped.
For most small growers, however, such packaged systems do an adequate job and offer the basics.
Large growers (and by large I mean those on the Greenhouse Grower Top 100 list) almost always need a stand-alone system that is often integrated to their ERP systems with real-time data exchange to the shipping and distribution system. Large growers’ shipping and distribution needs usually consist of moving freight via their own trucks, logistics brokers, asset based third-party carriers and even power-only tractor providers pulling company-owned or leased trailers. A packaged system is just too basic to provide an adequate solution to properly manage each of these needs.
Most stand-alone systems can integrate with your grower software through manual import and export functionality or through an automated solution. Both integration methods provide the same results, and your choice of integration will be based on the length of your growing season and load volume.
A true stand-alone TMS provides 100 percent of what you require when it comes to your shipping and distribution needs.
Costs To Consider
As always, there is a cost. Money and time are both rare resources.
If you have an ERP platform or grower software installed already, then look there first. Some vendors may include the shipping and distribution module as part of the package price, but don’t expect too much in terms of features if they do.
If you decide that you need to get a stand-alone system, the cost can be anywhere from $50 per month for the most basic system to more than $1 million upfront (plus annual license fees) for the most comprehensive and complex system.
In my opinion, no grower, even in the Top 100, needs the type of system that large retailers or manufacturers need. So don’t spend more than you need buying a system that does more than you will use. Spending $50 per month or a few thousand dollars per year for multiple users and locations is a good place to start. You can always upgrade to bigger and better systems if needed.
The Future Of TMS Systems
One big plus today is that the entire world is moving to hosted or web-based systems, and that is where you should be heading. Let someone else take all the technical headaches away, so you can focus on the features and functions that meet your needs. That way, all you need is an internet connection and a web browser — and a firm desire to automate and control your shipping and distribution operations.
Tim Higham is the CEO of Interstate Logistics Group, the largest dedicated logistics provider to the horticultural market. You can eMail him at thigham@InterstateLG.com. Learn more at InterstateLG.com or call toll free at 866-281-1281 x1323.