Logistics ERP in 2023: Definition, Features, Examples, Cost
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A core system for businesses, ERP tools are driven by market characteristics such as widespread digital adoption, thriving global trade and vast amounts of data that need to be tracked, maintained and analyzed. ERP market statistics show the move toward increased usage and global demand.
Logistics automation involves integration of software including logistics ERP systems to improve the efficiency of logistic processes.
Oracle Netsuite research affirms - the ERP market remains in a phase of rapid expansion, with total market size expected to exceed $49.5 billion by 2025. 50% of companies are soon acquiring, upgrading or planning to update ERP systems soon. Also the global ERP software market is expected to reach $78.4 billion by 2026.
A logistics industry business needs a modern IT infrastructure to support all of its processes and keep it running efficiently. It can be achieved with the help of good logistics Enterprise Resource planning (ERP for logistics) system integration. In this article, we will consider what a logistics ERP is, what shortcomings in management it eliminates, what should a good logistics ERP include, and how much it all costs.
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Logistics ERP: What Is It and Which Industry Problems Does It Solve?
ERP for logistics is software that manages and improves business processes by creating a common database. In simple terms, departments in an enterprise know what work each of them does, use the same information stored in a single system, and communicate with each other. By combining data, companies reduce costs, have accurate data for planning, and increase the number of satisfied customers.
If a company has a large number of departments, divisions, branches, then the implementation of logistics ERP software is a must. In general, the logistics ERP allows:
Increase the efficiency of a company's operations, while managing processes in a less costly way in the long run. Many logistics and supply chain ERP systems contain ready-made forecasting tools, or company specialists may make their own forecasts based on systematized data.
Help managers of the company to control all internal and external business processes, automate them, and also trace their interaction and influence on each other. The company's activity becomes more transparent.
Implementation of logistics ERP system helps to create unified information space. Employees of different divisions have access to information and can simultaneously work with data. This increases the efficiency and accuracy of work.
Adapt quickly to market conditions and organize a quick exchange of information between departments. Logistics ERP allows you to control the work of your staff and avoid data discrepancies due to someone's occasional mistake.
Logistics ERP can keep track of vehicles via GPS in real-time. This allows you to know at any time where the resources are and how they are transported.
ERP keeps records of human resources, calculates work schedules, controls the number of hours worked.
The system keeps records and generates necessary documentation, automates routine operations with the documents, for example, creates contracts.
ERP keeps accounting and tax records, controls the financial state of the company.
However, to achieve all of the above, an ERP for logistics must have a number of key features. Let's take a closer look at them.
Essential Features for Logistics ERP Software
Basically, a logistics ERP is a set of different software modules in which employees can work. For example, a sales specialist enters an order into the database, and everyone else gets information about it and an action plan.
Usually, a logistics ERP system is adjusted individually for each company, but in general, it includes the following components:
- maintenance and management of flow charts;
- tools for capacity planning and sales plan creation based on the analysis of market demands and assessment of the economic situation of the company;
- tools for setting objectives and tracking implementation;
- common databases within the company, with the ability to quickly delegate tasks;
- technologies that allow management of the warehouse, residuals, automate the processes of procurement, and build logistics;
- tools for creating a plan and tracking its implementation;
- implementation of communication applications between departments, creating workspaces;
- connection of accounting programs, collection of reports;
- control of individual employees or production resources as well as the entire production process.
Logistics ERP system is a sophisticated and effective tool that allows you to digitalize all the activities of the company and take them under control. Its usefulness is difficult to overestimate. So how do you get your hands on this technological wonder?
ERP for Logistics: Ready-made vs Custom
There are two main ways to create a unified platform for logistics and resource management:
- purchase of a ready-made logistics ERP software and its fine-tuning;
- custom development of an individual logistics ERP solution.
Let’s take a closer look at both of them.
Ready-made logistics ERP system
One of the most common ways to implement a logistics ERP system is to buy a ready-made solution. Such platforms can be both general-purpose and industry-specific. The latter are created for the specifics of a particular niche.
Flexible rate policy. Many providers now offer different formats of cooperation: buy a license at once for one year or rent a system for a month. In addition, you can expand the number of workstations and purchase additional services for a fee.
All data is stored on a company's server, while updates and technical support are provided by their own employees. This significantly reduces the risk of possible leaks of important data (payment information, client bases, etc.).
The popularity of such systems can be both their advantage and disadvantage. For example, if the functionality does not allow to realize all the needs of the company, the business faces a choice: either to adapt the platform to the standards of the organization or try to adapt the business processes to the mechanisms of the logistics ERP system.
A boxed solution implies the mandatory installation of the program on a computer, which deprives the maneuverability and makes it difficult to use the system remotely.
Custom logistics ERP system
For a business that is seriously engaged in process automation and optimization, boxed ERP solutions cannot cover all the needs. That's why many entrepreneurs invest in developing their own logistics ERP systems.
Ability to create logistics software that fully meets the needs and demands of a particular company and market. It creates optimal conditions for further scaling.
The implementation of custom logistics solutions is much faster and easier due to debugged processes and scripts. In addition, most developers of such systems offer technical support and software training.
As in the case of "boxed" solutions, all data are stored on the company's server, and the responsibility for their safety is not transferred to third parties.
The creation of a custom logistics ERP system requires inviting a team of highly qualified IT specialists, an appropriate infrastructure, and, of course, investments. Not all companies can afford this.
Consumption of time resources. You need to spend much more time than buying and adapting an existing solution.
As experience shows, in the long run, it is more profitable for companies to take a custom logistics ERP. Such a solution will not only bring business performance to a new level but will also give a significant competitive advantage, which will be expressed in profits. However, how much does it cost to develop a custom ERP for logistics?
Custom ERP for Logistics Costs: A Real Case Example
The price of developing a custom logistics ERP software for logistics depends on many factors. Let's consider the issue of potential costs on the example of a recently developed logistics application by RexSoft.
So, we needed to create a functional solution for the transportation of used cars and the interaction of the customer, dispatchers, and drivers on desktop and mobile devices. The key features of this app were:
Customer's ability to contact a dispatcher;
The mechanism of sending a form by the dispatcher to the customer, after which the customer can fill it out in the web version of the app;
Sending the request to the driver on the mobile version of the app;
Tracking the transportation of the car by the driver, as well as the ability to take photos of the vehicle and add them to the request;
The ability for the customer to view the condition of the vehicle and sign the request with an electronic signature;
Ability to view the route and movement of the driver thanks to the tracking system;
Planning of future transportations to save time and make the business process more profitable.
The approximate development time of such an application is 3-4 months. To be exact, the creation of this system took about 1110 hours. Six people were involved in the implementation of this project:
- PM - 80 hrs.
- IT architect - 40 hours
- Application design - 200 hrs.
- Front-end development - 360 hours
- Back-end development - 320 hrs
- QA - 110 hrs
Thus, the development of a custom logistics application from scratch with the time and rates of the specialists cost about $40,000. However, don't worry if this figure is too high for you. We offer different models of cooperation, which makes it possible to significantly reduce the cost.
More Bespoke Logistics ERP System Examples by RexSoft Team
Now you know what an EPP for logistics is, why it is needed, what it should include, as well as the approximate cost. But what will the final result look like? Nothing will be more eloquent in this question than real examples of custom ERP systems for logistics developed by the RexSoft team.
iMover - Logistics ERP software
This logistics ERP software is designed to help users move from one house to another. The system allows users to contact a mover in real-time to solve any inconvenience or problems that may arise. iMover is a real outlet for moving companies and helps people to change their living space with more comfort. This logistics ERP system has helped the company work in synergy with every part of a complex business process. All staff can now be managed from one location and contacted when needed.
Brokcars - Freight brokers ERP system
Another great example of a custom logistics ERP system. This application contains all the necessary functionality for the convenient and safe transportation of used cars from the seller to the customer. We have already described the functionality of this application in the previous section. However, it is worth noting that after the launch business indicators of our customer began to grow at a rapid pace.
BUSON - Transportation ERP software
The development of this ERP for logistics has proven to be ideal for transport tracking, route calculation, and order management. We have created a cross-platform logistics ERP system that increases the security and transparency of transportation processes by allowing our customers to integrate it into various applications for buying or booking tickets. Administrators can view ticket sales statistics from different platforms via API, track bus traffic on the map, receive notifications of any malfunctions or unscheduled stops, and check vehicle statistics.
Logistics companies are rapidly moving towards digitalization. In recent years, small businesses have also come to the need to automate business processes with logistics ERP systems. One way to do this with a limited budget and few resources is to take advantage of IT outsourcing and enlist the support of professionals. Contact us and we will carefully study all your requirements and then proceed to create a solution that will take your business to the next level.
Who needs a logistics ERP system implementation?
Logistics ERP systems are designed to reduce costs, accurately account for inventory and finances, eliminate scrap, and increase the speed of order assembly. These criteria help companies stay on top or strive for it. Logistics ERP system will suit medium and large businesses that want to respond quickly to any changes and develop, relying on the latest and complete information.
What is important to the head of the enterprise to get from logistics ERP implementation?
Logistics ERP will help you to minimize losses, for which it is necessary to organize an optimal filling of labor and material resources. Also with it, you can plan effectively the production processes as well as plan orders and be able to reschedule them, if necessary.
How to ensure the successful implementation of the ERP system for logistics?
The success of logistics ERP integration largely depends on the implementers. It is important to turn to a reliable company that has sufficient experience and can offer the best option for planning and resource management systems.
Bogdan MisiurenkoBusiness Development Manager