For small business owners (SBOs) running logistics businesses, whether it be fulfilling deliveries for a larger company like Amazon or conducting transportation with a fleet of small box trucks, keeping track of profits and losses at the bottom line becomes incredibly important. Not only do these businesses want to perform their deliveries on time and on target, they want to make sure they are receiving a quality return on investment.
Before, small logistics businesses had to focus on their operations first and foremost. Once they had vehicles and packages to deliver, they expended maximum effort in delivering those packages whether or not they were doing so efficiently. These businesses in theory lost a lot of money through human error and wasted time inputting data – many operations tried to track all of their drivers, vehicles, packages and devices manually through Excel spreadsheets.
Having a specialized software to track every step of a logistics operation can dramatically reduce the stress of both managers and drivers. However, many of the relevant logistics software on the market is excessively expensive, made for larger-scale operations, and moreover not specifically tailored for a small companies’ needs.
For independent or Amazon-partnered logistics businesses, OpenSource Technologies (OST) can elucidate, based on its industry experience, some of the key drivers of profit and loss within a logistics operation. If an SBO in logistics can identify these areas for growth within his or her current business, he or she can utilize an affordable custom logistics software to automate and manage many of these processes, saving money and manpower for the company.
Background on Amazon Logistics Businesses
Amazon Prime, as you probably know, is a service for quickly delivering products to customers. But while Amazon Prime is the marketplace used to shop for these products, Amazon itself does not personally oversee these products’ shipments. In the past, Amazon Prime partnered with businesses such as FedEx or UPS and USPS to deliver their packages. Because Amazon was cost conscious, they ended up deciding these outside services were too expensive to be feasible in their business model.
What was most compelling initially to Amazon was that these larger logistics companies had their own distribution models and routes. Over time, Amazon realized services like FedEx, UPS or USPS had their own deliveries to worry about, and in the end Amazon Prime products would not or could not take precedence. Amazon simply reached a point when they decided, ‘we’ll do it ourselves in the private sector.’
To optimize delivery costs and provide a service tailored to the needs of their sales business, Amazon began working with individual Small Business Owners (SBOs), who perform delivery operations with packages that come into centralized warehouses around the country. These independent SBO’s perform as Amazon logistics businesses, making deals to deliver Amazon Prime packages to their local areas. However they are not directly run by Prime, just fed by Prime.
In exchange for delivering these packages, SBO’s receive training and compensation, guaranteeing a small investment and steady stream of revenue to run their business. These Amazon Delivery Partners have since become one of the largest businesses and employers in the United States. However, in addition to the benefits they receive from partnering with Amazon Prime, these SBO’s must also juggle a wide range of challenges in their day-to-day operations.
The Difficulties of Running an Amazon Logistics Business or Small Logistic Business
Small logistics businesses can easily miscalculate financial information such as profits and losses if they attempt to keep track of all costs and incentives manually. Keeping track of your assets, loans, digital banking, gross earnings and budget can be especially difficult if you manage all of these financial concerns separately, rather than in one comprehensive software.
Normally, the delivery logistics of an operation like Amazon Prime’s could overwhelm a small business. Given the enormous inventory of a warehouse filled with Amazon packages replenished every single day, trying to organize all of the packages on an Excel spreadsheet can be nearly impossible for any SBO. Unless your business has an overabundance of managers to oversee delivery logistics and operations, employee or vehicle tracking without a specific software poses difficulties.
If one of your drivers took a three hour break on the clock, you may have no way of knowing he or she did so until the end of the day, when you start getting complaints about missing packages.
And If a Drive increases their performance by rescuing other driver(s), So you can manage the resources effectively and appreciate his/her performance.
Communication becomes essential, whether it be drivers checking in on delivery progress, or managers distributing phones or workers performing maintenance on vehicles. With hundreds of delivery vehicles and employees, without a proper management software you cannot tell if your company is actually making money or not. Because they must run on slim margins, these logistics operations need a way to identify all of the little costs that hurt their business. Without a device tracking system, small logistics businesses can easily lose these devices in the process of deliveries, or end up paying large data fees for devices they barely end up using.
These small logistics businesses also run into problems generating driver performance incentives without data on driver performance. If you can’t easily tell which drivers perform their deliveries excellently, you cannot readily offer bonuses to those high-performing drivers. Conversely, without assessment data, logistics businesses also find it difficult to promptly alert or de-incentivize drivers who do not deliver their packages on schedule.
In order to perform more consistently, as well as to get a better sense of their overall financial performance, SBOs in the Amazon Delivery Service Partner program, among others, have increasingly turned to custom logistics software to automate key business processes.
How a Custom Logistics Software Can Benefit an Amazon Logistics and Delivery Service
Depending on the context, logistics software looks different case to case. However in general, logistics software aims to perform the following tasks:
- Coordinate a company’s workflow (to get everyone on the same page).
- Decrease fuel and transport costs.
- Reduce manpower costs.
- Allow for better customer service.
- Improve shipment/delivery efficiency.
A custom logistics software can provide measurable or Key Performance Indicators (KPIs) like:
- A driver’s cost per mile
- the total cost per shipping unit
- how many packages you have successfully delivered.
This logistics software can also use Cloud Server to increase its speed, which can mean the difference between success and failure in the process of delivering thousands of packages a day.
If you want to scale your business, or even open a new centralized warehouse to deliver out of, you can do so with a custom logistics software built based on your current work processes. Furthermore, with enhanced role management, you can empower managers or admins at these stations to oversee drivers, deliveries, vehicles and devices on their own through the software.
Ultimately, Amazon or any other client wants a way to verify the performance of the delivery businesses they deal packages to. Your logistics businesses can use a Custom logistics software to provide delivery performance data back to a business partner like Prime.
The Cost of an Custom Logistics Software
A custom logistics software can cost $50,000 – $200,000, but can offer you a software capable of blending perfectly into your existing business processes. Custom programs tend to be expensive and only viable for well-scaled businesses. However, using a smaller-scale custom logistics software can prove to be a long term investment. By adapting to any changes in your business needs, being constantly rewritten for improvement, and by not breaking your bank when you first buy it, a custom logistics software tailored to your particular small business can add excellent value over time.
In the case of delivering packages through Amazon Prime, a custom Amazon logistics software catered to your existing team’s delivery process may be what your small logistics business needs to improve its performance and thrive even during the current economy.