By Dhruvil Sanghvi
Logistics is everywhere- right from moving goods across continents to delivering food, medicines and grocery to the end customer in the last mile. Over the years the global supply chain has become more connected than ever before, and the pandemic only made the importance of digitization even more significant. The global logistics market reached a value of US$4.92 Trillion in 2021 and is expected to reach US$6.55 Trillion by 2027 with a CAGR of 4.7 percent during 2022-2027.
Traditionally, the efforts for digitization have been going on for a couple of decades but most of these technologies are now outdated or based on on-premises solutions. The advent of the cloud has been a game-changer for many industries including Logistics. SaaS which stands for Software as a Service has emerged as a winning model for new high-growth technology businesses. There are benefits for both, the customers and technology providers. Customers get the benefits of a product that is always upgrading, and it lowers the bar for technology providers to offer products in a much better manner.
Benefits of the SaaS model in the context of B2B
a. High gross margins: A SaaS model drastically brings down the cost of software as companies can buy storage space according to their usage. Also, once the software is built and deployed on the cloud, there is minimal maintenance. In the earlier times, when the software was on-premises, a dedicated support team would be required and there would be multiple servers to maintain each deployment. With SaaS, there is only one deployment that is served via the cloud. This results in gross margins on average to the tune of 85% which is a great benchmark.
b. Stickiness of the B2B SaaS model: A B2C SaaS consumer may switch from a Netflix to an Amazon Prime but for businesses, this switch is not that simple. Once a business is convinced about using a SaaS product, the likelihood of sticking around is very high. This also means that sales cycles are relatively long but once a user starts seeing value, the client will be with you.
c. Expansion possibilities: Once a customer chooses a SaaS solution and is happy with the product, there are opportunities to upsell in a convenient manner. The different tiers of pricing are an example of this. A customer may start with a few licenses or a basic plan but as they grow, they can use more of the product capabilities by paying higher subscription fees. For SaaS providers, tiered pricing is the approach of choice to be able to expand accounts as the need arises.
Platform for logistics
When it comes to logistics, there are two key aspects of a software solution. One is the visibility part where an operations manager can have complete visibility over logistics operations. And the other is the vehicle routing and scheduling part where supply chain officers can configure their delivery operations according to their requirements.
An end-to-end logistics automation software will take care of both of these requirements through several platform modules:
Route Optimisation and trip planning: Tracking delivery data points and historical delivery patterns, route optimization algorithm helps to form trips automatically in the most efficient manner for delivery drivers. The algorithm takes into account variables like traffic conditions, weather patterns, order cancellations in real-time and several other parameters to deliver in the most efficient manner.
Hub to hub, B2B order fulfillment: In cases of movement of goods between warehouses or from the warehouse to store, visibility is crucial. Reducing loading and unloading times, optimizing capacity, and increasing store fulfillment rates are some of the areas which cloud-based transportation automation software takes care of.
Exception handling: Logistics SaaS platform has to be capable enough to handle several edge cases. There are numerous instances where an order might not have the correct address mapped to it, there might be a human error with respect to documenting a product code, or there can be a vehicle breakdown during a critical delivery. A delivery management software is capable of handling such exceptions so that the operations can run smoothly.
Gamified delivery driver experience: Be it delivery truck drivers or last-mile delivery associates, it is critical for enterprises to ensure high-efficiency rates. A gamified delivery driver experience incentivizes drivers to comply with routes and deliver in the most optimized manner.
This results in lower delivery costs and higher earnings for drivers along with a great experience for the end customer.
A superior end customer experience: In the age of digital, be it a B2B customer or a B2C consumer, delivering a great experience is critical. A SaaS-based delivery platform has the capability of communicating precise ETAs along with contextual alerts and notifications which keep the end customer in the know and delighted.
The latest Gartner forecast on TMS, worldwide, estimates that the market is expected to grow from US$1.32 billion to US$2.11 billion (from 2019 through 2024). That is a growth of 60 percent over a five-year period. And a majority of this is driven by SaaS-based automation platforms. The trend looks positive for the future as well and SaaS platforms have truly turned out to be a gamechanger for the logistics space.
