Third Party Logistics: 6 Pitfalls You Can Avoid With 3PL Logistics Software

Outsourcing last mile deliveries to third-party logistics (3PL) providers is a strategy many businesses employ in order to better focus on their core competencies. 3PLs are able to provide a valuable service linking retailers and other businesses to their customers in a way that streamlines the last mile and ensures customer satisfaction.

That said, many businesses worry about losing control of the delivery experience when they outsource to delivery partners—both when it comes to customer/brand experience and when it comes to costs. As a 3PL provider, the best way you can compete for success in the market is to allay customers' fears about those things happening.

What Is 3PL Logistics Software and Why Does It Matter?

Before diving into the common pitfalls, it's helpful to define what we mean by 3PL logistics software. Simply put, it’s a category of logistics software solutions designed specifically to help third-party logistics providers manage routing, delivery tracking, customer experience, driver management, and delivery performance more efficiently—all while ensuring visibility and integration with clients' systems and technology.

The best logistics software for 3PLs provides real-time visibility, automates key workflows, and helps reduce both cost and complexity across the supply chain. How do you make that happen? Start by investing in SaaS 3PL logistics software that helps you avoid these common pitfalls:

6 Pitfalls 3PL Logistics Software Helps You Avoid

1. Outdated Processes: Why You Need Modern 3PL Logistics Software Solutions

The era of digitization in logistics technology means there’s no excuse for slow, inefficient deliveries. And yet, many companies still rely on manual planning methods and outdated technology, both of which prevent them from becoming more competitive.

The latest technological tools enable companies to load trucks more efficiently, track drivers and orders, communicate with customers, and optimize routes. You can standardize, digitize, and automate key processes across the board, resulting in not just lower costs but more streamlined delivery management. Leveraging new tools even allows your business to seamlessly share routes and other information with clients, which is increasingly crucial for ensuring customer satisfaction.  

Legacy technology and manual processes can’t provide any of these benefits. Some businesses even find themselves spending considerable sums every year to upgrade their existing legacy functionality—all with minimal returns. 

In this light, 3PL logistics software should look like a much more sensible investment. Why? Because the best logistics software provides all the necessary features to help make logistics operations more cost-effective and efficient.

2. Poor Route Planning: Why the Best Logistics Software Prioritizes Optimization

Route optimization plays a crucial role in ensuring that orders reach customers within promised delivery windows and that last mile delivery costs stay manageable.

The 3PL software can offer logistics businesses the most cost-effective routes by factoring in different variables in its calculation. These factors can include historical traffic patterns, driver skill and speed factors, service time factors, customer requests, and much more. Here, AI can play a big role in ensuring efficient deliveries that meet your requirements without losing efficiency or ETA accuracy. 

Manual planning takes countless hours and is often inaccurate. In contrast, modern logistics software’s route planning and optimization can provide optimized route plans in seconds. Users only need to set their established parameters, import orders, and let the system do the work.

3. No Real-Time Visibility: How Logistics Management Software Closes the Gap

The right 3PL software solution also comes with tracking and visibility features to help fleet managers and dispatchers monitor drivers and vehicles on the road in real-time. 

Real-time tracking helps ensure that drivers are complying with the route plans. Just as importantly, it can show the status of each order relative to the delivery window. In this way, dispatchers can more easily spot looming delivery exceptions and act proactively to prevent them from throwing plans off track or irritating the customer. 

Compare this to third-party logistics software that doesn’t offer an easy way to see what’s happening in the field in real time: Typically, you won’t know about missed or late deliveries until it’s too late to do anything about it. Customers will leave negative Google reviews complaining about the delivery service, but your last mile operations will remain a black box.

This isn’t just crucial for your own delivery management process. Visibility is something that both your clients will increasingly demand. The right software is the only way to provide it to them. 

4. Limited Customer Visibility: What the Best 3PL Logistics Software Should Offer

Customers place high importance on order visibility and transparency, and businesses that fail to provide customers with delivery statuses and real-time tracking can expect high customer churn. Luckily, sharing order and delivery information is easy with the right logistics software system.

The best practice here is to provide a customer portal feature, enabling customers to visualize their status with a few clicks. You should also provide automatic updates and notifications to inform customers when their orders are already out for delivery or about to arrive. 

Automatic updates also reduce the number of customers calling the customer service team—which has the potential to cut down your back office costs considerably, all while boosting the satisfaction rates of customers who really don’t want to have to call in.

This is another area where AI can play an important role by handling the front line of customer questions and requests. 

<< Learn more about leveraging AI for smart, customer-facing chat agents here >>

5. Guesswork in Costs: Why You Need Smart Software for Logistics

Companies factor logistics expenses into their overall costs. Those that only estimate or guess transportation costs ultimately affect their product's value by either making their prices too low or high or making cost estimates based on past metrics. As a 3PL, it’s your job to provide clarity into this element of the supply chain.

Delivery costs are notoriously high right now, and there are plenty of reasons for that. These include driver shortages, high fuel prices, and regulatory mandates, and demand volatility. Unfortunately, many businesses make the mistake of using last year's figures for their product pricing.

You need the right 3PL logistics software in order to eliminate the guesswork in calculating transportation costs. Robust data integration and reporting are the name of the game here. The ability to determine delivery operations costs accurately also empowers firms to make competitive bids for new contracts so that they don't bid so low that it would cause losses.

There are plenty of opportunities to get creative here. For instance, the route planning feature of your software might enable you to model new geographies or other business changes so managers can determine accurately how much changes to delivery operations could cost in terms of fuel expenses and driver wages. This gives you the ability to make more data-driven decisions.

6. Falling Behind Trends: How Third Party Logistics Providers Stay Competitive with Software

The logistics industry is constantly evolving, with players finding ways to better manage their transportation and delivery operations time. Right now, AI is top of mind for most businesses—but it can be difficult to separate the reality from the hype, especially in logistics management. 

It pays to be mindful of the trends within your field. The right third-party logistics (3PL) software helps in this area by offering data and insights on fleet management and other supply chain topics. Advanced 3PL logistics software offers the right information to empower executives to make data-driven decisions.

In the end, delivery management—even for 3PLs—is complex. But logistics businesses can overcome these challenges and avoid committing the above pitfalls. The first step is investing in the right 3PL logistics software.

Improve Delivery Performance with the Right 3PL Logistics Software

Choosing the right 3PL logistics software is essential for modern third-party logistics providers looking to improve visibility, efficiency, and customer satisfaction. From route optimization to cost control, the best logistics software solutions help you avoid common pitfalls and stay competitive in a fast-changing market. Whether you're just exploring what is logistics management software or actively comparing platforms, investing in advanced software for logistics can transform your operations and position your business as a trusted, data-driven third-party logistics (3PL) partner.