ROI Calculation for Logistics Software

In this article, we will recommend our no-nonsense approach to measuring ROI and share how Cargobase generates ROI for shippers.

It is essential to analyse the potential Return on Investment (ROI) of your TMS (or lack of one), as this system is critical to the movement of goods from A to B, on time! And we all know that the failure of such goods to be delivered on time comes with additional costs and lost revenues.

In this article, we will recommend our no-nonsense approach to measuring ROI and share how Cargobase generates ROI for shippers.

The no-nonsense appraoch to measuring ROI

Cargobase takes a pragmatic and transparent approach to calculating the ROI for a TMS. In line with this philosophy, we do not charge any upfront implementation fees, nor support fees or any other costs that catch you off-guard. You are only charged monthly running fees and therefore have an immediate payback. Here's the Cargobase approach - let's look at the below framework taking the left side first, i.e your cost base.

Cargobase ROI Measurement

The typical cost base of your logistics operation has three main components:

  • Out-of-pocket spend: Logistics Service Providers (LSPs), which can be spot-buy or contracted.
  • Cost of your internal team: Salaries, employer’s cost, and overheads
  • Cost of failure: Delays, lost shipments, damages that result in lost sales, customer dissatisfaction etc.

A common challenge for many logistic teams is the lack of complete visibility on their spending with the logistics service providers (LSP) - one of the reasons to implement a TMS in the first place - data ownership and less reliance on LSP data.

Cargobase ROI levers

Competitive bidding process

On average, companies achieve a 27% cost saving on spot-buy freight through the Cargobase platform, and shippers benet from more quotes and faster response times on their spot-buy shipments.

A single platform for end-to-end workow

The logistics team will benefit from improved visibility, eciency, and, ultimately, higher productivity. Time and motion studies during pilots with our customers show that up to 80% of their time can be saved by working on the Cargobase platform and eliminating excess emails, WhatsApp and phone calls, as well as reducing unnecessary duplication of work and time-intensive reporting. With the platform being user-friendly and highly intuitive, onboarding is simple and new team members can be eective from day one.

Full visibility into LSP performance

Having all operational data in real-time in one system gives shippers consolidated insight into the performance of their LSPs through better root cause analysis and corrective action planning. Shippers can easily benchmark LSPs against their peers and partner with a pool of providers that truly add value to their business.

The ‘I’ of ROI

Typically TMS providers have the following price components:

  • Implementation
  • Customization (API’s)
  • Module license
  • User licenses
  • Transaction fees
  • Support At Cargobase we like to keep things simple and no-nonsense, as showcased in our ZERO-FEE implementation. We do not charge for implementation, API’s, separate module fees, or for support. No upfront investments mean you can start saving from DAY ONE.

How does Cargobase generate ROI.png

Nobody (except us!) wants to talk about the failed cost

There is an elephant in the room and that is the cost of a failed implementation. Many TMS solutions are so complex that there is a wide gap between what these systems can do, and what your team actually needs (the ‘consumption gap') This complexity not only increases the cost of the product, it also adds to the chance of failure. Just think about how much it will cost to your organization if you have to decide after a year to terminate the implementation. At Cargobase, we have seen countless cases where multi-year, multi-million TMS implementations were ultimately abandoned, the pain is real.

Let's get you ready to pull the ROI levers. Schedule a consultation here.

Related blog posts