What is Return on Investment?
Return on investment (ROI) is a simple and versatile metric that measures the profitability of a venture relative to its cost. ROI is calculated as follows:
(Net Return on Investment / Cost of Investment) * 100
* Net return on investment = Current value of investment – Cost of investment
Importance of ROI for Freight Forwarders
For freight forwarders or maritime logistics companies, return on investment reflects the extent that your workflow is streamlined and your transportation management process is optimized. So what is an investment that can significantly increase your current ROI? One venture could be updating the transportation management system (TMS) that you currently use daily. Using modernized software that is user friendly could make automating tasks a breeze. According to Inbound Logistics, companies who use up-to-date systems saw increases of 10% in their ROI compared to their outdated software with some claiming as high as 20%.
Evaluating Logistics Software ROI
So how do you evaluate a software’s impact on your ROI? One way is quantifying the increase in productivity and the reduction of labor costs. Here are time-saving features from software that could increase your freight forwarding ROI:
- Automated quotes and bookings: Automatically sending the details of freight to various carriers. It makes communication between you and your clients seamless and allows your employees to focus on what matters most: increasing customer satisfaction.
- Real-time container tracking: Know when your freight arrives precisely helps save time and human capital.
- Compatibility with third-party systems: With API and EDI connectivity, the information on third-party systems can be integrated seamlessly into your daily software. This feature will reduce data integration errors which could cost thousands or even millions of dollars while saving you time to focus on growing your business.
By quantifying time and labor saved, you can realize the true value of your investment and calculate the ROI the system brings to you.
In conclusion, if you are a freight forwarding startup looking for a way to maximize ROI and gear up revenues for your business, the best way to ensure the goal is simply choosing the right system. You should analyze the strengths and weaknesses of your existing program, the size of the company, the type of transportation, and the service you provide for customers. You can filter some systems that only serve for certain kinds of transportation, and you should also look for the system with functionality that corresponds to your needs.
In addition to the above mentioned, many other factors should be considered, like user-friendliness, scalability, security, and analytical tools. Check this post for more details about what to look for when searching for freight forwarding software.
The Best Way to Maximize ROI is Updating Your Freight Forwarding or Shipping Software
Wondering what is holding you back from achieving maximum ROI? It turns out software that is outdated often hampers you from getting those unrealized gains and savings. Modern freight forwarding systems should be those that are user-friendly and constantly evolving to tailor to your needs. For instance, Gofreight, our software as a service product, allows for a customizable interface and an ever-expanding universe of features tailored to your needs. For instance, our system features end-to-end accounting, easy drafting, and editing features for all your financial invoices, and a manager’s view with all the metrics and real-time visualizations to help you make strategic changes.
Take a look and estimate whether your systems cover all these features perfectly, to further decide if you need to upgrade to a new system.
Book a free demo with GoFreight, we provide the best software solution at a reasonable price!