When thinking about total cost of ownership (TCO) and logistics technology, technical teams need to think holistically. Talent, capacity, flexibility, and reliability are just a few areas of investment required to build logistics apps that accelerate your business. By exploring these core cost considerations, teams can make informed decisions based on their specific architecture, team and business goals. TCO frameworks are specific to an organization and must be adjusted for the stage of the company and the markets within which they operate.
As a team of logistics tech developers who work closely with the largest community of logistics tech builders, we have had many conversations with tech teams who are making important decisions about their logistics tech stack. From these conversations, we’ve noticed that teams need to think about many of the same considerations they considered when designing their cloud infrastructure environments.
When considering subscription costs for other SaaS services, you probably identified costs associated with your internal team’s ability to provide an alternate service. After adding in the costs of third party tools, consultants, and long term administration, you likely decided to select a SaaS provider to deliver the service.
When considering logistics technology, these factors apply, but determining the cost can be particularly difficult because the tech issues with logistics are layered. When delivering these apps, developers need to not only consider the above list but also have expertise with the components that are the foundation to businesses focused on delivery, field service, and gig work.
Logistics apps have inherent complexity around battery issues, nuanced location and mapping issues, and delivering user friendly mobile apps. All of these issues must be addressed in order for a logistics stack to deliver the insights to operations and satisfactory user experiences to customers and field teams. Logistics technology builders need to have teams of developers who can support systems that are secure and scalable while also delivering apps to users that are reliable and battery efficient.
Teams need to be composed of software architects who have familiarity with mapping technologies and experience building and operating real time location-based systems; software engineers who can drive the development roadmap for mobile applications; software engineers who can execute the development of iOS and Android applications; data engineers who can process and store large data sets, integrate with map technologies and produce actionable insights; UI designers and a support team who can manage user and customer issues.
This technical team would be responsible for developing a private or public cloud architecture and applications that support the activities of users, customers, and operations managers. If you are building logistics technology - you have likely experienced the varied needs of these important audiences. They each require accurate information in real time to make deliveries, document their work activities or have visibility into field staff operations. This must be delivered in a way that users can depend on with minimal steps to elicit insights like ETAs and delays or optimized routes.
Your Logistics Tech Stack
As an example a team might need to build a logistics app to support a fleet of delivery drivers who pick up and deliver packages. At minimum, this app would need to do the following:
- Monitor deliveries in transit
- Deliver the exact time of delivery to customers and ops teams
- Issue accurate payouts based on distance
While these three requirements are rather straightforward, the team would quickly find out (as you may have) that to present maps with accurate time and location information to drivers and customers is not straightforward. Assigning orders to drivers and tracking these deliveries in real time is also a rather difficult task, as is organizing all of this data in a way that allows for accounting and finance systems to execute accurate payments.
To support these requirements alone, teams would need to cobble together a host of APIs, SDKS and cloud infrastructure to just get started with solving these problems. Databases, middleware, data lake, security, compliance, those are all costly endeavors that have licensing, infrastructure, and ongoing maintenance costs associated with them. These components require DBAs, data scientists, and compliance expertise. What does your logistics tech stack look like?
Framing TCO
Logistics technology is a problem with many layers. Layers that are increasingly difficult when best practices are not followed. When considering TCO, in order to deliver apps and experiences that customers enjoy, these practices are helpful:
1. Establish a baseline. Map out your logistics tech stack and document any costs associated with infrastructure, SDKs, APIs, processes and talent. Use this information with a TCO model that matches your team’s capacity, trajectory and technical footprint.
2. Focus. It can be overwhelming to consider all aspects of the logistics tech stack. Instead, focus on the aspects that are most critical to your organization. For instance, talent might need an upgrade in skills, or organizations might need to make a larger investment in consulting services.
3. Consider savings. While TCO focuses on costs, it’s important to also think about the savings that could come from off-loading pieces of the tech stack. In terms of logistics apps, teams should quantify costs associated with inaccurate location information, poor customer experiences, lack of visibility into real time transit data and other outcomes of a sub optimal logistics tech implementation.
4. Automate. You’re probably already investing in automation for your current environment, but it’s critical to automate as much as possible with logistics tech. The sooner you can do away with manual processes, lists, and spreadsheets, the sooner you will reap the cost and time savings that your business depends on to compete.
5. Logistics tech requires a different approach. Using a cloud based logistics tech stack can be more costly than building your own environment if you're not using the right approach. Tech teams need to ensure that any cloud service that is used considers the above costs in the context of the desired business outcomes.
Ask The Right Questions
Building logistics technology is a complex endeavor. We wish that one model or framework could provide all of the answers. While we might not have all of the answers in this post, we hope this helps you ask the right questions. By asking the right questions, teams can minimize complexity, engage expertise where necessary and continue to build the apps and services that take your business to the next level.
HyperTrack provides APIs for logistics tech builders. By unbundling logistics tech through SDKs, APIs, webhooks and embed views developers can use no-code and low-code solutions to build logistics apps for the future. For more information on how using logistics APIs can improve your business, visit hypertrack.com or request a demo today.
