Build vs Buy Software: Frameworks for Logistics Companies to Make the Right Technology Decisions

The painful reality of software decisions in logistics

Imagine spending millions on a software solution that promises to revolutionize your logistics operations, only to discover it's a square peg in a round hole…

Your team struggles with clunky interfaces, inefficient workflows, and integration nightmares that drain productivity and innovation potential.

The hidden costs of misaligned software choices

Every day your logistics operation uses a suboptimal software solution, you're bleeding resources:

• Productivity losses mount as employees wrestle with unintuitive systems
• Competitive advantages slip away while your technology fails to adapt
• Innovation stagnates as your technology infrastructure becomes a constraint rather than an enabler

The stark truth? Choosing the wrong software approach can cost your company far more than the initial investment—it can compromise your entire operational efficiency and strategic positioning.

‍

The high-stakes decision: Build or buy?

Technical and operations leaders face a critical crossroads: Should you invest in custom-built software tailored to your exact specifications, or opt for a market-ready solution that promises faster implementation?

Why most logistics companies get this wrong

The traditional approaches to software selection are fundamentally broken:

Custom Build Pitfall

Many companies burn through resources developing complex solutions that never fully materialize.

Off-the-Shelf Trap

Pre-built software often promises simplicity but delivers compromise.

Only 15% of innovation projects successfully deliver their promised return on investment. The stakes are too high to rely on guesswork.

‍

A strategic framework for decisive software selection

I break down all of these concepts from this article in the video above.

1. Diagnose your unique operational needs

Before making any decision, conduct a forensic analysis of your specific requirements:

• Map out precise workflow challenges
• Identify integration points with existing systems
• Quantify the financial and operational impact of current inefficiencies

‍

Understand WHY you want to change the way things are done today

Finding your innovation why is critical for alignment within your organization. It sets expectations, establishes confidence in projects, and reduces wasted time and energy on ideas that create zero impact.

This matrix below is a great visual to understand

• What you can control
• What matters more to you today
• What you are capable of executing on now vs later

‍

Bottom line vs top line (today vs future)

Top line innovations

• Focus on revenue-driven changes that may include AI-driven solutions to optimize delivery routes, expanding offerings to adjacent markets, or using advanced analytics to create value-added services for customers.
• These innovations are ambitious and have higher risks and longer time horizons. However, they position the company for future growth.

‍

Bottom line innovations

• Concentrate on making current operations more efficient and cost-effective. For example, automating warehouse operations or improving compliance processes.
• These are generally lower-risk and provide quicker returns on investment, directly impacting profitability.

Strategic considerations for logistics

To sustain competitive advantage, logistics companies must balance these two aspects:

• Use bottom-line strategies to maintain robust operational performance and fund top-line innovation efforts.
• Leverage top-line innovation to adapt to evolving market demands and ensure long-term relevance.
• Deciding whether to focus on top-line or bottom-line innovation depends on the company’s strategic goals, resource availability, and market pressures.

‍

‍

2. Comprehensive evaluation criteria

Understanding what can work best for you doesn't have to be rocket science. Use the criteria below to quickly understand what is truly best for your organization. And sometimes it means you can leverage both depending on the problem, timelines, and ROI.

Build custom software if

• Your workflows are genuinely unique
• You have robust internal technical capabilities
• Long-term strategic differentiation is the primary goal

‍

Buy off-the-shelf solution if

• Speed to market is critical
• Your needs align closely with standard industry processes
• You lack extensive internal development resources

‍

3. The buy vs build decision matrix

‍

4. Risk mitigation strategies

Regardless of your choice, implement these critical risk reduction tactics:

For custom builds

• Start with a Minimum Viable Product (MVP):
  • Focus on core features that solve the most critical user problems, eliminating unnecessary complexity.
  • Prioritize rapid feedback loops to validate your product assumptions quickly and effectively.
  • Keep the project scope tightly aligned with your key business objectives to prevent unnecessary development.
  • Use iterative development to continuously improve functionality and reduce long-term technical challenges.
  • Launch with a carefully selected pilot group to minimize risks and gather meaningful real-world insights.
• Invest in Scalable Infrastructure:
  • Build a foundation that can easily grow and adapt to future business needs and technological changes.
  • Design with modularity to allow seamless updates and integrations as your business evolves.

‍

For when you buy a solution

Negotiate Flexible Contract Terms

• Protect your interests with contract clauses that allow easy scaling or exit if the solution doesn't meet expectations.
• Thoroughly verify compliance with industry-specific data security and ownership regulations.
• Start with pilot or phased implementations to thoroughly evaluate vendor performance before full commitment.
• Insist on transparent pricing structures that eliminate the risk of unexpected future costs.

Conduct Vendor Due Diligence

• Deeply investigate the vendor's track record, market reputation, and ability to provide consistent, long-term support.
• Request detailed case studies and references from businesses similar to yours.
• Carefully assess the vendor's capacity to scale alongside your organization's growth trajectory.

‍

Universal approach

• Involve Cross-Functional Teams in the Decision Process
  • Create a comprehensive team that includes perspectives from IT, operations, finance, and end-user groups.
  • Conduct collaborative workshops to gather diverse insights and identify potential implementation challenges.
  • Develop a shared accountability framework that ensures all stakeholders are invested in the solution's success.
  • Leverage collective expertise to uncover risks that might be missed by a single department.
• Establish Clear Success Metrics
  • Define precise key performance indicators that measure impact on revenue, operational efficiency, and customer satisfaction.
  • Create a dynamic assessment approach that allows for continuous evaluation and strategic adjustments.
• Plan for Change Management
  • Develop a comprehensive onboarding and training program that ensures smooth technological adoption.
  • Proactively communicate the benefits of the new solution to minimize resistance from team members.
  • Create a supportive environment that helps employees understand and embrace the change.

‍

5. Build AND buy strategically

Just because you’re building custom software doesn’t mean you need to build it all from scratch. In fact - you shouldn’t.

There are so many tech-forward offerings and services that offer up APIs to bring you data, visibility, dwell times, etc.

As you’re building each feature, you should evaluate time-to-value and time-to-maintain to steer what truly needs to be custom built, and what you can license.

For example:

If you’re trying to implement live chat (which is a large undertaking), you should look at leveraging chat providers like Stream, or Twilio. As your needs evolve, if you find you need more - you can likely customize while leveraging their core chat engines.

When buy makes sense

A really good clarifying question to ask as you’re evaluating what parts of your product to buy vs build - is are you generating revenue from THIS product? There are likely arbitrage opportunities at your different levels, but many times if it’s not a strategic feature for your customers, it may be table stakes to compete and buying it is the clearer path than delaying your launch months.

‍

The competitive advantage awaits

The right software strategy isn't just a technical decision—it's a strategic lever that can propel your logistics operation into a new era of efficiency and innovation.

Your next move

1. Gather your cross-functional leadership team
2. Use this framework to conduct a comprehensive software assessment
3. Make a data-driven decision aligned with your strategic objectives

Don't let another day pass with a software solution that's holding your logistics operation back.

Your competitive edge is waiting.

‍