Recently, I was in the office of a customer who had just provided all employees with an Internet-based, desktop program to facilitate outbound shipping. As I waited for my meeting, I overheard an administrative assistant complaining to a co-worker. The new program, she said, only offered the next-day services of one carrier (with whom the customer had a major contract) and it did not allow her to use the next-day services of the carriers she preferred. I couldn�t help but smile to myself � this is exactly the way desktop shipping tools are supposed to work and precisely the kind of behavior this company is trying to change.
How do your employees decide which carrier delivers your company�s expedited documents and packages? If you took a poll � and got your employees to answer honestly � I bet the following selection criteria would make the top 10:
� The carrier has a friendly and good-looking pickup person.
� The carrier provides free tickets to events, free lunches or other spiffs.
� The carrier has memorable or compelling advertisements.
� The employee�s boss demands the use of a certain carrier based on his or her perception of the price and quality of the service.
� The employee has a positive perception of the carrier�s reputation.
None of these methods of selecting a carrier will help you control what your company spends on outbound shipping. In other words, what employees don�t know about shipping is hurting your business. Face it. Making decisions about shipping is complicated. And in today�s world, where every carrier offers a plethora of service options, it is very complicated. Without the help of a multi-carrier selection tool, the average person has little or no knowledge of the delivery services available, the difference between them and the cost.
Where the Savings Are
First, let�s examine some areas where informed decisions can save money.
Next-Day Delivery. When an employee is instructed that an important package needs to be delivered on the next business day, most employees will select an AM delivery service with either �Air� or �Express� in its name. This is a premium service and, while it may be necessary in some circumstances, there are many situations where afternoon delivery the next business day is equally acceptable. A significant opportunity for saving money exists on packages whose recipient is within 300 miles of the sender. In this case, guaranteed ground service will deliver by the next business day. Check your carriers� Web sites to see which destinations normally receive your shipments within one day.
Surcharges. Surcharges added to the base rate can dramatically change the cost of getting the package delivered. These include charges for residential delivery, rural delivery, Saturday delivery and address correction, to name a few. The average employee usually isn�t aware of these and often doesn�t have the details about the recipient that he or she needs to estimate the total cost of shipping.
The Inter-Company Pouch. And what about that inter-company pouch? How often does it go? What carrier and service does it travel by? What if multiple items going from your office to an inter-company location could be combined and treated as one shipment? The potential cost-savings in this area is huge.
Getting Control
What can you do to better manage your shipping costs? Here are four suggestions that will drive results and drop cost-savings to your bottom line.
1.) Policies. As the manager who has accountability for shipping costs and who negotiates with the carriers, you have the power to set and enforce company policy regarding which carriers and services are used for your company�s package and document shipping. Create your policy based on the agreements you have with the carriers, and don�t be afraid to include more than one carrier in your policy (such as one carrier for domestic packages and another for international).
Your policy should indicate which carrier services are allowed, who can use them and if approvals are required for certain types of services (such as for a next-day, early AM delivery). Be sure the carrier services you designate make sense from the standpoint of cost and that the carriers you select have a reputation for on-time delivery in the areas where you will use them. Follow up regularly and audit the performance of these carriers to insure you are getting the service you expect.
Having a carrier policy isn�t enough � you have to communicate it to your employees. People throughout your organization need to be familiar with the policy and understand why certain carriers have been selected, what the cost benefits are and what level of service they can expect from the selected carriers. Don�t underestimate the importance of frequent and clear, comprehensive communication.
2.) Tools. The next step is to invest in tools that will help your employees work smarter and help you enforce the company�s shipping policy. As previously pointed out, shipping a package is complex, especially if there is any degree of choice involved across carriers or services. As you evaluate shipping tools for the desktop, consider the following:
� Do you want your employees to complete the shipping transaction themselves? Or, do they simply need to generate a ship request or traveler for completion for the mail center? Give employees desktop tools that provide the functions and information to accomplish these activities as assigned.
� A well-constructed tool clearly shows the costs and delivery times for all available services � the information employees need to make an intelligent choice. A well-constructed tool also allows you to designate multiple levels of access to carrier services. Based on the needs of their job, employees can be denied or granted the use of certain carriers or carrier services.
� To meet the demands of your business, are there any special services that your employees typically need to use? These special services can add significant cost to package shipping. Be sure you have a tool on the desktop that identifies the costs of these special services so employees can make informed decisions.
Numerous software products are available that support shipping decision-making and execution. My advice is to choose a � software tool that shows the employee all the costs of the service options available. The more information employees have regarding costs, the better the decisions they will make on behalf of your business.
3.) Training. To realize the benefits of your shipping policy, you must train employees to use it. Upfront training is needed to educate employees about the policies and tools. It also may be needed on an ongoing basis to reinforce more complex processes.
To achieve maximum cost-savings from your policy, consider additional, specific training in the following areas:
� Carrier or third-party insurance. What should be insured? How is value determined?
� International shipping. This area of shipping is becoming more complex and costly. Do you want to develop expertise in many people or only a few people within your organization? Your training strategies and processes would be markedly different in either scenario. If your company ships a high volume of international packages, consider employing a third-party trainer that specializes in this area.
� Hazardous and dangerous goods. This area is similar to international shipping in that it is expensive and costly. Assess your company�s needs in this area and determine the appropriate training process. What training is needed to ensure that your carriers accept your packages and documentation? How will you keep employees up-to-date on all necessary aspects of HAZMAT shipping? This is an area in which it pays to go outside for expertise. Penalties for violations can be severe.
4.) Managing Employee Actions; Measuring Results. The final step in reducing shipping costs is to manage and monitor employee usage and compliance with the shipping policy. The right desktop shipping solution will have extensive reporting tools built in for this purpose. These reports will show you costs and carrier usage by cost center or department. They will help you identify employees or departments that are not complying with your policies and thus should not receive the associated cost and service benefits.
Also, remember that the employees who make the carrier and service selections are not likely to see carrier invoices because these are processed in another department. Making this invisible information clearly visible to employees is a key step to ensuring that intelligent decisions are made for each package or document.
I believe the average employee wants to do the right thing �everyone wants to make the right shipping decisions and not waste the company�s money. But without tools and policies that support and guide them, your employees� decisions will continue to cost you money.
Johanna Boller is vice president of Product Line Management for Pitney Bowes Distribution Solutions. She can be contacted at johanna.boller@pb.com. Pitney Bowes is a nonexclusive licensee of the USPS. The price of DPV and RDI is offered by Pitney Bowes, and is not established, controlled or approved by the U.S. Government.
