In this edition of Parcel Perspectives I thought I’d share some knowledge from the this year’s PARCEL Forum, which was a great success. My congratulations to everyone who helped organize the event. I’m looking forward to next year’s show and I’m glad to see that it will be moving to downtown Chicago. I presented at the show again this year, and the topic was the use of Analytics. I had about 25 people attend the presentation. I won’t bore you with the details of my presentation, but what is interesting are the questions I received during the presentation. There were three reasons why the attendees to my session were interested in an analysis of their parcel data. These were:

1) Dimensional Weight Analysis
2) Shipping Personnel Performance
3) Location and Stocking of Distribution Centers

(Now there are scores of other reasons to do analysis, and the show had some very reputable firms exhibiting a variety of invoice analysis services, but the attendees at this particular presentation were primarily interested in those three analyses.) 

The first topic, dimensional weight analysis can directly impact what you spend with the carriers. The ultimate goal is to affect the packaging you use so that you can reduce the additional handling charges, large package surcharge, or the actual dimensional weight. Two individuals from a large retailer were in the audience and they discussed one of their product lines: Bicycles. They were getting hit hard with the carrier’s ‘additional handling charge.’ This is currently an $8.50 fee with either UPS or FedEx that is assessed, amongst other handling factors (such as the shape of the packaging container) when the longest side exceeds 60 inches, or the second longest side exceeds 30 inches. The operation teams of this retailer reduced a few inches off their current packaging and were saving over $100,000 a year with the change to this one product line. 

This topic also received a lot of attention at the show. While I was not able to attend his presentation, I talked to Dean Arnold from National Instruments at the networking event. Dean presented a case study that included how NI was able to cut their parcel spend by hundreds of thousands of dollars by focusing on reducing their dimensional charges.

From an analytics view, this type of analysis is solely dependent on your shipping system's ability to not only determine the shipping charges and fees, but to also consume information from the order entry system so that the analysis can be performed based on SKU, or product line, or some other order-based data that allows the shipping operation to provide feedback to the other stake-holders in the business. Quite often data is passed back to an ERP system that has this information, but the data passed back is total freight charges, tracking number, carrier/service, etc.. Flags for dimensional weight and individual surcharges may not be sent back to the ERP system. Should the amount of data being passed to that system increase? Or should you augment the data being sent to the shipping software? Given the myriad carrier/service/surcharge combinations, it may be a simpler task to just pass operational and order information to the shipping system (especially given the dynamic nature of the shipping charges.)

The second topic, shipping personnel performance, surprised me a bit. My topic had been announced as controlling your operational costs. It actually makes perfect sense that a company would want to analyze the operational performance of the warehouse through their shipping system. The system is providing a time stamp for each shipment processed. It is also capturing the workstation and the user. Individual performance of each shipping station can be determined, as well as how quickly a dock or bay is turned around when the carrier is manifested. This analysis could be drilled down further to determine performance for domestic versus international shipments or standard versus dangerous good shipments and provide hard data to be used to determine if the business would benefit from spending money on improving the data integration to the shipping system and reducing manual steps in the process. Or it might simply prompt an investigation into why Mary can get twice the shipments processed that Bob can.

Lastly, the third area that received a lot of attention during the presentation was the use of data to provide heat maps of where shipments were being delivered to. As shippers successfully negotiate contracts, reduce their surcharges, and improve their warehouse efficiencies, one of the biggest areas left for reducing their spend is to reduce the distance required to get the goods to the consignee. An analysis of origin to destination by SKU or product line can inform the shippers where to move inventory. Another large retailer, for example, noticed a significant quantity of Mother’s Day and Father’s Day promotions were being shipped to Florida. While the retailer has a distribution center in a neighboring state, a large percentage of the shipments were not originating from the closest DC. A simple shift in that seasonal inventory has resulted in significant cost savings for them. 

The second part of this analysis is related to where they should be considering opening their next distribution center. This is even more interesting when you start to consider the regional carriers (who had a large showing at this year’s PARCEL Forum). How much could you benefit if you were able to directly induct your packages to OnTrac’s Reno Nevada hub and enjoy next day delivery along the entire west coast at ground prices? 

While these are just three areas (from literally dozens discussed), I find it interesting how the focus changes from year to year and based on the demographics of the participants. We’ve already reserved our booth for next year, and we are looking forward to another great show, this time in downtown Chicago.