There’s no question that shipping has become more complex in recent years, and with new rates taking effect in January 2013, businesses will need even more creative ways to streamline processes and become more effective.

Smart organizations will focus their attention on the most pressing challenges and opportunities. So in September of this year, we posed that question to small and mid-sized shippers in the retail, manufacturing, wholesale trade, and e-commerce industries. The findings paint a picture of what it takes to prosper in today’s environment.

Many companies have already taken steps to increase efficiency and save. A full 27% report that they are already using transportation management software to help optimize shipping performance. When you look at the shipping landscape, the value of such technologies is clear.

• Organizations rely on more types of transportation than ever before; and managers need to make sure that items are shipped the right way, at the right price. Methods include:
o Parcel Ground (71%)
o Parcel Express (62%)
o Freight and LTL Carriers (58%)
o Air Freight (35%)
o Ocean Freight (23%)
o Rail Carriers (10%)

• With so many modes of transportation, it makes sense that most shippers surveyed use multiple carriers.
o 59% use 2 – 5 carriers
o 17% use 5-10 carriers
o 11% use more than 10 carriers

• The number of options employed by savvy shippers leads to the need for more in-depth rate comparisons and additional administrative support.

Saving Time and Money Requires Automation and Information

Most survey responders spend up to $500,000 a year on shipping. And when asked to name the most important shipping factor, these managers and department heads ranked two areas above all others: automation and information. 

The need to automate outbound shipping processes was ranked at the most important factor by 35% of all companies. For many, additional automation could streamline package preparation, simplify rate comparisons, and standardize business rules across departments.

The second most important concern centers on information. In this survey, 32% of responders ranked reporting and dashboards on carrier performance as the most important shipping factor. Such information could make it easier to identify waste, validate carrier charges, and gain a big-picture view of shipping expenses.

When you consider that transportation costs can average six to 10% of overall company revenue, it’s not surprising that automation and information are seen as such valuable additions. Many small and mid-sized organizations understand the opportunity, but look at shipping management software as a solution that only works for larger organizations. As a result, they don’t have the tools in place and must deal with fragmented processes, unexpected fees, and poor compliance on a day-to-day basis. Compare that to the 27% of small and mid-sized businesses who already have the software needed to optimize, integrate, and automate their shipping processes with the highest degree of real-time visibility and control.

Organizations Deal with Pain Points at Every Step of the Process

Despite the fact that a quarter of those surveyed use a transportation management system, there is indication that even with those shippers, there is an opportunity to better utilize technology. The survey uncovered that challenges exist across the entire supply chain, from carrier selection to cash flow optimization. Three examples highlight the potential for waste and inefficiencies.

• Returns handling. Up to half (48%) of respondents process returns manually, adding cost and unnecessary errors to a function that already drags on profits.

• Carrier data storage. Nearly three-quarters of businesses (72%) store data related to shipping and carriers in multiple databases. In such cases, companies may not have access to all of the information they need to respond to customer inquiries or management requests in a timely, cost-efficient fashion.

• Expense management. Most organizations analyze carrier invoices either weekly (37%) or monthly (36%). And as noted above, this usually involves organizing, collating, and comparing statements for up to five or more different carriers. In addition to the obvious administrative cost, the lack of a single-view makes it harder to compare rates and service levels.

With higher rates taking effect in a matter of weeks, this is an ideal time for managers to assess their current shipping operations. Special attention should be paid to areas that require redundant effort, steps that involve manual processes, functions that are difficult to control, and points where you may be overspending. Small and mid-sized firms that rely on carrier-provided software, for example, need to log onto multiple sites and disparate systems to monitor shipping activity. And even then, it is difficult to develop, employ, and enforce shipping rules and guidelines across the company. 

Given the advantages of today’s leading transportation management systems, it makes sense that a full 22% plan to invest in new technologies in the year ahead.

Karen D'Andrea is Director, Logistics Solutions and Services, Pitney Bowes