Shipping a parcel five or so years ago was a simple affair. Jot down an address and ZIP Code, slap a label on the package and call a carrier. Much has happened since then; intense carrier competition, mania for productivity, skyrocketing documentation requirements and increased international shipping requirements, just to name a few changes.
Shipping intelligently now requires flexible software systems with the ability to apply customer-specific, sophisticated business rules. The old type of rate shopping between carriers and a few levels of service no longer cuts it. If companies ship more than 100 packages a day, it behooves these shippers to constantly compare and choose not only between carriers but between levels of service as well to ensure that a package reaches the customer in a given commitment time and at the lowest cost possible. This is usually referred to as using a best way group or advanced rate shopping.
Why All the Changes?
Beth Enslow, Senior Vice President of Enterprise Research at Aberdeen Group, says modern parcel shipping software started becoming popular three years ago when fuel costs began rising. CFOs saw their transportation budget line items jump and called for action. What they found stunned them: Money was being squandered, and not through indifference, but rather from ignorance.
To keep a customer happy, a shipping clerk would spend $15 to $20, or more, to ship a small parcel, Enslow explains. But he or she could have satisfied the customer with a five dollar shipping cost. A better shipping system would help the clerk make a better decision. Or, depending on the systems business rules, it would require management approval for more expensive shipping.
Enslow calls this maverick spending. And it adds up one of her clients discovered that such spending was costing the company as much as $4 million a year. She cites telecommunications and insurance as business sectors that are becoming aware of the compelling value proposition of parcel shipping software.
Whats So Great About It?
Enslow says one of the key benefits of the newer, enterprise-class software is real-time visibility of shipping costs. In addition to cost savings, such visibility allows order entry to offer customers real-time tracking and service options such as overnight or appointment delivery. Additionally, the accumulated data that outlines not only what is being spent, but where, can be helpful when renegotiating carrier contacts.
Business rules can also be configured to take full advantage of money-saving options such as ultra-budget services that use USPS service for the final miles. And the advanced systems take into full account factors such as fuel and extended area surcharges, guaranteed times of transit and insurance costs. They also facilitate downloading of electronic invoices as well as uploading electronic customs clearance information. Systems should be flexible enough to capture the data and generate documentation for regulation-specific requirements such as Sarbanes-Oxley.
And even the most modest-sized company needs to be able to handle growth while controlling costs. That can be accomplished by minimizing and, wherever possible, eliminating manual processes and touching packages as little as possible.
Whats Wrong with What I Have?
Significantly, many companies have shipping software that will soon no longer be supported by their vendors. Consequently, alternatives are now being explored. Add to the mix the older systems that can no longer be patched up with rubber bands and chewing gum, and youll see why parcel shipping software has come of age. Its a significant and growing market. In fact, Adrian Gonzales of ARC Advisory Group estimates the market for parcel shipping software was $197 million in 2005 and is growing at a 6.5% growth rate.
Parcel shipping software has long been the stepchild of transportation management systems, which plan and optimize the transportation aspects of a companys supply chain. That is changing, says Gonzales. Parcel shipping was concentrated in industries such as direct-to-consumer and publishing, and this segment is growing rapidly. Additionally, major companies such as Wal-Mart are successfully adopting multi-channel retailing, including e-commerce.
Other industries including the makers of high-value parts are increasing their use of parcel shipping. And manufacturers, with their ever-tightening order-to-delivery cycle times, are turning to express shipping. What was once due in five days must now get there in two, explains Gonzales. Other software beneficiaries are companies that have a diverse customer base, each with different Web-enabled electronic ordering requirements. He agrees with Enslow that one of the key drivers of the investment in more sophisticated shipping systems is the growing value of information. Companies need visibility of shipping information in order to increase productivity.
An Important Part of Your Strategy
Greg Aimi of AMR Research notes that parcel shipping has become a strategic tool. In addition to leveraging carrier services and automating functions to achieve savings and efficiency, savvy companies are creating performance metrics and monitoring such things as on-time delivery and internal process effectiveness. And they are also capturing premium prices by providing customers with more convenient service options.
Paul Krappman, who has served in top management positions with two parcel shipping software companies, notes that the industry has gone from automated shipping stations to full-fledged logistics systems. Looking at a package as it relates to thousands of other packages creates organizational efficiency as well as saves pennies on a package. Saving pennies remains important, he agrees, because shipping has become such a significant cost area.
But Krappman believes that the real opportunity lies in taking an enterprise view. Advances in shipping software give companies the opportunity to reinvent their distribution systems. Well-designed software systems employ technology, business rules and inter-departmental cooperation to create shipping systems that are scalable to ultra-high speeds, improve the distribution process and offer corporate-wide visibility and detailed accountability.
In larger companies, shipping systems work in synergy with departments such as quality assurance, regulatory affairs, utilities, manufacturing logistics, IT, finance, accounting, environmental safety and health, administrative services, loss prevention, marketing, customer service, order entry marketing and e-commerce.
Is It Hard to Make the Switch?
Enslow notes that enterprise-class parcel shipping systems feature browser-based information distribution, making it easier to keep all of these departments in the loop. The best are well-architected and written using standards-based technologies. Consequently, they are flexible, scalable and relatively easy to deploy and update.
Some of the features to look for in a system include:
The ability to handle multiple package shipments in a variety of methods to better accommodate a warehouses custom flow process
Availability of enterprise features such as allowing multiple servers for fail-over, standby or load balancing operation
Fast processing speeds with the ability to apply complicated business rules
Packstation component for box-level operations such as verification of content, serial number capture, package-specific insurance and COD options, weight validation, etc.
The ability to update carrier rate and routing information via the Internet automatically and securely
Some systems have helpful options such as:
Browser-based shipping, reporting and tracking for zero-footprint supply chain visibility through a companys intranet
Touchscreen-ready interfaces that can free workstations from keyboard and mouse
Dynamic screen layout that can be customized for alternate languages, on-the-fly forms, etc., without paying for expensive compiled customizations
Pop-up labels, animations and audible alerts to effortlessly guide even novice operators through a complex shipment
Device drivers for electronic scales, dimensioning equipment, programmable logic controllers, raster and optical scanners and wireless devices
The ability to centrally change to screen layout, scripting
and printing
But most importantly, if you are installing a new shipping system, take great pains to determine exactly what you want it to do and then craft business rules that will make it happen.
Justin G. Cramer is the Executive Vice President of Best Way Technologies, Inc., the maker of ProShip parcel shipping software. He can be reached at 847-758-2193, or e-mail him at justin.cramer@bestwaytech.com.
