Before manufacturers were able to apply strategic sourcing practices to their operational expenses with the same discipline they used to buy the “direct supplies” used on the factory floor, procurement departments referred to off-contract purchases as “maverick spending.” A catch-all term, it referred to spending that failed to leverage the organization’s negotiating power, or, even worse, purchases made by employees without knowing if the price was advantageous or even acceptable.
In purchasing parlance, maverick spending was the antithesis of efforts to bring spending under management – a long-standing effort that became possible for entire industries when Software-as-a-Service-based e-procurement applications enabled organizations to gain visibility over their purchases and aggregate them to create value-based, preferred contracts. Once in place, these contracts made it possible to optimize spend – a reality that led to the rise of chief procurement officers and ultimately made such sourcing agreements table stakes in many industries.
Today we are a similar, but even more striking evolution in parcel shipping. Shippers, erroneously thought to oversee a cost center of business for far too long, are increasingly appreciated as strategists who oversee a business function that has the ability to dramatically impact the revenues not only of e-commerce companies and omnichannel retailers, but businesses in innumerable industries.
Regrettably, though, for many organizations parcel shipping remains the last frontier of spend optimization efforts, with shippers at many companies continuing to engage in “maverick spending,” in which they have little real insight into their own shipping activity, are unaware of hidden costs in their carrier agreements, do not know how the rates they pay compare with those of their competitors, and consequently have no ability to use shipping performance as a competitive differentiator. Not surprisingly, carriers have aggressively safeguarded this lack of transparency with a litany of hidden fees, complex rules, numerous surcharges, and contracts comprised of numerous fine-print details.
Despite this, more shippers are showing in very real terms how a more strategic approach to parcel shipping is not only helping their organizations save money, but also driving top-line results. Just as procurement professionals did a decade ago, these shippers are embracing the visibility SaaS-based applications make possible and then applying the resulting intelligence to their efforts. Broadly applicable, these efforts deserve a closer look and offer a sampling of the many ways shippers can impact businesses. Examples include:
With such strategies in place, today’s shippers are proactively working to make sure that parcel shipping does not remain the last frontier of spend optimization for long. Instead, they are realizing a future where the crucially important impact of shipping acumen, the role it plays in online retailers’ fulfillment operations, and its impact on business operations in companies of all kinds is not only known and valued but expanded up – developments that promise the beginning of a golden era.
Josh Dunham is the co-founder and CEO of Reveel, founded in 2006 to help shippers level the playing field for carriers. The company’s Shipping Intelligence Platform provides shippers with the actionable insights they need to make decisions that optimize their operations and deliver opportunities to save money.
This article originally appeared in the July/August, 2023 issue of PARCEL.