Seven Ways Dimensioning Can Save Your Parcel Operations Money
|By Omar Dajani|
Automated dimensioning systems have been around for over 20 years and have been used by a small subset of the shipping, warehousing, and distribution center business. First-generation systems were a breakthrough for companies that had been using the measuring tape and clipboard method, but the mechanics remained virtually unchanged for decades. With limited demand from a niche market, there was no reason to improve the technology.
Today, all three major carriers (FedEx, UPS, and USPS) use dimensional (DIM) weights to calculate most shipping charges, driving a new measurement standard within the parcel industry. This larger market has sparked innovation, and new plug-and-play systems are packed with features that provide additional benefits.
While some lament the arrival of dimensioning, early adopters have discovered that dimensioning can save them money in all aspects of parcel operations. With the current pressures on speed, capacity, and flexibility, logistics managers are learning the benefits of dimensioning.
Here’s what dimensioning can do for you:
1. Improve Unloading and Slotting Efficiencies
Space is the currency that warehouse managers live and die by. The feeling that your warehouse is underutilized is accurate. Most warehouses are packed inefficiently — by as much as 20% — because they have no way to accurately predict space requirements.
Dimensioning is the tool you need to recover that extra capacity and use it to generate extra revenue. By dimensioning incoming freight, your WMS can slot items more efficiently. With a sub-second system, every inbound shipment is scanned at top speed, so your WMS is seamlessly updated when suppliers change, SKUs are added, or packaging changes.
Dimensioning your inbound freight reaps other rewards, too. Companies that have paired dimensioning systems with a WMS have reduced unloading times from four hours to 30 minutes, reducing labor costs by about $100 per employee, per truck. Assuming two workers offload three trucks per week, slotting efficiencies gained from pairing dimensioning equipment with a WMS can result in $30,000 annual savings.
2. Capture the Benefits of Pre-manifesting
Pre-manifesting speeds up shipping times, but it relies on pin-pointing actual shipping charges before the order is picked. Now that carriers are using DIM weights to calculate shipping fees, estimating postage based on weight alone is a risky business. The two ways of padding your estimate — either overcharging the customer or overpaying the carrier — are both unsustainable.
With dimensioning, pre-manifesting is more accurate. Dimensioning systems provide the data that lets you estimate shipping costs the same way that carriers do. No surprises for you or your customers.
If the quandary over how to calculate shipping charges has steered you away from pre-manifesting, you’re missing other opportunities besides improving warehouse floor efficiencies. Pre-manifesting allows you to mark the order shipped, thereby improving your performance metrics. You can also collect payment immediately, which alerts you to credit cards that are declined before picking even begins.
3. Enable Direct-to-Box Picking
Thanks to e-tailer giants like Amazon, customer expectations for delivery times have risen dramatically. Polls show that 78% of Americans expect their orders to be shipped within 24 hours. Online shoppers aren’t just shopping for price — they are also comparing delivery times.
Dimensioning is the key to competing in this new environment because it enables direct-to-box picking, which can reduce pick times by as much as 10%. That translates to a 10% increase in your outbound package stream without any additional labor cost. And dimensioning optimizes box selection on an order-by-order basis, reducing void fill costs.
4. Include Item Images on Pick Lists
Pick times are a key warehouse metric that can lead to employee stress and incorrect order fulfillment. Those mistakes cost money, resulting in returns and lower customer satisfaction. The labor cost of returns — receiving incoming packages, assessing condition, restocking, filling out paperwork, and communicating with customers — average about eight percent of sales. Preventing returns is a significant revenue bump.
Some new dimensioning systems are equipped with cameras, which record both image and dimensions of items in less than a second. This added reference point helps pickers get the right item every time. Warehouses that include images on pick lists have reduced picking errors from four percent to virtually zero.
5. Integrate a Multicarrier Shipping Solution that Operates in Real Time
Due to the nuances of individual pricing models, carriers are not a “one size fits all” shipping solution. Some carriers are more cost-effective for smaller packages, while others are more cost effective for larger packages — but that may change depending on the weight. You can guess or make rough rules to predict which packages should be going to which carriers, or you can measure the dim weight of each parcel and chose the shipper with the best price.
Ideally, you should select a dimensioning system that plugs into your existing outbound operations without consuming footprint or impacting speed. Features to look for are sub-second dim weight measurement, API integration, and top-mounted scanners. This type of system is easy to install, integrates with your shipping software, and can be inserted into your existing shipping line straight out of the box.
6. Audit Invoices
The inaugural Pitney Bowes Parcel Shipping Index reports that more than 31 billion parcels were shipped in 2014 and forecasts parcel shipping volume to grow at an annual rate of five to seven percent through 2018. At that volume, it’s understandable that invoicing errors occur.
One freight company we are aware of has recovered between three percent and seven percent of small parcel spend by identifying errors in their billing. On average, a company that is spending $100,000 per year will lose about $5,000 to errors. A company that is spending $1 million per year loses $50,000.
With dimensioning, you can detect and correct invoicing errors by comparing your shipping estimates to actual charges on a parcel-by-parcel basis. Of course, this requires a dimensioning system that is certified for accuracy. Carriers are likely to challenge your estimates generated from a machine that is not certified, and they certainly won’t accept manual measurements.
7. Negotiate from a Position of Strength
Imagine negotiating the price of your next car without any idea of its age, mileage, or features. You’d have to take the car salesman’s word on critical metrics that determine the worth of the car. Who do you think would get the best deal in that negotiation?
Negotiating your carrier contract without dim weight information is a bit like that. Without dimensioning, your carrier has far more information about your package stream than you do, so they can offer terms that maximize their income. Beyond that, carriers are using dimensioning as a black box to create a complicated pricing structure that works in their favor. You need real data to fully understand their proposal and to make an informed counter-offer.
Now that the DIM weight genie is out of the bottle, there is no going back. It doesn’t make sense to continue to rely on outdated methods when the industry has moved on.
The cost-benefit analysis of dimensioning is overwhelmingly positive. Any one of these benefits justifies the modest investment in state of the art dimensioning equipment, with some customers reporting ROI of just three to four months. Dimensioning isn’t a burden; it’s an opportunity to increase efficiency, deliver customer satisfaction, and contain costs — any way you measure it.Omar Dajani serves as President of QubeVu's Business Development and Sales units. In addition, he serves QubeVu's parent company Postea as President of its services subsidiary IGI. He has a long background in the design and development of retail and logistics systems – including as part of the team that holds the patent for the Automated Postal Center, the USPS self-service kiosk. He has a B.S. in Electronic Engineering from George Mason University and a Masters Degree in Engineering and Technology Management from George Washington University.