Reducing Small Parcel Shipping Costs: Here’s Where to Begin
Q. The cost of shipping small parcels is constantly increasing, so how can I reduce and control these expenses more easily?
A. Global supply chains are still being impacted by COVID-19, and will likely remain volatile for the foreseeable future. Unprecedented volume is also a huge contributor to these costs. According to Statista.com, the global parcel shipping volume in 2020 was more than 131 billion parcels, a figure they predict will double in less than six years, reaching 266 billion parcels by 2026.
So, providing accurate shipping costs, and managing these costs effectively, is more important than ever before. If you cannot, you will likely pay more than you need, and often a huge part of the problem is due to incorrectly sized and/or poorly packed cartons.
We frequently find companies have a limited selection of cartons that are outdated for the products currently shipped, resulting in items being packed in cartons that are too big. Consequently, the cartons are packed out with costly dunnage, and shippers pay to transport empty space.
Good Cartonization software eliminates this problem, using the weight and dimensions of objects to select the correct sized carton, assisting with accurate shipping cost calculations in near real-time when the customer places an order, essential for any e-commerce site. At the same time, packers are shown how to pack the items properly, requiring minimal fill while ensuring items arrive in perfect condition.
Q. What do I need to implement Cartonization software efficiently?
A. To get the best results, you need two things. First, you need to automate the process. Our software connects seamlessly with any WMS/ERP and functions almost like a "plug-in" giving you access to advanced Cartonization capabilities that support an unparalleled number of rules and operational constraints.
Secondly, you need accurate product dimensions and weights. When we receive good quality data from customers and run it through our software, we can achieve extremely good, predictable results.
Unfortunately, many companies fail to realize the importance of using proper dimensioning equipment and how this will ultimately reduce their costs. For example, dimensioning equipment scans and weighs items to provide accurate data but can often provide other interesting and vital information such as whether a product can be compressed or folded or nested. These factors can make a tremendous difference in achieving substantial savings.
Q. Your software runs with any existing WMS, but how can I integrate it?
A. Our BlackBox software for high-speed Cartonization runs as a Windows service and supports many industry-standard APIs for easy integration into WMS, TMS, ERP, and even legacy systems. BlackBox can be configured to operate with any system available that generates data to a standard schema and can be running and providing savings within a very short timeframe.
Transportation has often been considered a commodity. Equipment, fuel, software, and wages are all very similar from a cost perspective. A 3PL’s culture can be a competitive advantage.
Q. Why does culture matter?
A. Today, cost is just one of many factors to consider when selecting a 3PL. A low-cost provider may produce short-term savings but will not deliver sustainable efficiencies and the level of service shippers expect. Strategic partnerships that are mutually beneficial stand the test of time and drive waste out of shippers’ supply chains.
An organization’s culture is critically important to attracting talent, creating partnerships, and sustaining outstanding performance.
Q. How does cultural alignment produce results?
A. Shippers are looking for long-term strategic partners that are culturally aligned. When company cultures mesh, it is difficult to determine if the 3PL team member works for the shipper or the provider. Trusting a 3PL to manage all or a portion of your supply chain is a big decision—and selecting the right culturally aligned partner makes all the difference.
A 3PL’s team members who are empowered to take actions that positively impact a shipper’s supply chain stay engaged in the improvement process. The strategic shipper-3PL relationship is strengthened whenever value is created by providing proactive notification of a late load, producing savings by combining LTL orders into a multi-stop truckload, or eliminating empty miles with a backhaul.
Q. Is a cultural connection enough to sustain a business partnership?
A. Culture alone won’t sustain a shipper-3PL relationship. But having a culture focused on continuous improvement along with the right people, processes, and technology is a formula for success. A flexible 3PL will customize transportation management system (TMS) software to meet the needs of each shipper partner by understanding the intricacies of their unique freight.
Implementing a TMS as a shipper can be very time consuming and costly, and there is no guarantee the software will produce expected results. Shippers often don’t have in-house expertise and may depend on third-party integrators for future configuration changes and upgrades. The right 3PL has a team solely focused on implementation and integration yet closely aligned with operations.
A TMS is a requirement for all 3PLs, but does the 3PL provider bring value with the right people, processes, and platform behind the software?
Find a 3PL that has a culture and vision that match your own. If you are successful at that, you will have a long and mutually beneficial partnership.
Ruan has expertise in transporting and warehousing goods in every industry—and the right people, processes, and technology to meet your transportation management needs.