Transforming Parcel Reporting into Operational Savings

The devil, so it goes, is in the details.

But in the parcel world, the details—and what you do with them—can be downright delightful to your bottom line.

If you’re like most companies, you receive parcel reporting from the carriers themselves or a parcel audit partner. But the morass of data can be difficult to understand and analyze. Some carriers offer reporting modules, but don’t provide reporting to the tracking number level with all data fields available.

And face it, you need to be able to report on and analyze a complete database of information to effectively manage parcel costs. Measuring and taking action on this data can enhance operational efficiencies and increase your savings.

One company that has reaped these benefits is Instawares LLC, a national e-commerce distributor of food service equipment and supplies to the commercial and consumer markets. Volume growth prompted Instawares to scrutinize its parcel data. In turn, the company has a better picture of its business costs. Instawares knows its true parcel costs and can accurately identify its shipping profits and losses each month.

“We are constantly performing analytics on our shipping and how it affects our margins,” says Richard Hebert, director of operations for Instawares. “For all shipping charges, our motto is to monitor, manage, control and improve.” Hebert, who is responsible for managing transportation, says that parcel reporting lets Instawares know why they are spending to ship instead of just absorbing the shipping cost and gives Instawares control of the P&L rather than having it control them.

Monitoring all adjustments and surcharges is key to managing costs, controlling future costs, and improving operations. Although Instawares uses its reporting data to meet specific needs, there are other potential savings in parcel reporting:

Trend analysis: Tracking parcel costs over time can shed light on the reason(s) costs increase or decrease. For instance, a new surcharge might indicate that a product, packaging or shipping process has changed. What might seem trivial at the shipping dock or product design phase can erode the bottom line through increased shipping costs. Correlating surcharges or shipping patterns to the shipper/product level can identify the problem area and lead to ways to avoid these costs.
Third-party shippers: Third-party shippers and suppliers that ship direct to customers are invaluable partners for businesses. They not only remove legs in the distribution process but also can provide valuable savings.

However, it’s critical to closely manage these partnerships. Consider third-party shippers that change packaging or weight of packages without your knowledge. Although these suppliers are your partners, they might not be aware of your business objectives or how even small changes to shipping can have dramatic implications on your bottom line. For example, the cost of shipping one apron is approximately the same as shipping 20. Understanding this and changing the minimum order quantity can improve the margin for that product.
Commercial/Residential adjustments: Residential packages incur surcharges. Knowing whether a customer’s ship-to address is residential or commercial before shipping allows a company to include the surcharge in its shipping cost to the customer. After the fact, parcel reports can be used to validate that addresses are being correctly assigned in manifesting technology as either commercial or residential.
Large package surcharge and dimensional weight: A large package surcharge is added to packages that exceed 130 inches in length and girth. In addition, if a product’s dimensions exceed the cubic size of 5,184, divide the cubic size by 194 to determine dimensional weight in pounds. Monitoring which products receive these charges gives companies the option to update the cost of the product to cover the handling fee or add a handling fee when the product is ordered.
Additional handling: Additional handling is incurred when products can’t be processed through a parcel carrier’s conveyor systems. One company incurred an extra fee for a five-gallon tub of detergent, likely because of the tub’s shape. The company eliminated this fee and dramatically improved the product’s overall profit margin simply by putting the tub in a box. Identifying high accessorial products and finding a solution to the shipping can save up to $7.50 per package.
Address correction: Charges for incorrect addresses, at $8 per correction, can add up quickly. Reporting data can show carrier requirements for submitting your customers’ addresses. Updating your customer database with parcel-approved address information can significantly reduce this expense over time.

In today’s marketplace the stakes are high for companies looking to improve their bottom line. As such, identifying sources of savings takes on added importance. One area that many companies are turning to is their parcel reporting. Despite their complexity, parcel reports contain critical information that can help your company drive unnecessary costs out and improve efficiency. By measuring and taking action on this data, you can turn parcel reporting into operational savings.

To learn more about GENCO’s inbound transportation management service, please contact Michelle Gripenstraw at (770) 827-6322 or gripensm@genco.com.

Articel written by:
Michelle Gripenstraw, V.P. Supply Chain Solutions, GENCO Supply Chain Solutions