E-commerce has conditioned consumers to expect that purchased products should be in their hands within a day or two of ordering. That expectation is driving the go-to-market strategies of myriad companies, which has shined a spotlight on the parcel business.
“Over the past four years, the parcel industry has experienced explosive growth because of the rising popularity of online shopping,” says Kevin McLaughlin, vice president of sales and business development at AMWARE Companies. “As a result, small-package distributors are forming partnerships with the major carriers to make deliveries on their behalf, but are simultaneously experiencing a steep increase in transportation costs.”
McLaughlin says distributors need to think strategically about how to stay competitive when shipping costs pose a threat to margins. Some are enlisting the help of transportation cost management solutions to catch errors such as overcharges, inaccurate accessorials, damaged shipments and invalid Saturday delivery fees.
Smart Business spoke with McLaughlin about transportation cost management solutions, and how audit and recovery benefits distributors.
How does a parcel audit help distributors?
When swamped with shipments, sometimes over 1,000 per week, it can be a hassle to manage the daily flow of packages. Manually analyzing all those carrier invoices keeps the process in-house, but often ends in human error and an inefficient allocation of company resources. Fortunately, there is a better way to do business.
Smart software can perform a comprehensive audit on every single shipment and identify all errors, tag shipments with the billing dispute type, sort by priority of refund amount and automatically file disputes with the carrier. On average, an intelligent audit can recover anywhere from 3 to 6 percent of savings on every carrier invoice.
Parcel audit and recovery can also benefit companies that have multiple people who ship on behalf of the company. Matching general ledger codes to shipments is an accountant’s nightmare. The software automates the process of general ledger coding and brings precision to the accounting process. The finance department is able to spend less time on data maintenance and more time on transforming that data into actionable items.
Where else might distributors lose money on parcel shipping?
Distributors have agreements with major shippers that are renewed on a regular basis. The carriers are notorious for promising distributors big savings, but there is normally a catch. For instance, a distributor might be offered a discount in an area that doesn’t fit its shipping profile or the discount might be attached to a minimum charge that the distributor rarely reaches. It’s important to know your shipping profile and review these agreements carefully to ensure the savings promised will actually materialize. This is where consulting services for carrier agreement negotiation can give you the upper hand in negotiations.
Working with an expert transportation consultant can save a distributor up to 20 percent on shipping costs. The consultant uses cost-modeling software to evaluate agreements from multiple carriers in a real-time, side-by-side comparison. This level of analysis identifies areas of savings by cost component and prevents any money from being left on the negotiation table.
Companies that rely on e-commerce parcel fulfillment as a significant aspect of their business model — whether big or little, operating out of a basement or through a giant fulfillment center — can benefit from parcel auditing.
What does it take to get started?
Distributors don’t have to accept shipping overages, inadequate pricing agreements, and inefficient accounting processes as a cost of doing business. The software is simple to install and cost efficient to employ. To set up the program, distributors create an account within minutes and the system immediately begins to audit shipments and generate savings without disrupting daily workflow. There’s no upfront cost to the distributor, only a split of the savings recovered.
Parcel audit and recovery software is a cost-efficient way for companies to ensure they’re maximizing savings and time.
Insights Logistics is brought to you by Amware