The ROI on Shipping Software: lower costs, higher returns

Posted on Sep 22, 2015 By proshipnews Share:

Delivering your products to customers in a cost-effective manner, on-time and in adherence with local and international regulations is a critical success factor, especially in today’s ever-changing e-commerce world. Adopting the right shipping strategy can give companies a competitive advantage, while providing an outstanding customer experience.

Reduce transportation costs by up to 30%!

However, cost-effective shipping is a challenge because each shipment can potentially involve multiple carriers with numerous levels of services and constantly changing rates. Intricate business rules and shipping restrictions for parcels that differ in size and weight, include anything fragile, hazardous or perishable, or are shipped outside the country further complicate the process.

Multi-carrier shipping software, also known as Transportation Management Software (TMS), can significantly reduce transportation costs by up to 30%. It will also help to streamline your warehouse processes, reduce labor and potentially help reduce your inventory levels. Investing in multi-carrier shipping software will produce numerous benefits and pay your company dividends.

Better Shipping Cost Management

Faster Shipment Processing

Multi-carrier shipping software will significantly reduce the time to process a package through your carriers. Assuming $24 per hour is the cost of a fully burdened employee, and there are 3,000 packages shipped each day, and you save 5 seconds per package then the cost savings of 4.2 hours per day at $24 an hour x 260 work days per year = $26,208 per year. Use the equation below to calculate your cost savings!

Shipping software can drastically reduce the time it takes to process a single LTL or TL order. Currently, if it takes approximately 15-20 minutes, automated shipping software can cut that time to 1-2 minutes per shipment to produce the required paperwork. Assuming $24 per hour is the cost of a fully burdened employee, and there are 35 LTL/TLs per day and a savings of 15 minutes per order is realized, then the cost savings of 8.75 hours per day at $24 an hour= $210 per day, or $54,600 per year.

Order Visibility

By giving customers the ability to track their own shipment, you will save money even if you are only getting 20 calls a day and it is taking five minutes per call. Assuming $24 per hour is the cost of a fully burdened employee you could potentially save: 20 calls each taking 5 minutes per call is 1.6 hours saved per day at $24 an hour x 260 work days per year is $9,984 per year.

Automated Rate Shopping

Rate shopping multiple carriers at a shipment level is a powerful tool to ensure least-cost alternatives and benefit from the value regional carriers could offer. Average savings should exceed 5% of total annual carrier spend. For example, if your total carrier spend is $300,000 per year and you save just 5%, that calculates to a savings of $15,000 per year.

International Shipping

Whether you’re shipping to Asia, Europe or South America, shipping software should perform the different regulatory steps for each destination, and produce or electronically transmit the required documentation and customs forms. Automatic rate shopping among the international carriers assures that you’re shipping most economically when carrier costs are the highest.

Analytics and Reporting

Dashboards and/or reports can be created to isolate cost centers and monitor trends, while helping greatly to reduce unnecessary use of premium transportation services. Reporting can be designed to help evaluate and understand the complete transportation spend by carrier, by division, by location, by department, by customer, or by any searchable data field. The impact of better planning and management reporting through shipping software may be different for each organization, but is critical in effectively managing freight costs.

More Accurate Shipping

Custom Address Validation Modules within the shipping software can offer accurate address validation. This can reduce or eliminate carrier charges for address corrections, thus allowing you to improve on-time delivery performance for your customers. Additionally, address verification will improve the integrity of your internally stored customer information and decrease the number of items shipped to incorrect locations. Bar codes and bar code scanners eliminate manual key-entry in shipping, also eliminating the chance for human error. Savings in this area are generally difficult to quantify. Every mis-picked, mis-packed, mis-labeled, or mis-shipped customer order results in an additional cost per shipment. These mistakes or delays in the order fulfillment process can cost a sale or even a customer.

Customized and Compliant Labeling

Multi-carrier shipping software enables companies to easily meet the requirements for compliant labeling without having to change printers, label stock, or systems. This can reduce carrier charge-backs for non-compliant issues and reduce the overall amount spent on freight.

Scalable Solution

Shipping software should be an enterprise solution that scales as your business grows. Shipping software is often designed with a modular architecture, allowing you to install, pay for, and maintain only those modules that your business actually needs, saving both time and money. The flexibility of scalable solutions allows for your business to grow, whether you are adding locations, stores, e-commerce sites or international shipping destinations. Scalable software will keep you from having to expend more time, energy and cost shopping for a new solution as your business expands.

Support

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Customer support, though hard to quantify, should also be considered a value. Your organization may not need 24/7/365 support, but be sure you have a process to get the help you need if your system is down. Support should come from a team of engineers familiar with your environment, who because of their certified status have access to carrier support.

As consumer expectations continue to shift and demand instant satisfaction, a lot of pressure is put on retailers, distribution centers, third party logistics (3PL) providers and carriers as they all work to get orders out to customers as quickly and efficiently as possible. Multi-carrier shipping software can be an essential way to increase profits, cut labor costs and help your company grow.


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