Wednesday, February 21, 2018

A Little Squeeze

‘Little things’ in shipping practices can add up to big savings.

With transportation rates soaring, saving money on shipping is vital, yet harder to accomplish. It can seem the only way to cut costs is to move shipments to less premium modes. But one powerful way to squeeze costs from your supply chain is to avoid paying unnecessary fees to carriers. These four categories are a good place to start:

1. Address Corrections. Address correction charges apply when a package has a mistake – any mistake – with its recipient address. These fees can be applied for errors like spelling a city name incorrectly or using the wrong postal code. It may seem trivial on paper, but with charges around $13 to $14 per package, these can add up fast. To help battle these fees, your system needs to flag which addresses are incurring fees most often, and establish a pattern for where the fees are originating.

2. Invalid Accounts. If a package does not provide a valid sender account number, carriers can again tack on an extra $13 to $14 per shipment. These errors can be fixed at the origin of the package, simply by ensuring the correct sender account number is used. A transportation management system (TMS) can show what locations may be the largest offenders in order to implement a plan to consistently get this right. 

3. Dimensional Weight Fees. It seems obvious that shipping a pack of pens in a large box the size of a refrigerator would be overkill. Carriers increasingly charge according to the amount of space a package takes on their truck, penalizing shippers for sending items in oversized cartons. The perception between box size and the dimensional weight are often prone to error. Dimensional weights are important to track and analyze on a regular basis.

4. Package Consolidation. Marrying shipments to the same delivery address, even if from separate orders, helps squeeze waste and cost from your supply chain. Suppose a customer orders a baseball helmet and a baseball glove, and the fulfillment center packs the helmet and glove in different boxes. Soon after, the customer remembers to order baseballs and places another order. Do the baseballs ship separately in a third box? You would like to think it won’t happen, but don’t assume it – monitor it.

Your supply chain needs to be routinely subjected to technological analysis to prevent issues – these and others – from creeping in. Human perceptions and force of habit can make it hard to see what the numbers are actually telling us. Little improvements in your shipping practices can add up to big supply chain savings. 

Kirk Shearer
800-989-0054 x103

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