Reduce Parcel Shipping Costs - Caputo

3 Alternative Ways to Reduce Parcel Shipping Costs

Shipping cost management challenges are second nature for many businesses. Optimizing vendor management, carrier relationships and total resource use for shipping is an incredibly complex process. Raw data and input from diverse stakeholders complicate efforts to make sense of shipping costs and obscure opportunities to reduce expenses.

In practice, organizations have developed tried-and-true solutions to help control parcel shipping costs. For example, one common tactic is to eliminate late deliveries, which limits the need to rush-ship as many items and reduces the total cost of parcel shipping. This low-hanging fruit does not have to be where the savings stop. Here are three alternative parcel management strategies you can employ to reduce expenses and get more value from your carrier relationships.

1. Deal With Address Corrections

Any lost or delayed shipment represents sunk cost. You will either have to send another product to the customer or deal with customer support calls from a frustrated client seeking answers about why their parcel did not arrive on time. Sometimes losses and delays are unavoidable. They also happen for some surprisingly simple reasons. One of the more common issues that affects delivery is an improper address. You could run into a situation in which:

  • An address is listed in an unconventional format, causing an automated scanner to flag it as incorrect and send a correction request back to you. This leads to delays in getting the package out for delivery.
  • A listing does not comply with the carrier’s regulations for address listing and coding, causing the carrier to hold the package until you correct the situation.
  • A consistently incorrect address sends packages to the wrong units within a business park or multi-unit dwelling, creating confusion for customers, potential for theft and delays in delivery.
  • A failure to update addresses for customers who move or request an alternative shipment destination leads to packages being sent to the wrong location.

In any of these cases, you could be required to recover and/or resend packages. You may need to replace a shipment entirely. Setting address compliance standards and analyzing your database for data quality and policy compliance is vital to eliminating unnecessary costs.

2. Prevent Shipper Error

Vendor compliance is not always cut and dry. You may encounter situations of improper account number usage, leading to costs for something you did not ship. For example, a retailer may use a distributor for one of its jacket brands. When the distributor gets an order, it knows to use the account number for that retailer. However, if one of the distributor’s dock workers or order entry employees applies the account number to the wrong shipment, the retailer could be left paying to deliver somebody else’s product.

On an isolated basis, these errors may not be particularly expensive. Over time, the costs can add up quickly, leaving you paying a hefty bill to ship another company’s goods. If you attach a P.O. number or order number to each shipment, you can analyze each shipment in your account, verify that rules have been followed and prevent errors.

3. Protect Against Fraud

Imagine an employee knows your account number and is authorized to make shipments. How can you prevent that employee from using those details to send gifts to friends or using your company’s assets for personal purchases? If you cannot track every shipment easily, this small fraud can go undetected. When you track order numbers or P.O. numbers, you can eliminate this type of fraud entirely.

Internal compliance rules can also let you attach account numbers to locations. If an account number is designed for goods that will ship from a specific location, any item under that account number shipping from an alternative location would raise a red flag. There may not be a problem in some cases, such as a vendor shipping from a backup warehouse due to unexpected supply limitations. But it can also be a sign that vendors are creating additional expense because they are not complying with service level agreements.

Maximizing Value Potential

Taken in isolation, these errors or fraud instances may not cause significant damage. Over time, at volume, the costs add up quickly. If you do not have strong rules in place and software to monitor compliance in real time, the unexpected expenses can be significant. A typical 3PL may be able to help you tackle low-hanging fruit to reduce parcel shipping costs. An enterprise logistics partner like Transportation Insight can work closely with you to create the best rules for your business and implement technology to monitor compliance. Identifying errors and fraud efficiently creates significant value as you are able to reduce parcel shipping expense to protect profitability.