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Why a TMS for Parcel Shipping Makes Sense for your Business

Whether you’re in retail or B2B e-commerce, if you’re shipping parcels, you may be wondering whether a Transportation Management System (TMS) for parcel shipping, also known as multi-carrier shipping software, would make sense for your business. But how exactly can a TMS for parcel shipping benefit your business?  Which solutions are right for you? And how easy is it to upgrade from the system you currently have in place?

These are three important questions, and we’ll address each one in turn.

1. How can a TMS for parcel shipping support your transportation management strategy?

When it comes to order fulfillment, most logistics operations have two major objectives: meet the actual delivery promise made to the customer at the time of the order and minimize the delivery costs. Parcel shipping software addresses the common challenges that arise when meeting these objectives in several ways.

First, you need to select the right carrier mix for your business. A TMS for parcel can help you do this by providing an accurate and precise Business Intelligence dataset that allows you to project and assess the financial impact of new carrier pricing conditions.

Next, the right TMS for parcel can help you make on-the-fly decisions about which carrier service is best for a particular shipment based on your business rules, the service level, and the cost, and it guarantees compliance with carrier requirements from an IT and labeling perspective regardless of which carrier service is selected. The software should also support communications with carriers during the booking and manifesting processes.

ebook logistyx quadrant Choosing a TMS for Parcel ShippingOperational visibility can also be enhanced, as an advanced TMS for parcel shipping will feature Control Tower visibility, collecting all tracking information and generating delivery event alerts that feed into the CRM system.  This means customer service teams can proactively trouble-shoot delivery exception events and communicate delivery updates to the customer in real time. For example, perhaps the product can be sent from a different distribution center to arrive on time. Or perhaps the customer is willing to retrieve the product from a nearby store or locker. Customers can even track and trace shipments on company websites without the need to visit carrier sites, reducing inbound calls about shipment status to customer service and increasing the customers’ browsing behavior on the shipper’s website – which (fingers crossed!) could lead to additional purchases. Consider too that tracking delivery exception events enables shippers to capture accurate carrier performance data – improving carrier service measurement and better informing carrier contract negotiations.

Finally, a TMS for parcel streamlines the financial management of shipping costs by providing carrier invoice matching tools that identify invoice discrepancies and automate payment when appropriate. Plus, if the system has a deep ERP integration, it will allow for sophisticated account allocation and cost accruals.

2. Which solutions are right for your business?

As you’d expect, there are a variety of different TMS for parcel shipping solutions on the market from a range of providers. To help you decide which is best, it’s essential to analyze the context and objectives within your business – what you actually ship, shipment origins, shipment destinations, your carrier contracts, your business rules, and what you need to achieve.

For example, your shipments might be part of an omnichannel distribution model within a retail or ecommerce business, where multiple delivery locations and stringent delivery times require different carrier services to meet the customer’s required ETA. You’ll require a TMS for parcel shipping with rigorous control over – and visibility into – each delivery movement from the warehouse to the final destination to ensure on-time delivery is achieved.

Next, consider the deployment scope. Very few providers of TMS for parcel shipping technology feature a global carrier services network with Professional Services teams located worldwide. These two elements will be showstoppers for shippers that want to ship globally using a single solution company-wide.

Beyond this, there is a list of solution features that might be “nice to have” for some, and a mandatory requirement for others. These include scalability, cross-border shipping compliance, and integration with other supply chain systems such as e-commerce, ERP, WMS, and OMS technology.

To this last point, for some companies, integration with existing systems may be a priority. And thankfully there are TMS for parcel shipping solutions that have either a public API or pre-configured integrations to leading technology partners such as Manhattan, Blue Yonder, SAP, and Oracle. Having a wide selection of useful integrations can enable shippers to be more responsive to changes in either customer behavior or market requirements, allowing them to rapidly pivot and adopt new partners and technologies as necessary. They future proof the organization, if you will, against additional changes to come.

Another consideration: whether to host the TMS for parcel on premise or in the cloud. And in some scenarios, a hybrid model might be preferred. A word of advice: Businesses with a growth mindset need shipping technology that can support the company as shipping volumes and complexity increase, and a cloud TMS for parcel enables a high-growth business to quickly seize opportunities and react to threats.  Cloud TMS for parcel systems offer scalability, agility, and low total cost of ownership, rescuing companies from large IT overheads and empowering them to handle growth on their own terms by leveraging flexible technology that will scale with them.  Furthermore, by implementing cloud TMS for parcel technology that can operate globally, major obstacles to international market expansion can be eliminated.

3. How do you migrate from a legacy system to an advanced TMS for parcel?

If you’re already using a shipping management system, whether it’s an older TMS or even a legacy carrier management solution that’s part of your WMS, then you may worry about the difficulty of upgrading.

Usually, systems migration will require three key workstreams:

  • Conduct an in-depth analysis of existing, relevant supply workflows and system integrations.
  • Ensure systems integration is implemented and tested, and that carrier contracts are onboarded and commissioned.
  • Build the appropriate business rules in the system.

The biggest challenge we face when migrating from another TMS technology to a Logistyx solution comes when a shipper expects a like-for-like migration, with a similar level of features. In most cases, however, the original design isn’t documented in a reusable way, and upon closer analysis, the shipper doesn’t really need a like-for-like migration, they need to redesign the system to meet current requirements and lay the groundwork to scale.

The important thing to remember is that TMS for parcel systems don’t require large “master data” migration.  Most of the assets lie in carrier connectivity, compliance, and contract data. So, the migration pain is generally limited.

Finally, it’s important to analyze the compelling reason behind implementing a new TMS for parcel. In our experience, it’s very rarely a technology change that triggers an upgrade to our solution, but rather a business reason, such as the need for additional business features, wider carrier integration capabilities, better analytics, improved ability to make strategic decisions, and more. In any of these situations, a redesign is required, and the challenge of migrating systems isn’t critical.

Take the Next Step

To learn more about how a TMS for parcel shipping could make sense for your business, download the e-book: Logistyx Quadrant: Choosing a TMS for Parcel Shipping.

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