Using multiple vendors to source commodity products is a recommended business practice for companies looking to mitigate risk, secure optimal pricing, and leverage various vendors’ strengths. Therefore, it stands to reason this rule should also apply to the use of common parcel carriers such as UPS, FedEx, DHL, and USPS, as well as smaller carriers that specialize in regional and international markets. However, shippers are often made to believe they are getting the best deal when using a single carrier.
Growing the carrier network can help any company by introducing more options and capacity into the parcel delivery mix. Therefore, companies that want to stay ahead of market dynamics such as delivery capacity shortages or increasing e-commerce volumes have invested in a cloud Transportation Management System (TMS) for parcel shipping that creates flexibility and diversity in fulfillment. Below are four advantages of this multi-carrier solution:
1. Use Multiple Carriers to Eliminate Risk
The old adage of “putting all of your eggs in one basket” proves true in parcel shipping. Using a single carrier will always increase risk, since shippers are unable to change carriers or service levels quickly. Single-carrier relationships may look good at the outset, but over time there is no motivation for the carrier (supplier) to excel in service or pricing because the relationship lacks a competitive impetus.
2. Streamline Multiple Transportation Modes
Most shippers today will have more than one mode of transportation (parcel, LTL, freight, international freight, private fleet, etc.). Shippers not using a TMS for parcel shipping will, in most cases, use multiple systems or manual systems to tender packages to a carrier. A TMS for parcel shipping will allow the shipper to plan and execute all of these modes from a single system which, in turn, will dramatically increase efficiencies by:
- Streamlining shipping processes
- Leveraging a single user interface
- Automating rating for better carrier selection
3. Rate Shop Different Carriers
Rating shipments and comparing those rates to other carriers for the same weight, destination, and delivery times is a common feature in a TMS for parcel shipping. Best practice is to shop rates and select the optimal carrier for the shipment at the time the order is received, instead of doing this later in the supply chain, thus alleviating constraints that may occur during the actual shipping process. Again, without multiple carriers competing for your business, these savings opportunities are bypassed. In addition, most systems can shop between the parcel mode and the LTL freight mode for those loads that could use either.
4. Ensure Carrier Compliance
Parcel carriers today have stringent requirements for meeting their compliance programs for all of their service levels (next-day, express, ground, COD, etc.). These compliance programs address facets of the shipping process such as:
- Creation of proprietary bar coding
- EDI transmission of shipping manifests
- Track and trace functionality
Carriers have certification programs, such as FedEx’s “Certified Solution Provider” (CSP). Shippers can find TMS for parcel shipping providers that adhere to the CSP program through FedEx.
TMS for parcel shipping providers that have certifications with carriers can assure the shipper of meeting the carriers’ complex standards, and the shipper will have a library of carriers and service levels from which to choose – thereby optimizing each customer shipment.
On Time Delivery at the Lowest Cost
A cloud TMS for parcel shipping simplifies the complexity of logistics from product purchase to carrier payment. Shippers can leverage multiple carriers from a single system, securing the best rate, route, service level, and transit time for each shipment. In addition, the right solution will allow shippers to track any package with any carrier, anywhere. It will also ensure compliance with carrier rules and shipping requirements.
Does this describe your current shipping needs? Contact a Logistyx expert to learn more.