When supply chain disruptions such as the COVID-19 outbreak occur, a cloud Transportation Management System (TMS) for parcel shipping is a lifeline to shippers and logistics service providers seeking to rapidly increase their available shipping options. A cloud TMS for parcel shipping provides shippers and logistics service providers with the ability to quickly onboard, leverage, and optimize multiple carrier services–critical functionality when suddenly pivoting to a ship-from-store model, for example, or when pulling local courier services into the transportation mix to maintain on-time delivery rates. Furthermore, it can provide the data and analytics necessary to understand where logistics performance is sub-par and uncover opportunities to increase performance and savings. Therefore, it’s paramount supply chain professionals understand the consequences of poor agility in parcel shipping, and the importance of putting the right TMS for parcel shipping in place.
The Costs of Sub-Par Agility in Parcel Shipping
Total supply chain costs are among the most important metrics to track in business. According to Supply & Demand Chain Executive, top supply chains perform at one-fourth of the costs per $1,000 in revenue. This difference means a bottom performer with $5 billion in annual revenue could incur $403.9 million in extra supply chain costs per year.
One of the contributors to a higher spend may be the cost of extinguishing fires that occur within parcel shipping as a result of inefficient and uninformed processes. For example, organizations may have limited capabilities to plan for unforeseen events, poor responsiveness, lackluster visibility into day-to-day operations, and a finite pool of carriers. Ironically, bottom performers are more likely to have foregone a cloud TMS for parcel shipping in favor of spending money to address these problems. Top performers, on the other hand, recognize that using a cloud TMS for parcel shipping in advance of a supply chain disruption adds value and can increase profits per parcel, regardless of adverse circumstances.
Best Practices to Maximize Agility and Value in a Cloud TMS for Parcel
A cloud TMS for parcel shipping adds value to a supply chain in several ways. It automatically selects the right carrier service for each order according to carrier contracts and business rules; creates or acquires the tracking, labels, and documents; monitors delivery events and automates event exception workflows; manages the manifest and end-of-day processes; and analyzes carrier performance.
Shippers and logistics service providers wishing to maximize the value of their TMS for parcel shipping investment should follow these three best practices:
1. Create a large carrier services network.
Comparing carrier service rates can help shippers and logistics service providers achieve fast, cost-effective shipping. The right TMS for parcel solution will enable the shipper or logistics service provider to meet the customer’s shipping requirements from within the TMS for parcel system, and there should be no limit to how many carrier service integrations the system can manage. The system will automatically determine the carrier that can provide the best rates to a particular region and according to the shipper’s business rules, ensuring every shipment is in compliance with each carrier’s labeling and communication standards, as well as with any applicable trade regulations. This provides shippers and logistics service providers with the agility to quickly onboard new carriers or carrier services in the event of a supply chain disruption and provide them with the agility they need to accommodate increasing shipping volumes, manage new or unexpected shipment origins and destinations, and meet customer delivery expectations.
2. Leverage a Control Tower.
A Control Tower will provide full visibility into customer deliveries, including a complete picture of what’s happening with each shipment, so shippers and logistics service providers can monitor carrier performance and respond rapidly to any issue or disruption. The system will send early warning signs when there are parcel delivery issues or “exception events,” giving customer service teams the necessary agility to proactively trouble-shoot the exception event and communicate delivery updates to the customer in real time.
3. Collect parcel shipping execution data around the clock and automate reporting, information sharing, and performance visualization.
Shipping data accuracy and timeliness directly impact decision quality. Therefore, thoughtful shippers and logistics service providers prioritize initiatives that reduce time to information, create a single source of truth, and empower business operations with high-quality data that increases agility and drives toward KPIs.
Specifically, a Business Intelligence platform in a cloud TMS for parcel will understand how components such as distance, speed to delivery, density, and package size affect spend within the transportation carrier landscape, visualize how and where changes are planning to (or should) occur, and retain this information as a “profile” that allows the shipper or logistics service provider to negotiate with carriers. For instance, if a shipper is implementing changes in fulfillment to increase ship-from-store, or as many retailers have done during the COVID-19 outbreak, locate a new temporary DC, understanding how these changes impact zone and carrier service-level downgrade options are critical.
Increase Supply Chain Agility with the Right TMS for Parcel Shipping
A TMS for parcel shipping will enable long-term scalability, profitability, and efficiency. And the use of an advanced TMS for parcel shipping will increase agility and transcend supply chain boundaries during a supply chain disruption, providing an additional return on investment. To learn more about how a TMS for parcel shipping can meet your shipping needs regardless of your shipping environment, watch our expert video.