9 Tips for Reducing Shipping Costs
Automated shipping software can help you reduce the amount you spend on freight, streamline your warehouse processes, provide new delivery capabilities and potentially help reduce your inventory levels. It will also help to improve customer satisfaction by giving you the ability to better communicate the status of your customers’ shipments. Here are 9 tips to help you get the most from your shipping software , enabling your business to reap the benefits of better shipping cost management.
Set Up Faster Shipment Processing
A powerful shipping engine, along with improved physical flow, will decrease the amount of time and effort it currently takes to ship a package without incurring additional costs. Eliminating steps will improve the speed of package processing and avoid lost or incorrectly shipped packages.
Multi-carrier shipping software will significantly reduce the time to process a package through your carriers. Assuming $24 per hour is the cost of a fully burdened employee, and there are 3,000 packages shipped each day, and you save 5 seconds per package, then the cost savings of 4.2 hours per day at $24 an hour x 260 work days per year = $26,208 per year.
Shipping software can drastically reduce the time it takes to process a single Less-Than-Truckload (LTL) or Truckload (TL) order. Currently, if it takes approximately 15-20 minutes, automated shipping software can cut that time to 1-2 minutes per shipment to produce the required paperwork. Assuming $24 per hour is the cost of a fully burdened employee, and there are 35 LTL/TLs per day and a savings of 15 minutes per order is realized, then the cost savings of 8.75 hours per day at $24 an hour = $210 per day, or $54,600 per year.
Allow for Order Visibility
Shipping software will allow complete order visibility within the enterprise and instant tracking once packages leave your facility. This visibility will empower customers to track their own packages, which will in turn save time for your shipping and customer service departments.
By giving customers the ability to track their own shipment, you will save money even if you are only getting 20 calls a day and it is taking five minutes per call. Assuming $24 per hour is the cost of a fully burdened employee, you could potentially save: 20 calls each taking 5 minutes per call is 1.6 hours saved per day at $24 an hour x 260 work days per year is $9,984 per year.
Offer More Accurate Shipping
Custom Address Validation Modules within shipping software can offer accurate address validation. This can reduce or eliminate carrier charges for address corrections, thus allowing you to improve on-time delivery performance for your customers. Additionally, address verification will improve the integrity of your internally stored customer information and decrease the number of items shipped to incorrect locations. Barcodes and barcode scanners eliminate manual key-entry in shipping, also eliminating the chance for human error. Savings in this area are generally difficult to quantify. Every mis-picked, mis-packed, mis-labeled, or mis-shipped customer order results in an additional cost per shipment. These mistakes or delays in the order fulfillment process can cost a sale or even a customer.
Use Automated Rate Shopping
Multi-carrier shipping software with time-in-transit and a rate matrix will provide information on the most cost-effective and time efficient method of transit. The best carrier service is not necessarily based on the size of the package and the delivery date. With the right software you can find a cheaper carrier service and your package will still arrive on the required delivery date. Rate shopping multiple carriers at a shipment level is a powerful tool to ensure least-cost alternatives and enables you to benefit from the value regional carriers could offer. Average savings should exceed 5% of total annual carrier spend. For example, if your total carrier spend is $300,000.00 per year and you save just 5%, that calculates to a savings of $15,000 per year.
Create Analytics and Reports
Screens and/or reports can be created to isolate cost centers and monitor trends, while helping greatly to reduce unnecessary use of premium transportation services. Reporting can be designed to help evaluate and understand the complete transportation spend by carrier, by division, by location, by department, by customer, or by any searchable data field. The impact of better planning and management reporting through shipping software may be different for each organization, but is critical in effectively managing freight costs.
Provide Customized and Compliant Labeling
Multi-carrier shipping software enables companies to easily meet the requirements for compliant labeling without having to change printers, label stock, or systems. This can reduce carrier charge-backs for non-compliant issues and reduce the overall amount spent on freight.
Understand International Shipping Regulations
Whether you’re shipping to Asia, Europe or South America, shipping software should perform the different regulatory steps for each destination, and produce or electronically transmit the required documentation and customs forms. Automatic rate shopping among the international carriers assures that you’re shipping most economically when carrier costs are the highest.
Use a Scalable Solution
Shipping software should be an enterprise solution that scales as your business grows. Shipping software is often designed with a modular architecture, allowing you to install, pay for, and maintain only those modules that your business actually needs, saving both time and money. The flexibility of scalable solutions allows for your business to grow, whether you are adding locations, stores, e-commerce sites or international shipping destinations. Scalable software will keep you from having to expend more time, energy and cost shopping for a new solution as your business expands.
Get the Right Support
Customer support, though hard to quantify, should also be considered a value. Your organization may not need 24/7/365 support, but be sure you have a process to get the help you need if your system is down. Support should come from a team of engineers familiar with your environment, who because of their certified status have access to carrier support.
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