Reduce Your Shipping Costs with Logistics Technology
Shipping rates and surcharges are still increasing, with the result that for many ecommerce companies logistics-related expenses — such as shipping, packing, and storage — now account for as much as 25% of cost of goods sold (COGS). An increasing number of small parcel shippers are turning to logistics technology as an effective way to manage and reduce these costs.
Here’s a snapshot of five ways technology can drive cost-efficiency in a shipping operation.
When done manually, carrier selection is a time-intensive process entailing complex calculations to determine the best combination of rates and lanes for a particular shipment. Specialized shipping technology, such as a Transportation Management System (TMS), enables companies to easily select the best carrier for every shipment in real time based on cost and service level. In fact, in an ARC survey 40% of respondents said that without their TMS system, shipping costs would rise by 5% to 10%, and almost a quarter (23%) of respondents said they would increase by even more!
With the greater selection of delivery options available to them via technological solutions, logistics decision-makers are better able to balance cost and service for each shipment. Technology can also assist with vetting carriers to make sure they are insured, are well-rated, and provide required services such as load tracking.
Shipping updates in real time
Most customers — and shippers — now expect real-time track and trace as a standard part of package delivery. Technology allows key shipment data like tracking and proof of delivery to be transmitted to the customer using newer methods of data interoperability such as APIs or geofencing, which provide customers with delivery location and status almost instantaneously. Frustrating phone calls to dispatchers and drivers to chase down packages are now a relic of history.
Load planning and driver routing can significantly impact logistics costs. For companies with complicated delivery patterns, there is little certainty their networks are really optimized no matter how much time and money they expend on planning. Technology, however, can do in seconds what it would take a human hours to do, and it can do it accurately, every time. This is a major benefit in terms of developing routes from a strategic perspective that incorporates multiple factors, such as carrier rates, delivery windows, and other requirements.
Historically, logistics runs on paperwork, every point along the way having its own set of forms and paperwork requirements. For logistics managers and their teams, it’s easy to become bogged down in all of the manual paper-based processes they are responsible for. Not to mention that a single error can cause problems up and down the supply chain. Digitization of documentation reduces not only the number of errors, but also the time commitment, freeing logistics professionals to concentrate on more productive and profitable tasks. Logistics technology also allows for the data to be stored in a central location, making it accessible to everyone who needs it.
The ultimate consequence of the benefits outlined above is happier customers. More efficient logistics operations mean that packages get out the warehouse door and to the customer’s door faster, while centralized data storage plus real-time track and trace remove the uncertainty for customers of when their order will arrive. The integration of processes and systems increases transparency and communication between company, carrier, and customer in ways that have never before been possible. And for ecommerce companies, as with all companies, happy customers are loyal customers.