Turn Your Shipping Into A Profit CenterDocument Transcript
into a Profit
Shipping is a critical customer satisfaction tool, and
running a responsive shipping department requires
significant investment. Fortunately, that investment is
recoverable. The shipping department can be configured
in a way that can turn a profit.
Ways to accomplish this range from good planning to
creating detailed business rules for your shipping
software. Here are eleven areas to look at:
1. Eliminate surprises. For example, the wrong address
on a shipping label can result in an address bill-back,
adding at least $5 to the cost of shipping the package.
Even more painful is the cost of supplying wrong
dimensions to a carrier. The additional cost on a larger
box could easily result in a $40 surcharge that you most
likely could not recoup from your customer. Also,
address validation programs can help identify
discrepancies before the customer completes the order.
2. Choose the appropriate carrier and service level for
the appropriate job. Make sure your business rules select
carriers based on all the discounts your carriers have
made available. Consider setting up your system to use
the post office for residential or rural delivery where
extended-area fees may apply, or materials are less
time-sensitive. Another example is cost-effective
Saturday delivery: FedEx Home and USPS offer free
3. Negotiate contracts with your carriers that provide the
best savings. Every surcharge usually is negotiable,
including fuel surcharges. Also, rates can be based on
your seasonal shipping patterns. Getting the best rates
can be achieved without changing your shipping
4. You do not have to pass on your carrier incentive
rates to your customers. All or part of them can be used
to cover other shipping overhead costs. Your system
should be able to determine the level of order visibility
for your customers.
5. Make tracking information readily available to
customer service. This improves productivity and makes
for happier customers. Ask your shipping system
provider if they supply a tracing and tracking utility.
6. Take advantage of quot;freebiesquot; offered by your carriers,
such as free shipping materials. Carriers often will give
away labels, envelopes and boxes if you ship with them.
They also often can provide discounted or free hardware
such as scales, scanners or printers.
7. Collecting detailed information, such as duties terms,
prior to shipping internationally can result in significant
savings. Having information for commercial invoice and
other customs paperwork available at order entry can
help avoid costly bill backs. The best time to accumulate
this information is when it comes into your system
rather than when it leaves.
8. Pick the right service level. Most carriers have several
service levels, and business rules should be configured
to select the best one. Some service levels will get your
shipment there just as fast as premium ones. Ask your
software provider to configure your shipping system to
furnish detailed time and transit information for all
9. Create reports that boost productivity and control
costs. An example, one tracks pickers and packers to
identify bottlenecks in the warehouse. When relevant
information is shared with other departments you can
identify opportunities for efficiencies and savings.
10. Don’t ignore LTL carriers as you configure a more
productive shipping system. Build in routing tables and
create the ability to rate shop. You can consolidate
orders that may be better suited for LTL. Or you can
adopt break-bulk shipping and truck to a geographical
area before using to-the-door carriers.
11. Build business rules that help employees be more
productive. There is no reason a shipping-line worker
should have to look up addresses or make phone calls to
double check information. More sophisticated business
rules also can automate decisions taking into account
variables such as value, insurability and speed.
If your shipping platform has the flexibility to take
advantage of these cost-savings tactics, it can, in fact,
become a profit center.