HOW TO FIX YOUR SPEND MANAGEMENT & PARCEL AUDITING PAGE 16
JANUARY-FEBRUARY 2024 PARCELindustry.com
THE MINIMUM MIRAGE: REVEALING THE TRUE PRICE OF THE GRI PAGE 10
CONNECTING THE DOTS: UNCOVERING OPPORTUNITIES TO REALIGN SUSTAINABILITY GOALS AND ACTION PLANS PAGE 18
THE CLOSED LOOP OF SHIPPING EXCELLENCE PAGE 26
DOES YOUR PARCEL OPERATION NEED A BOLD NEW LOOK?
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Volume 31 | Issue 1
06 EDITOR’S NOTE
18 20 22 24 26
Off to a Running Start By Amanda Armendariz
08 PARCEL COUNSEL Anatomy of a Lawsuit, Part Three: How to Effectively Use a Lawyer in Transportation Litigation By Brent Wm. Primus, JD
10 INDUSTRY INSIGHT The Minimum Mirage: Revealing the True Price of the GRI By Keegan Leisz
12 SUPPLY CHAIN SUCCESS New Year Budget Plan: How to Win in 2024 By Eric Grice
14 REVERSE LOGISTICS Reverse Logistics to Embrace Tech More By Tony Sciarrotta
18 CONNECTING THE DOTS: UNCOVERING OPPORTUNITIES TO REALIGN SUSTAINABILITY GOALS AND ACTION PLANS
28 FREIGHT PULSE 72 SHIPPER SURVEY: SOMETHING STIRRING BEHIND THE CURTAIN?
20 DO YOU REALLY NEED THOSE TOYS? MAXIMIZE PRODUCTIVITY BEFORE EMBRACING AUTOMATION
30 CLOSING THOUGHTS
By Clint Smith, Sr.
By Stephen (Steve) T. Hopper, PE
22 USING YOUR ORGANIZATION’S DATA AS BUILDING BLOCKS TO ACHIEVE IMPROVED BUSINESS INTELLIGENCE By Jey Yokeley
24 2024 TREND ALERT: EXPECT CHANGES IN RETURNS POLICIES AND REVERSE LOGISTICS STRATEGIES By Marcus Shen
26 THE CLOSED LOOP OF SHIPPING EXCELLENCE By Josh Dunham
4 PARCELindustry.com JANUARY-FEBRUARY 2024
From Morgan Stanley
Delivery Times, Cost, and the Online Shopping Cart: Accurate Information for Happy Customers By Krish Iyer
SPONSORED CONTENT 09 THERE’S NEVER BEEN A BETTER TIME TO RENEGOTIATE YOUR SMALL PARCEL CONTRACTS 16 GET HELP WITH AUDITING & SPEND MANAGEMENT: FIND YOUR PERFECT PARTNER FROM THESE 11 COMPANIES
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PARCEL (ISSN 1081-4035) is published 7 times a year by MadMen3. All material in this magazine is copyrighted 2024 © by MadMen3. All rights reserved. Nothing may be reproduced in whole or in part without written permission from the publisher. Any correspondence sent to PARCEL, MadMen3 or its staff becomes the property of MadMen3. The articles in this magazine represent the views of the authors and not those of MadMen3 or PARCEL. MadMen3 and/or PARCEL expressly disclaim any liability for the products or services sold or otherwise endorsed by advertisers or authors included in this magazine.
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JANUARY-FEBRUARY 2024 PARCELindustry.com 5
EDITOR’S PICK
Here are some of the most-read articles on our site in recent weeks. If you haven’t already checked them out, you might want to — there is some great information in there!
EDITOR’SNOTE
OFF TO A RUNNING START By Amanda Armendariz
I
love January because it’s such a blank slate, fresh with possibilities. New year’s resolutions abound for many people, both personally and professionally. And nothing could benefit from a new year’s refresh more than the small-package operation. Now that the holidays are over and peak season has passed, this is the ideal time to take a look at what went right during the holiday rush so you can repeat it this year, as well as identify what issues need to be rectified before 2024’s peak. Make sure you speak to colleagues in various departments to get their take on what went
6 PARCELindustry.com JANUARY-FEBRUARY 2024
right and wrong. Sometimes it’s easy to get tunnel vision and only focus on our own specific areas, but as we all know, the small-parcel operation is a tightly interconnected one, and it depends on all departments working together in order to function smoothly. As you page through this issue, you’ll notice that is one of the overarching themes; it’s not just being aware of your organization’s data, but understanding how to most effectively utilize it across the entire operation that is most crucial. And if one of your goals this year is to get a leg up on your auditing and spend management practices, we’ve profiled 11 great potential partners for you on page 16. Be sure to check out what they have to offer, and when you reach out, let them know you saw them in PARCEL. I’m excited to see what the new year will bring for our readers and the industry as a whole. One thing is for sure; there’s never a dull moment, so make sure you stay on top of things! You’re already off to a great start by reading PARCEL. Thank you, as always.
Discover the Full Spectrum of Supply Chain By Carol Miller
How Logistics Companies Can Leverage AI Chatbots for Efficient Customer Service By Emily Newton
Navigating the Unseen Challenges in Parcel Carrier Rate Changes for 2024 By Timothy Binkis
PARCELCOUNSEL
ANATOMY OF A LAWSUIT, PART THREE: HOW TO EFFECTIVELY USE A LAWYER IN TRANSPORTATION LITIGATION By Brent Wm. Primus, JD
N
o matter how carefully a parcel shipper structures its transactions and conducts its operations to avoid being sued, it is almost inevitable that sooner or later a claim will be brought against it in a court of law. Similarly, no matter how much effort a parcel shipper makes to resolve its own claims against other parties out of court, there will be situations where the settlement discussions break down and a parcel shipper will have to bring a lawsuit in order to recover its claim. In this installment of PARCEL Counsel, we will discuss how a party involved in a lawsuit as either the defendant or the plaintiff should use a lawyer in the litigation. By way of background, these observations are based upon the countless lawsuits wherein I have represented either the plaintiff or defendant over the last 50 years. Communicate with Your Lawyer The outcome of any lawsuit is based upon the underlying facts. Accordingly, it is essential that you provide your lawyer with all of the underlying facts of the situation regardless of whether or not you think they might be relevant. In transportation, there are lots of terms that are not generally known. Accordingly, it is important that you teach your lawyer the meaning of the terms that you use. Document and Record Retention As a general rule, once litigation is contemplated or has
8 PARCELindustry.com JANUARY-FEBRUARY 2024
occurred, there will be put into place something known as a “litigation hold.” What this means is that documents, records, emails, and anything else that might be relevant to the subject matter litigation are preserved and not destroyed — whether accidentally or otherwise. Before any litigation occurs or is even contemplated, it is very good business practice to adopt a policy for document and record retention. It is very frustrating for a lawyer when a client says, “There was another page we added later, but we can’t find it now” or “I didn’t get his name” or “The person at our company that handled this matter is no longer with us and moved to Cleveland… or was it Cincinnati?” Get the Lawyer Involved as Soon as a Problem Arises When you are served a Complaint naming you as a defendant in a lawsuit, there are very short time limits within which to respond to the Complaint which would require retention of a lawyer immediately. However, consideration should be given to getting the lawyer involved when it appears that there might be litigation arising in the near future. Conversely, when one wants to commence a lawsuit the time periods to do so are known as statutes of limitations. These can be up to six years or even longer. However, it is not good practice
to wait until the last possible time to start a lawsuit as memories fade and documents disappear. The Lawyer Knows the Law, not the Facts While an experienced lawyer is expected to know the relevant laws surrounding the litigation, they do not know the facts. This means that it is the task of the parcel shipper involved in the litigation to make sure the lawyer has all of the available facts. It does not help your lawyer win your lawsuit when they hear someone say, “Oh, it is way in the back room” or “We are just too busy to answer all of these interrogatories” or “Why don’t you ask them for that?” Get Involved in the Case To effectively prevail in litigation, it is important for at least one person in your organization to become very involved in the case. This includes reading all of the court filings and attending any court hearings — even if their presence is not required. All for now!
Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A. and the Senior Editor of transportlawtexts, inc. Previous columns, including those of William J. Augello, may be found in the “Content Library” on the PARCEL website (parcelindustry.com). Your questions are welcome at brent@primuslawoffice.com.
APPLICATION ARTICLE
There’s Never Been a Better Time to Renegotiate Your Small Parcel Contracts There’s Never Been a Better Time to Renegotiate Your Small Parcel Contracts For the first time in a long time, it is a true buyer’s market for parcel shippers. However, although at the moment UPS and FedEx are aggressively looking to win business by offering larger discounts and other concessions, these good times will not last forever. So, with some industry experts forecasting that shipping demand will strengthen later in 2024, which could send rates upward again, the time for companies to lock in their best rates is now. TransImpact was founded in 2008 to help shippers negotiate better parcel contracts, but our team’s collective parcel industry knowledge goes back much further. We recognize the extraordinary opportunity available to parcel shippers, and our analysts want to shout from the rooftops to shippers that the record level of savings we secured for clients in 2023 will only grow in 2024. Taking advantage of the situation requires action, however. Carriers do not offer shippers lower rates without being asked — and asked in a very specific way. This is what TransImpact assists parcel shippers to do better than anyone. There are a lot of misconceptions about parcel contract negotiation that cause companies to miss exceptional opportunities like this. A big one is the myth that parcel contracts cannot be renegotiated until they have expired. Not true. And yes, there are a lot of consultants and companies claiming the ability to save you money on your carrier agreements, plus a few percent through invoice auditing, but such promises are a dime a dozen. Our approach is different. TransImpact understands how to generate the most savings — and we guarantee it. We’ve helped clients achieve an average cost reduction of $714k over the past three years, which is a massive savings for most any company. Negotiating the best carrier agreement takes industry expertise, market data, and technology. The goal is always to attain the market-appropriate rates for a company of your volume and shipping DNA. A well-conducted negotiation will not adversely
affect service or carrier relationships (another misconception). Optimizing contracts and strengthening carrier relationships is what TransImpact assists our clients to do, every day. Here’s one more reason why TransImpact is better. We will tell you BEFORE you start to renegotiate what your rates should be — to within 1/10 of one percent. More importantly, our team and technology can not only find more savings than anyone else, but we also remain by your side as an active partner once you’ve signed the new agreement with your carrier. How do we know what your parcel rates should be? We ascertain the general range that your rates should fall within by using our market knowledge and leading parcel analytics technology. From there, we can pinpoint your precise marketappropriate rates, because we know where the profit line is for the carriers. Then, we team with you to leverage a simple but well-practiced process that anticipates the carriers’ behavior and responses during negotiations, while unearthing the hidden costs buried in your agreement.
This is not a set-it-and-forget-it process, either. Our clients receive weekly report cards validating their savings. And, as your shipping needs and patterns change over time, we’ll guide you in adjusting your shipping program accordingly. Together, we continue to optimize your rates, as we monitor your company’s shipping patterns, what’s happening in the market, peak season surcharges, GRI implications, and any other changes that may impact your overall parcel spend. The bottom line? With TransImpact, you’re always assured of getting market-appropriate rates and all the savings you deserve.
www.transimpact.com jey.yokeley@transimpact.com 252.764.2885
INDUSTRYINSIGHT
THE MINIMUM MIRAGE: REVEALING THE TRUE PRICE OF THE GRI By Keegan Leisz
E
very year, parcel carriers announce a general rate increase where they cite an average increase in their rates. For 2024, UPS and FedEx announced a 5.9% average increase. In the parcel industry, it’s a well-known fact that these announced increases are non-linear averages, and the actual increases can vary based on service, weight, and zone. For example, FedEx lists its Priority Overnight, Zone 2, one-pound rate at $37.04 in 2023, while it’s listed at $39.96 in 2024. That’s a 7.9% year-over-year increase. On the other hand, the Ground, Zone 2, 10-pound rate went from $13.51 in 2023 to $14.29 in 2024 — a 5.8% increase. While these differences can cause fluctuations of a few percentage points, the way the minimum reductions are stated in many contracts can cause these single digit increases to balloon to 20% or more. Building on this reality, shippers must be especially vigilant in navigating these complex rate increases. Far from being straightforward, these hikes often conceal deeper cost surges that go beyond the announced general rate increase. Intricate details, such as minimum charges, can have a substantial impact on a shipper’s budget if not carefully planned for. This article aims to shed light on the nuances of these rate adjustments and provide shippers with strategies to manage their shipping costs effectively in a landscape where small percentage increases can translate into significant financial challenges. Minimum Reductions Impact on Negotiated Rates In most FedEx and UPS contracts, they will include a section that lists a minimum reduction by service. These minimum reductions are typically listed as a flat amount off the Zone 2, one-pound published rates for domestic US services. Once you subtract the minimum reduction from the Zone 2, one-pound rate, you get the minimum charge. These minimum charges represent the lowest rate a shipper can obtain, regardless of their discounts. If there are no
10 PARCELindustry.com JANUARY-FEBRUARY 2024
rate caps for a particular service in an agreement, these minimum reductions will remain static throughout the length of the agreement. As an example, FedEx could list a minimum reduction for Priority Overnight packages as $27.50 off the Zone 2, one-pound published rate in a contract. In 2023, that Zone 2, one-pound rate for Priority Overnight is $37.04, meaning the minimum charge in this example would be $9.54. If there were not rate caps in an agreement, you would subtract the same $27.50 from the 2024 published Priority Overnight Zone 2, one-pound rate to calculate the 2024 minimum charge. In this case, the published rate is $39.96, which means the minimum charge in 2024 is $12.46. When comparing the 2024 minimum charge of $12.46 against the 2023 minimum charge of $9.54, you can see that it increased by 30.6%, which is much higher than the 7.9% increase of the applicable published rates. This is due to the minimum reductions being expressed as flat amounts instead of percentages, which means that the contractual minimum charge will increase by the same $2.92 flat amount as the applicable published rates instead of the same percentage increase. Risks and Mitigation Strategy As with any parcel rating mechanism, shippers need to determine what the risk is to them, and what ways they can avoid or mitigate a cost in-
crease. Any shipper who does not have a rate cap on certain services can have exposure to ballooning minimum rates. A shipper should do a full analysis to determine the exact impact, but shippers who have lighter weight and lower zone packages will typically have more packages that are impacted by the minimum charge. There are two ways to mitigate the impact of ballooning minimums: 1. Rate caps – Rate caps require carriers to limit the rate increase to an agreed upon rate, which would prevent the ballooning effect with minimum charges. It’s important that the rate caps are applicable to all high-volume services, and do not contain any clauses that can void the rate caps. 2. Percentage based minimum reductions – Instead of utilizing the typical flat amount minimum reductions, shippers can negotiate percentage-based minimum reductions. For example, instead of $27.50 off the Zone 2, one-pound rate, a shipper could negotiate the minimum at 74.25% off the Zone 2, one-pound rate. Any shipper who has uncapped services should evaluate what the annual rate increase does to their negotiated rates. If a shipper finds that they’re at risk of the ballooning minimums, they need to have immediate conversations discussing the risk mitigation options with their carriers. Even getting a rate cap that is above the announced rate increase, like eight percent, can help limit the ballooning effect. As
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an example, Figure 1 lays out a three-year view for Priority Overnight minimums using an uncapped increase with a $27.50 minimum reduction, an uncapped increase with a 74.25% reduction, and an increase with a $27.50 minimum reduction with an eight percent rate cap. As illustrated in Figure 1, both mitigation strategies significantly limit how much the minimum increases year over year. The percentage reduction will tie the rate increase to the same rate increase as the Zone 2, one-pound published rate, while having rate caps will limit the increase to the
agreed-upon percentage. Both methods lead to a difference of more than two dollars in 2024 and a difference of more than four dollars in 2025 when compared to the flat amount minimum reduction. In summary, shippers must be vigilant in navigating the complexity of parcel rate
increases, which often mask substantial cost hikes beyond the announced general rate increase. The minimum charges are an example of an intricacy that can blow up a shipper’s budget if not planned for properly. Timely conversations with carriers, strategic sourcing best practices, and proper planning are crucial for shippers to optimize cost-effective shipping solutions amidst the complexities of annual rate changes.
Keegan Leisz has been a transportation analyst and project manager for seven years and is a frequent speaker and author on transportation optimization strategies.
JANUARY-FEBRUARY 2024 PARCELindustry.com 11
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SUPPLYCHAINSUCCESS
NEW YEAR BUDGET PLAN: HOW TO WIN IN 2024 By Eric Grice
A
s we turn the page into a new year, we often find ourselves filled with ambition to take on new challenges. While many are setting personal home, work, and fitness goals, we often find ourselves faced with a monumental challenge from work that comes with the calendar change: the annual budget. As transportation personnel, this means balancing top-down financial pressure, while maintaining service excellence for customers, in a manner that is safe and executable by the operational staff. From year to year, we always seem to have unique challenges to balancing these factors, and the ability to adapt is what ultimately defines your logistics success. Hitting the Number The past few years have offered unique pricing climates across transportation modes, namely the spike through the pandemic that broke even the savviest shippers’ budgets. Then the rebound, particularly for shippers who have ocean and air freight, made-year-over-year numbers shine. However, as we enter 2024, pricing across modes has stabilized and we expect a more standard year-over-year annual pattern — and that means general rate increases. If that extra spend isn’t in the budget, there are basically two things you can do: either get better rates or ship your items in a more efficient manner. Carriers will rarely just offer up better rates. In order to make sure you are paying the lowest fair rate possible, it is important to be informed about the market. Understanding how your profile relates to competitors
12 PARCELindustry.com JANUARY-FEBRUARY 2024
can help make informed decisions about where you can improve on price. Do you need a full strategic RFP or just make a few pointed asks with targets? A mature rate procurement strategy requires preparation and understanding prior to any actual sourcing. If we already have competitive pricing, then maybe there is a cheaper or more efficient way to move the product. The recommendation is to always start with the data and a full assessment of your spend profile. Are there any new accessorials occurring, or do you see an increase in certain modes or services? What business decisions are driving those results? Typically, as you review these, you will find cost down opportunities that may come with tradeoffs that impact service. Making the Date As we look to make changes to reduce cost, we must constantly be aware of the impact to your customer. Typically, most shippers can be more aggressive with inbound transportation, which often has fewer time commitments. However, particularly for retailers who compete with Amazon, outbound delivery times are crucial. Shippers who can implement more dynamic rules into shipper software and take advantage of different service levels, regional carriers, hub and spoke models, etc. will have an advantage. Once you under-
stand the cost and service tradeoffs, make sure to share these across the business. Sometimes those static service rules can be broken if the folks in charge understand the potential return. Does It Work? Lastly, as we look at unique solutions, we have to be mindful of keeping operational fit. Will changes impact work schedules, or perhaps technology? Maybe you will need new conveyors and have to adjust dock door allocations to accommodate a new regional carrier. Also, even if it can not be done operationally right now does not mean it is a complete nonstarter; showcasing a significant ROI is always a positive motivator. That said, we strongly recommend not implementing something just because it can save money unless you have full confidence that you can operationally make it work. If a new program fails and you must revert, it will always end up costing more. Consider using a trial period for a proof of concept and understand that anytime you are making a change there always will be some bumps to roll through. Good luck as you embark on a new year that will undoubtedly bring new challenges on your journey to logistics excellence.
Eric Grice is a Manager for Körber’s Transportation Consulting team.
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REVERSELOGISTICS
REVERSE LOGISTICS TO EMBRACE TECH MORE By Tony Sciarrotta
A
s omnichannel sales increase, the number of returns will grow. Indeed, e-commerce retail sales have increased 8.3% year-todate through November, while retail sales have risen two percent for the same period, according to the US Census Bureau. In 2024, US e-commerce sales are expected to increase 10.5%, representing 16.6% of total retail sales compared to 15.6% in 2023. While returns occur throughout the year, a spike in returns occurs typically during the end of the year holiday season. In 2022, global returns grew to 13% of total orders in the holiday period, an increase of 63% year over year, according to Salesforce data. Meanwhile, UPS handled an estimated 70 million returns from November 20, 2023, to January 21, 2024, up from an estimated 65 million return packages during the previous holiday season. In 2024, returns management will be among the top supply chain issues that retailers will tackle in terms of costs and as part of retailers’ environmental, social, and governance (ESG) mandates. Returns costs vary from one retailer to the next, with some estimates of $642 billion a year from parcel delivery management software provider nShift, while logistics technology company Optoro’s cost estimate is 39% of the original price to process a return. Technology Usage Grows In 2024, technology and data analytics will be embraced more to help lower returns costs and mitigate the number of returns. According to a Provoke Insight and the US Postal Service survey, two-thirds of companies use technology to improve their reverse logistics process. But perhaps either more is needed, or some companies need to rethink the technology they are currently using. Manual labor tasks, such as reworking, repacking, and relabeling, are among the biggest costs in returns management. Also, understanding why an item is returned can help mitigate and reduce costs, but for many companies,
14 PARCELindustry.com JANUARY-FEBRUARY 2024
the “why” remains a mystery. One of our RLA startup pitch contest winners in 2023, Newmine, focuses on the “why” using artificial intelligence. Newmine offers a service-based (SaaS-based) returns intelligence platform that uses predictive and prescriptive analytics and corrective action workflows to lower future returns and improve retailers’ financial performance and customer satisfaction. The use of AI is growing throughout supply chains, including reverse supply chains. “AI can do in minutes what usually takes days for inspections, verifications, and certification of products. It can help track and trace the reuse, refurbishment, and recycling of materials,” wrote the Program Director for the Reverse Logistics Department for the American Public University System, Dr. William Oliver Hedgepeth, in the Reverse Logistics Association’s quarterly periodical, RL Magazine. But “you must have someone to check the accuracy of the data and information coming from such AI applications,” according to Dr. Hedgepeth. Understanding the data from such technologies as AI is important. Georgia Tech professor Valerie M. Thomas writes that reverse logistics can become easier and cheaper by combining computer vision, data from sensors, machine learning techniques, and robotics.
by larger supply chain technology firms to create end-to-end solutions. This will likely continue into 2024. In 2023, for example, Blue Yonder acquired Doddle, noting in its announcement that “with Doddle, Blue Yonder will be the only company with a comprehensive suite from planning and execution to fulfillment and returns to build more sustainable and profitable, end-to-end supply chains.” Consulting firm Accenture also acquired a reverse logistics technology firm, OnProcess. In the announcement, Accenture noted the addition of OnProcess will “allow it to offer clients supply chain delivery capabilities with integrated after-sales operations. The combined solution will improve operational efficiency and enhance the customer experience while supporting a more sustainable supply chain.” Technology will help build circular supply chains and raise awareness of reverse logistics earlier in supply chain processes better to manage returned products from a cost and environmental perspective. 2024 will be the year that retailers and manufacturers embrace reverse logistics technology as part of their technology investments.
RL Technology M&A Reverse logistics technology firms are also being acquired
tools, white-papers, and monthly webinars that provide best practices in managing reverse logistics.
Tony Sciarrotta is Executive Director of the Reverse Logistics Association. The RLA offers various
SPONSORED CONTENT
Get Help With Auditing & Spend Management: Find Your Perfect Partner From These 11 Companies
The small-package industry is an ever-changing one, and companies that don’t stay on top of their transportation spend quickly risk losing hundreds of thousands of dollars — or more. Auditing and spend management tasks are crucial but can often seem daunting. Luckily, they don’t have to be. Check out these 11 companies below; they’d be happy to help. And when you reach out, make sure to mention you saw them in PARCEL.
Here at Advanced Carrier Technologies, we want to make your job easier and more productive and make your company more profitable. We take tedious and annoying audit processes and move them into the “done” column for our clients, recovering dollars from carriers each and every week. Then we do what we are frequently told isn’t possible: we find ways for our clients to reduce their freight spend, usually using the same carriers they are currently using. No BS, we only get paid if we save you real dollars. Successfully achieving these results for 20+ years and counting!
www.Go-ACT.com | 248.630.1326
Proactively do everything you can to keep your parcel costs in check. Let us do much of the heavy lifting. Rely on Cass to deliver best-in-class parcel spend management, including quick-insight dashboards that summarize your spend and highlight problem areas so you can take quick action. Make a greater impact with our advisory services team, who will deliver deep insights into the past, cost modeling for the future, and high-impact recommendations that often drive millions in savings. cassinfo.com/parcel | mcothran@cassinfo.com | 314-506-5500
CT Logistics is celebrating our 101st anniversary in the freight audit & payment industry. We are a global logistics supply chain provider, delivering impactful cost reduction solutions. When leveraging CT, you’ll have experienced assets available 24/7 for services including: freight audit & payment, TMS, managed freight, bid management, benchmarking, peer group comparison, and expert spend analytics. CT customizes all solutions to minimize your costs and save your company money. CT’s staff includes knowledgeable professional services teams for consulting and advice. CT’s business intelligent platform provides global supply chain visibility with graphical dashboards. CT is ISO 9001:2015 & SOC certified. www.ctlogistics.com | sales@ctlogistics.com | 216.267.2000, Ext. 2190
With 25 years of experience, we are the partner you need in 2024. When you choose Green Mountain, you’re not investing in a product. You’re investing in the most knowledgeable partner who delivers a best-in-class audit, seamless dispute resolution, intelligent cost allocation, advanced business intelligence, and expert account support. No matter the size of your company or complexity of your supply chain operations, we’re able to scale our services to best meet your shipping needs. It’s not too late to achieve success in 2024. Let’s talk! “Green Mountain does a superb job of executing the tactical audit process while also supporting our strategic initiatives through advisory and analytics.” – Fortune 500 customer greenmt.com | contact@greenmt.com | 877.397.2834 In today’s volatile, complex, and ambiguous supply chain environment, making informed decisions can seem like a daunting task. Founded in 1996, Intelligent Audit, a global leader in multi-modal transportation invoice audit, business intelligence analytics, and secure carrier payment processing, provides the clarity you need. Our unique blend of freight audit, recovery, business intelligence, and payments services provides unmatched insights, enabling shippers to make smarter, data-driven decisions. By normalizing and cleansing your data across carriers, modes, and regions, coupled with the expertise of our account managers, we discover cost-saving strategies and quantify decisions, eliminating guesswork and reducing anxiety. Intelligent Audit is your key to strategic decision-making in uncertain times. www.intelligentaudit.com | info@intelligentaudit.com | 201.880.1110 16 PARCELindustry.com JANUARY-FEBRUARY 2024 2022
Reveel is disrupting invoice audit/recovery and parcel spend management. From offering audit and recovery at absolutely no cost, to an advanced technology app that can eliminate the need for expensive parcel consultants, Reveel blows open the black box and delivers full transparency that’s empowering you take control of your parcel shipping spend. Peer comparisons, actionable insights, anomaly detection, modeling, and simulation-based optimizers are just some of the tech that shippers like you are using to reduce their spend. Learn more about how you can leverage this technology by checking out these case studies: https://reveelgroup.com/resources/category/case-study/ www.reveelgroup.com | info@reveelgroup.com | 877.842.9443
Seeking audit and spend management solutions? The best are in this issue, and we recommend them highly. When direct access to your carrier data is essential, our carrier connectors simplify collecting and consolidating your parcel and regional carrier shipment and cost data into a ready-to-use, vendor-neutral data lake. This empowers you with the flexibility to control your data for current and future projects — even in addition to existing spend management partners. With deep expertise from managing tens of billions in carrier data for brands and ship-tech providers, our team of parcel data experts is committed to supporting your data-driven goals. http://shiplab.com | info@shiplab.com
Complexity. Pressure. Risk. Rising costs. Time constraints. Sound familiar? Put Sifted’s Logistics Intelligence Platform software to work and start managing your parcel spend with ease. Sifted’s machine learning capabilities transform data from billions of shipments into personalized, benchmarked analytics. No more sorting through multiple data sets. Sifted syncs and normalizes your carrier data, making management and automation a breeze. Equipped with hard-dollar ROI and unparalleled transparency into carrier performance, shippers gain clarity, autonomy, and control — a tectonic shift from traditional consultancies. | sifted.com | info@sifted.com | 800.903.3073
Parcel experts to our core, we leverage deep industry expertise, market data, and proprietary technology to negotiate the best carrier agreements for your company. In 2023, TransImpact saved our clients an average of $714K each, guaranteeing savings to a tenth of a percent. And once negotiation is done, our parcel spend intelligence technology and weekly report cards continue to optimize your rates as we watch for changes to your company’s shipping habits, market conditions, rates (such as GRIs and new surcharges), and anything that can impact your overall parcel spend — ensuring you’ll continue to receive the appropriate rate reductions. www.transimpact.com | jey.yokeley@transimpact.com | 252.764.2885
The increasingly complex nature of small parcel shipments makes it difficult to get a timely, accurate picture of true cost and service fulfillment. High volumes, multiple surcharges, contracted delivery guarantees, limited access to information — it all adds up to a complicated invoice process prone to inaccuracies and unnecessary costs. Our small parcel experts work with you to proactively identify areas to reduce expenses with customized solutions that integrate small parcel and freight data for an accurate view of your true transportation spend. usbank.com/transportation-solutions/small-parcel | cpstransportation@usbank.com
Our innovative approach transforms complex carrier contracts and hidden fees into strategic opportunities, reducing shipping expenses and enhancing supply chain transparency. Focusing on technology-driven solutions, we offer real-time analytics and automated processes to streamline operations and boost your bottom line through our FreightOptics platform. Specializing in audit and spend management, these solutions bring up to 35% in potential savings. It integrates seamlessly with 27+ parcel and freight carriers across all modes, requiring zero upfront investment and no IT involvement. Clients typically observe refunds within 7 days, marking a swift transition to more efficient and cost-effective logistics operations. Video | https://zdscs.com | info@zdscs.com | 800.785.7959 JANUARY-FEBRUARY 2024 2022 PARCELindustry.com 17
CONNECTING THE DOTS:
Uncovering opportunities to realign sustainability goals and action plans By Clint Smith, Sr.
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he past few years have been historic for the direct-toconsumer (DTC) industry. Sales grew steadily until the pandemic unleashed tremendous growth and a need to convert omnichannel packaging and fulfillment operations to satisfy customer demand. Meanwhile, companies hastily developed and publicized ESG (environmental, social, and governance) goals and committed to achieving them in 2025. Admittedly, many companies have slid sustainability goals to the back burner. However, the rapid growth in e-commerce has compelled consumers, industries, and governing bodies to shine a light on sustainable packaging to reduce the environmental impact of fulfillment and shipping. So, what defines “sustainability” and where is the industry at with its sustainability goals? To find out, Pregis surveyed 325 decision-makers and influencers across three primary industries, including industrial (manufacturing, automotive, and transportation), retail/e-commerce, and consumer packaged goods (CPG) companies. Overall, the survey reveals that there is a “misalignment” between the companies’ definition of sustainability versus the initiatives and resources the companies are prioritizing and implementing. The bottom line: Businesses appear to be missing the connection between
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damaged goods and landfill waste. Diverting packaging waste from landfills was one of the top ways companies defined sustainability. Yet, when asked what strategies are being executed, reducing package damage was low on the list of prioritized and implemented tactics by businesses. On top of this misalignment, key stakeholders appear to be missing from the sustainability decision-making process, which may be hindering businesses from executing an effective ESG program. Multi-Faceted Approach Focusing on Damage Reduction The survey indicates that 87% of companies feel it’s a priority to divert packaging waste away from landfills. However, when asked about the packaging and fulfillment practices implemented, only 40% of respondents have taken action toward reducing the number of packages that get damaged. This misalignment creates a distinct opportunity to educate stakeholders on the profound impact of damaged goods. Frequently, both consumers and a company will dispose of damaged shipments in a landfill — ultimately polluting the environment. If companies prioritize damage reduction, they could not only accelerate their sustainability goals but save themselves from the total cost of damages, which can have far-reaching impacts on profitability and customer lifetime value.
Various Stakeholders Are Key to Making Sustainable Packaging Decisions According to the Pregis survey, companies designated sustainability, finance, operations, and procurement as the primary departments to make sustainable packaging decisions. As the goals are becoming increasingly influenced by customers and consumers, it was surprising to see that packaging engineers (32%) and marketing (one percent) were the least involved. Packaging engineers optimize sustainability by selecting and validating the materials to meet the performance requirements for protection and shipping. At the same time, marketing communicates the voice of the customer and conveys the sustainability value proposition to the general public. Sustainable Packaging: The Intersection of Design, Performance, and Material Choice The Pregis study also showed that 99% of businesses want a trusted packaging supplier to provide package design and testing services, while 70% would like their supplier to perform an environmental impact analysis of packaging. Packaging suppliers with experienced design and engineering experts can help companies explore packaging alternatives to match their sustainability priorities while meeting performance demands and business goals. Starting with the right packaging decisions is good for the environment to reduce landfill waste and conserve resources. There are three primary ways to strategically approach packaging to ultimately have a positive impact on Mother Nature. Prevent: Preventing waste starts with the right packaging design for optimal protection. Packaging that under- or overprotects will likely result in damaged goods, which leads to packaging and landfill waste. Reduce: Minimizing the amount of material used while offering proper protection is impactful. Reducing volume can be achieved by rightsizing, down gauging, or lightweighting materials. These options save on material and shipping costs while helping meet sustainability commitments.
SUBSCRIBE FOR FREE! Recycle: A key to sustainable packaging is extending its life so that it does not waste away in the landfill. Packaging can be collected, sorted, processed, and ultimately reused or made into another item. In addition to choosing the right strategic approach for a business, it’s also imperative to determine how packaging affects three critical areas. Package Performance: Select packaging that protects products through the shipping journey. When exploring sustainable alternatives, ask yourself: Will packaging avoid reshipment? Is it a contributor to landfill waste? Is it durable enough to withstand transit and warehousing conditions? Will the packaging protect the products’ appearance throughout the lifecycle? Economic Impact: Always address economic factors when making any changes, including the cost of eco-friendly materials, fulfillment operations, and shipping. While recycled or bio-based packaging may carry a higher initial price, that premium could outweigh the
total environmental and financial impact associated with the alternative solution. Consider the whole picture: the amount of packaging used, a package’s size, shipping costs, and protective performance. Also study the cost of replacing damaged goods, including shipping and employee labor costs. Environmental Aspects: The driving force behind sustainable packaging is to have a positive impact on the environment. There are different ways to integrate sustainable aspects into packaging, including the material composition (recycled content, bio-based materials) and choosing products that are responsibly sourced and widely accepted for recycling. To ultimately create the right sustainable strategy, a company’s packaging supplier is key to incorporating the above components into a rigorous consultative approach that will examine multiple options, create prototypes, and test a variety of transportation environments. From this data, that supplier can recommend the right design and material choices to protect the product
while minimizing waste and maximizing cost efficiencies. Suppliers and Manufacturers: Partnering on the Sustainability Journey At the end of the day, there are ample opportunities to make improvements and create new and innovative ways to reduce waste in landfills, preserve resources, and contribute to a circular economy. Everyone has an important part in preserving the environment and aligning sustainability priorities to meet customer and industry demands. Companies can immediately make strides toward their sustainability objectives by engaging with a trusted packaging supplier committed to integrating these goals seamlessly into their operations. This proactive step ensures that sustainability becomes ingrained in the company’s core values and practices rather than being sidelined.
Clint Smith, Sr., is Pregis Sr. Director of Global Sustainability.
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Do You Really Need Those Toys? Maximize Productivity Before Embracing Automation By Stephen (Steve) T. Hopper, PE
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y historical standards, the recent surge in both the volume and variety of industrial automation solutions is unprecedented, and it continues to accelerate. Nowhere is this more evident than in the warehousing and fulfillment industry, where technology companies introduce creative automation solutions at a rapid pace. The proliferation of automation solutions for warehousing and fulfillment operations in recent years is hard to ignore. Options such as automated guided vehicles (AGVs), collaborative robots (“cobots”), and various autonomous mobile robots (AMRs) and sorting systems have become integral to the industry’s landscape. This surge in automation is driven, in part, by the challenges posed by a shrinking workforce, as well as the push for improved productivity and reduced labor costs. Living in an age dominated by automation, our collective desire for a society where it is ubiquitous is understandable. Automation appeals to our imaginations, fueled by science-fiction classics like Star Wars, Star Trek, Transformers, and The Jetsons. It’s the future — sexy, glamorous, and where the “cool kids” are. Industry events like
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ProMat and MODEX showcase an array of exciting automation solutions, prompting media outlets to consistently advocate for automation adoption with the prevailing mantra, “Automate, or evaporate!” The industry is navigating a perfect storm, with an aging and diminishing workforce exacerbated by events like “The Great Resignation” that was triggered by the COVID-19 pandemic. This shortage of qualified labor intensifies the pressure on businesses to identify automation as a solution. However, is automation itself the goal, or is it a means to achieve broader objectives? While the allure of automation is undeniable, businesses must recognize that automation is merely a tool — a means to achieve goals such as improved productivity and reduced labor costs. The real question is whether businesses should prioritize automation as the initial step toward these goals. Or would it be wiser to embark on the journey by enhancing the productivity of existing labor resources, using the current facility, equipment, and information systems? In other words, do businesses really need those high-tech toys? The good news is that remarkable progress toward productivity and cost
reduction goals can often be achieved through less expensive and less risky measures than automation. Phased and effective productivity improvement initiatives, without new automation, can yield substantial benefits. Level 1 Examine the methods your workers use to perform repetitive tasks in your operation, and reengineer them to improve their efficiency. Reengineer your workstations based on Lean principles and ergonomic standards to minimize the motion and movement required to complete repetitive tasks, and select safe and effective tools for workers to use for every task. At the start of each shift, conduct a brief team huddle to set daily goals, identify issues, highlight achievements, and answer any questions the workers have. Develop effective training materials, and use them to train workers to follow the right methods and use tools safely and effectively. Typical productivity improvement: 5% to 15%
SUBSCRIBE FOR FREE! Level 2 Conduct kaizen workshops with workers and supervisors to develop flowcharts for repetitive processes (such as receiving, putaway, inventory management, picking, packing, shipping, and returns), and find ways to streamline them by eliminating and combining steps. Using clear, simple language and effective illustrations and photos, document the recommended standard operating procedures (SOPs) for all major tasks. Assemble and maintain an operations playbook incorporating the SOPs, streamlined process flowcharts, and other helpful resources, and place the playbook in practical locations (such as all workstations, the breakroom, and the office of every manager and executive). Analyze all material flows in the facility, and reengineer the facility layout to minimize the travel distances between associated activities that have strong relationships with each other (such as picking and packing). Typical productivity improvement (Levels 1 and 2 combined): 10% to 25% Level 3 Based on historical information or estimates, develop and maintain objective productivity metrics (such as units per hour [UPH], lines per hour [LPH], cases per hour [CPH], and pallets per hour [PPH]) for all repetitive tasks, and consistently track the productivity of all workers using these metrics. Have supervisors conduct periodical, one-on-one coaching sessions with each worker (such as for one hour every month) to ensure that each worker understands how to do the work accurately and productively. Periodically analyze and classify all active stock-keeping units (SKUs) based on their velocities, and slot faster-moving SKUs in the most accessible locations to minimize the overall distances workers must travel to perform putaway, replenishment, and picking tasks. Typical productivity improvement (Levels 1 through 3 combined): 15% to 30%
Level 4 Each week, generate a list of all the workers who performed each task, sorted by their productivity numbers, and foster healthy competition among workers by posting the lists in a prominent location (such as in the breakroom). On a periodical basis, ask every worker to suggest a minimum number of productivity-enhancing ideas (such as a minimum of two ideas every month), and promptly implement the good ideas, giving meaningful credit to the workers who suggested them. Periodically recognize workers who had exceptional productivity (such as by classifying the top 10% of workers as gold, the next 10% as silver, and the next 10% as bronze). Regularly reward workers who consistently achieve exceptional productivity by giving them non-monetary awards (such as free lunches, gift cards, t-shirts, and concert tickets). Typical productivity improvement (Levels 1 through 4 combined): 20% to 35% Level 5 Develop and maintain objective, multi-variable engineered labor standards for every repetitive task, and consistently measure and track
the labor performance of all workers against these standards. Establish a formal monetary incentive program that rewards workers who exceeded their performance standards during each pay period (such as wage bonuses and paid time off). Typical productivity improvement (Levels 1 through 5 combined): 25% to 40+% These initiatives can yield significant improvements in labor productivity without the need for extensive automation investments. While there are cases where automation is a sensible investment, it’s crucial to assess whether the time is right. Are you already maximizing productivity from your existing workforce, using your existing facility, equipment, and information systems? If not, then exploring low-cost, low-risk measures to boost workforce productivity may be a wise step before you invest a lot of money in automation.
Steve Hopper is Founder & Principal of Inviscid Consulting. Inviscid helps businesses drive down operating costs and boost service levels in their warehousing, fulfillment, distribution, and logistics operations. He can be reached at steve.hopper@inviscidconsulting.com or 404.832.5326. JANUARY-FEBRUARY 2024 PARCELindustry.com 21
USING YOUR ORGANIZATION’S DATA AS BUILDING BLOCKS TO ACHIEVE IMPROVED BUSINESS INTELLIGENCE
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BY JEY YOKELEY
usiness intelligence (BI) is not just a buzzword. But for many companies, it is — and that’s a problem for their supply chains. For the companies that use it, BI is a tool that provides clear and actionable insights leading to a range of business improvements throughout the supply chain. The functional areas that benefit can include parcel and freight shipping, inventory management, and demand planning. But, the positives extend to every part of the organization and ultimately lead to happier customers. Data as the Building Blocks Companies realizing the benefits of BI already know that data is at the core of an effective BI strategy. The good news is that almost no company lacks data. Many, however, either don’t know how to bring the data they have together in useful ways, or they are unsure of what to do with it once they have. The data that are available (and necessary) to use for BI can include logistics-related systems (e.g., TMS or parcel shipping stations) and warehouse systems (such as WMS), as well as ERP, inventory management, production planning, sales order management, and finance systems. With most companies operating some or all of these technologies, it’s both easy to see how most already have the data, but also why it’s so challenging to bring it all together in a useful way. Many conversations about BI start and end with the challenges of how data tends to be siloed within organizations. This means the data’s there, but it exists in a way that cannot be accessed or combined with other data to create meaningful conclusions. Data can’t be the building block of BI if the pieces are kept separate. Siloed data isn’t the only challenge in getting started with BI. Any data integration is complex, and companies also often overlook the importance of data hygiene. For these reasons,
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many companies that successfully use BI first partner with experts experienced in making the proper data connections and overcoming these common (but manageable with help) hurdles. With your BI foundation in place, experts in BI know one other key thing: For BI to work, you must ask the right questions. What Do You Want to Accomplish with BI? BI does not come with a set of standard reports or instructions out of the box. Companies design the output they want and shape it with the questions they ask of the data. The list of questions can be endless, but here are a few examples. If the objective is to reduce costs, a company can use BI to answer a series of questions that lead to real insights and assist in making the most informed business decisions for the supply chain. What percent of operating expenses are made up of supply chain costs? Does what we charge for shipping cover our costs to deliver? What are my inventory levels? Are they increasing or decreasing? How are our parcel shipping costs trending? In comparison to budget? By line item? BI can help assess risks, too. Which vendors are not delivering on time? Not achieving a 100% fill rate? Are we in danger of stockouts? Overstock? Which customers are driving profit? Who is a collection risk? What changes to buying patterns are we seeing based on products and sales channels? The outputs from BI answer many of the difficult questions business leaders must constantly ask.
SUBSCRIBE FOR FREE! These lists are just a beginning, but they illustrate how far-reaching BI can be regarding the blocks of data and the sources it is built on. Sales and profitability are two other valuable areas BI can help illuminate: What were our sales yesterday? Last month? Last quarter? What is our projected revenue? Are we going to meet it? Where will we end the quarter? The year? Are we making our necessary margins? By customer? By product? Which customers are outside our parameters for profit? Are the bottom 20% affecting the top 80%? Despite being sales-related, these examples are essential to the supply chain, since sales drive supply chain activity, and those costs impact company profitability. Forward-Looking Answers It’s important to remember that the outputs from BI (and the data it’s built on) are constantly changing. So, using BI is not a once-a-year or even once-a-quarter thing. BI is a management tool for use on an ongoing basis. It’s also not only able to look backward; it’s just as valuable as a forward-looking tool. With the proper questions, multiple “what-if” scenarios can be considered to support strategic decision-making. For example, the cost impact on inbound freight costs of new suppliers can be compared, as can the difference in parcel shipping costs to service customers when considering the location of a new fulfillment center. More advanced BI tools can provide insights further upstream in the supply chain, including helping to model customer demand simulations based on different scenarios. Or even identifying untapped customer groups, magnifying the possibility of acquiring new consumers and thus increasing sales — and therefore increasing the demands on your supply chain. Forecasting through algorithms enables more precision, leading to more accurate cost budgeting, sourcing, and labor management. The Proper Foundation Companies must recognize that data is the building block to start using BI. Success and actionable insights start with shaping your data into the best structure, leading to the most helpful answers. Everyone on the path to implementing BI should expect challenges with siloed data and figuring out how to extract useful information from it. But with some trial and error — and maybe some assistance from a BI expert partner — BI will quickly provide a measurable ROI through supply chain and other company-wide improvements.
Bringing over a decade of experience, innovative strategies, and a passion for driving business growth, Jey Yokeley, Senior Vice President of Sales & Marketing at TransImpact, shares invaluable insights in navigating the complex, evolving marketplace, positioning TransImpact on a trajectory of sustained success as an industry leader in Parcel Spend Management and Supply Chain Planning. JANUARY-FEBRUARY 2024 PARCELindustry.com 23
initiatives can create a seamless and eco-friendly returns experience that reduces waste and minimizes the environmental impact. However, many businesses don’t have the infrastructure to lean on data to the degree needed and often have to seek a third-party provider to support their initiatives. Trends in Supply Chain and Reverse Logistics Maintaining velocity while managing surplus inventory is key for two reasons: Slow-moving inventory racks up carrying and opportunity costs, and the value of the goods themselves actually degrades over time, as certain products become obsolete or fall out of fashion.
2024 TREND ALERT: Expect Changes in Returns Policies and Reverse Logistics Strategies
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By Marcus Shen
etailers are realizing things need to change to improve profitability amid dwindling consumer demand and rising costs. Predicted 2024 trends can be grouped into three categories: return policy changes, reverse logistics strategy changes, and aligning with modern technologies to manage their surplus in inventory to achieve maintained velocity and strengthen profitability. As returns persist, the cost to process them continues to rise. We’ve observed retailers demanding a better way to manage returns and surplus inventory while e-commerce purchases continue to rise, resulting in customer-centric returns policies racking up into the millions, with retailers footing the bill. Trends in Technology It’s no surprise that retailers and manufacturers who adapt to technological advancements can improve not only their customer experience, but also mitigate the pains of returns and warehouse storage costs. Here are some observed trends we’re bound to see more of in 2024: Augmented reality “virtual try-on” features emulate a fun “try before you buy” experience online. Retailers such as Warby Parker and Zenni have shown success with this method. However, the accuracy is often debated and the set-up is time-consuming and costly. AI chat experiences, which are smart enough to feel like live chat, have helped customers who are debating on a size choice or have questions before making their purchase. However, it should be noted that the added guidance gives the consumer confidence in the purchase and has reduced — but not eliminated — returns. Leveraging supply chain data analytics and customer-centric
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Retailers hosting outdated traditional liquidation strategies may find that sourcing the right buyers for their merchandise and managing overflowing warehouses is costly, slow, and inefficient. A newer approach to recommerce relies heavily on reverse logistics and supply chain executives aligning with smarter solutions and partnerships to recover more value out of their returned, overstock, and damaged goods. Investing in an automated returns process can be an efficient and more accurate way of dealing with warehouse and DC processing of returns. Implementing a recommerce strategy can be the right solution for retailers seeing a decline in velocity and recovery from returns and overstock. Those who don’t have the capabilities internally to rectify their challenges may need to align with strategic partners that offer the innovative technology solutions that can help the business maintain velocity while managing surplus inventory. Working with a reverse logistics partner can connect retailers with many buyers around the world and enables your organization to strategically sell excess goods into the secondary market faster than it could through in-house methods. Trends in Return Policies Restocking fees are quickly becoming more commonplace among some of the biggest names in retail like Zara, H&M, Dillards, and J. Crew. It’s reported that about 40% of retailers are charging return fees this year, according to retail technology company Narvar. “Returnless” or “Keep It” Refund Policies Retailers like Amazon and Walmart will occasionally let a customer keep their refunded item instead of making them ship it back. The costs associated with fuel, processing, reshelving, and warehouse storage space to take it back is more expensive than just letting customers keep the item. Shortened Returns Periods Long gone are the days of extended returns period from the pandemic, and it’s common to see return windows drop from 60 days to 30 days or 14 days (mail or in-store). For consumers, this shortens the window of opportunity to make a return, and ideally, creates a more intentional purchasing decision altogether. For retailers, adjustments to return policies are an effort to reduce an unsustainable amount of returns. However, it
SUBSCRIBE FOR FREE! should be noted that making your items harder to return can create a larger barrier of confidence to your consumer making the final decision to buy. Understanding Returns Policies Empowers Consumers It’s commonly known that 20% of online purchases are returned. Knowing that retailers are tightening up return policies, consumers will have to adjust their shopping habits or risk fees being taken out of their refund. That means combating buyer’s remorse — or the regret associated with a purchase that may not have been necessary — and bracketing — the practice of buying multiple sizes and sending back the ones that don’t fit. Yet, shoppers still want flexibility in their purchasing. If return policies are too strict, they will abandon their purchase altogether. Happy Returns reported that 50% of shoppers fell into this category. A cumbersome or inconvenient returns policy can be the difference between a sale or dealing with the possibility of an item getting sent back to the merchant. There is still hope for retailers navigating these dicey waters. An efficient and transparent returns policy can actually lead consumers to revisit brands for future purchases. Brands would do well to focus on this aspect before enacting any policy changes and see it as an opportunity to strengthen their brand’s reputation in creating positive returns experiences. The eco-conscious consumer may see return policies changing as a step in the right direction for companies to lower their carbon footprints. The use of natural resources associated with manufacturing and overproduction is one thing — but the rampant rate of returns and its adverse effects on the environment is only aggravating the issue. There is a growing number of millennials and Gen Zers who share the same environmental concerns. Returned inventory in the US produced 9.5 billion pounds of landfill waste, according to Optoro. The Reimagined Returns Process By leveraging smart technologies, data analytics, and customer-centric initiatives, businesses can create a seamless and eco-friendly returns experience that reduces waste and minimizes the environmental impact. Modern recommerce strategies go beyond traditional liquidation solutions and have been growing in popularity due to the alignment with secondary market buyers and speed of offloading overstock, resulting in an improved recovery rate for returned items and reduced warehouse storage costs. What businesses choose to do with their returns can ultimately become the divide between growth velocity and financial hemorrhaging of the business. With such a heavy decision in the balance, it often is wise to align with support from expert sources when making recommerce and reverse logistics decisions.
Marcus Shen is CEO, B-Stock Solutions, the world’s largest B2B marketplace for excess merchandise. B-Stock helps retailers and manufacturers achieve a healthier bottom line through an online B2B marketplace and managed services that deliver demand, efficiency, and insight to clients’ re-commerce operations. JANUARY-FEBRUARY 2024 PARCELindustry.com 25
BY JOSH DUNHAM
THE CLOSED LOOP OF SHIPPING EXCELLENCE
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ver the past few years, I have seen, among business leaders, a growing realization of the dramatic impact that parcel shipping operations, acumen, and performance have on overall business success. But although there is greater appreciation of the influence shippers have on the bottom line, far too few organizations and executives fully appreciate the impact they simultaneously have on top-line results and crucially important business functions that, on the surface, can appear to have nothing to do with parcel shipping costs. That is beginning to change in organizations that are embracing a more strategic approach, one in which shipping data is being used not only to measure, monitor, and optimize shipping spend, but also to impact other operational imperatives that influence profitability. This proactive effort results in a closed-loop approach that drives continuous improvement. The parcel shipping “ecosystem” includes front end systems, like transportation management, order management, cartonization, and multi-carrier parcel management systems, all of which work on a set of policies that are programmed into the system and promise to save on time and money. While these systems do deliver on their promise, there hasn’t been a way to close the loop and validate that what was intended to happen, actually did happen, or if the policies could be further optimized for additional improvement. Furthermore, optimizing one part of the shipping operation may have unintended consequences on the end-to-end result. The proof is in the pudding, as they say, and in parcel spend management, the “pudding” is in the carrier invoice data. The problem is that this data can be mind-numbingly complex and requires a backend system to cleanse and normalize the data from which advanced data analytics can then be used to pull out actionable insights and measure
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the results. Now shippers can use these insights to close the loop, validate their frontend systems, and even optimize their policies to make those systems work even better. Today, when platforms that feature sophisticated and powerful data science enable shippers to understand their shipping activity and data as never before, and, more importantly, to act on the actionable insights found within it — for example, knowing when a surcharge exemption deep within the fine print of a carrier’s contract expires before the contract does — shippers can expand their impact by viewing their role as part of a closed-loop process that lowers parcel spend and improves operations and processes simultaneously. Several real-world examples show how this closed-loop process can be applied, its potential for businesses today, and why it is crucial for shippers and operations leaders to work closely with one another to create it. The perfect box: Unbeknown to the shipping department, the marketing team created what it believed to be the perfect box — one that not only was sturdy and well made, but which conveyed the attributes of the company’s brand in its appearance and even the feel of the materials used. Unfortunately, it also far exceeded the dimensional weight specified in its contract, something the shipping department learned after alerts from its platform showed an alarming increase in parcels being priced by DIM rather than actual weight. Today, the shipping department at the same company works closely with the marketing team whenever packaging decisions are being made. Parcel spend is again closely measured and monitored, and efforts to optimize the process and costs are taken on by all departments involved through an ongoing feedback loop that keeps all informed of performance metrics. The e-commerce promotion that resulted in a loss: Most shippers know this story all too well. Again, it stems from a
SUBSCRIBE FOR FREE! decision in the marketing function — this time to promote a particular product line with a new, aggressive sale. Unfortunately, neither the marketing team that developed the offer or the operational team that set the pricing discounts considered the shipping costs involved. With complimentary shipping still included, the entire product line sold out quickly, but shipped at a loss. Now, the same retailer receives data science-generated alerts if a similar situation occurs and, just as importantly, the pricing, marketing, and shipping teams work together and share data to ensure that all new promotions drive the desired bottom-line and top-line results — with the resulting shipping spend being measured and monitored in order to optimize the business. A packaging decision that landed savings and paved the way for new business simultaneously: The operational team wanted to know what shipping costs would look like if a mailer was added to all outgoing parcels, something the company could easily measure and monitor as it relates to shipping spend. Ultimately, that question led to more fundamental ones — which boxes should the company use, how could it reduce the waste associated with them, and how could those same boxes perform better by better protecting and presenting shipped product? Using packing simulations from one of our partners, the company was able to choose the boxes that best addressed its KPIs and saved more than 16% in transportation costs while simultaneously helping carriers meet their own goals of packing trucks more efficiently. Just as importantly, the new boxes used significantly less corrugate, enabling the company to lower its Scope 3 emissions — an important competitive advantage as more publicly-traded companies elect to only do business with companies that measure their supply chain carbon emissions and make it easier to comply with evolving regulations, including Europe’s Corporate Sustainability Reporting Directive, which strengthens sustainability reporting requirements and applies to American companies that have at least one subsidiary or branch in the EU and revenues of $168 million US or more over two consecutive years.
Are your shipping costs too high? We’ll get you back on track.
Our dedicated team of logistics experts with over 30 years of experience, know where to look for incentives and optimization opportunities the carriers don’t want you to see. Parcel optimization and savings experts Auditing of all freight modes Reporting and analytics tools Payment processing solutions General ledger coding solutions White label solutions for consultants
Our goal is to reduce your shipping costs, it’s all we do. www.Go-ACT.com
248-630-1326 | Connect@Go-ACT.com
A closed-loop approach to parcel shipping, one that continually seeks to optimize shipping spend management and performance, while simultaneously using that data to make physical, operational improvements across the business — in shipping and beyond — is yet another one of the powerful ways that parcel shippers can help their organizations. Now, more than ever before, shipping performance and expertise have the ability to move businesses forward.
Josh Dunham is the co-founder and CEO of Reveel. Founded in 2006 to help shippers level the playing field for carriers, Reveel launched its Shipping Intelligence Platform in 2021. A SaaS-based analytics, contract analysis, and negotiation solution, it provides shippers with the actionable insights they need to lower shipping costs right now, on their own. JANUARY-FEBRUARY 2024 PARCELindustry.com 27
FREIGHT PULSE 72 SHIPPER SURVEY:
Freight Pulse: Parcel Key Takeaways
Something Stirring Behind the Curtain? We at PARCEL would like to thank Morgan Stanley for
1. Volume Growth Expectations Move Higher Across the Board; All Modes Back In Positive Territory
allowing us to publish some of their most recent survey results, as these provide wonderful insight into the current parcel sector. The charts in this article are just a sampling of what this survey discusses. For the full results, please visit PARCELindustry.com/ MorganStanleyJan24.
2. Pricing Expectations Were Mixed Across Modes
3. Carrier "Aggressiveness" Moves Higher For UPS While FDX Retreats From Highs, But Remains Relatively Aggressive
4. % Of Shippers Expecting To Ship A Slightly Larger Portion Of Volumes As B2C Increases Seq. While Slightly Smaller Portions Moves to 0%
5. Rate Discounts Tick Down Across The Board, Though FDX Air Remains Inline Seq.
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CLOSING THOUGHTS
DELIVERY TIMES, COST, AND THE ONLINE SHOPPING CART: ACCURATE INFORMATION FOR HAPPY CUSTOMERS By Krish Iyer
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or years, delivery expectations have hung on broad carrier windows: two to five days, three to seven days, etc. While these still exist, modern shopping carts and time-conscious consumers demand finer details. New tools emerge to communicate specific delivery dates and times, boosting cart conversions and, ultimately, sales. Expectation vs. Reality Parcel Monitor’s “State of E-Commerce in the US” reports an average first-attempt delivery time of 3.6 days. However, this clashes with consumer expectations, especially Amazon Prime’s two-to-three-day standard. This gap often stems from retailer fulfillment delays (sometimes up to two days) and afternoon orders missing pickup deadlines, adding another day in transit. So, while broad carrier windows are inaccurate, order placement time and retailer-to-carrier handover significantly impact delivery. Delivery Time Influencers: Four Key Factors Inventory location: Closer inventories mean shorter transit times to customers. Retailer processing cutoffs: Order processing delays and too-early-in-the-day pickups extend the delivery window for orders that have to shift to the next day.
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Order process: Streamlined order processes minimize delays. Carrier historical averages and policies: Final-mile workshare products can add ambiguity and impact customer satisfaction, as well as the carrier’s historical performance in a particular shipping lane. Static vs. Dynamic vs. AI: Choosing the Right Delivery Model Many retailers rely on static delivery times based on carrier service guides. This method is neither dynamic nor does it take into consideration historical averages and late deliveries. Carrier APIs offer delivery estimates, but with only 70% accuracy and limited insight into the performance of final-mile workshare products. The optimal solution leverages AI technology. AI Delivery Advantages Dynamic delivery dates: Increase conversion by displaying accurate dates at every website touchpoint. Data integration: Considers historical and current carrier data, real-time product/ inventory data, and your specific delivery needs. Cost savings potential: AI-powered rules can help to identify times when you can downgrade service levels while still meeting delivery commitments, potentially reducing shipping costs. However,
carefully monitor performance to ensure customer expectations are met. Next Steps Build a business case: Analyze data from different carriers, pickup locations, and delivery ZIP Codes to identify patterns and discrepancies between promised and actual delivery times. Run A/B tests: Compare conversion and cart abandonment rates for various carrier services and delivery date commitments in your shopping cart. Investigate technology: Analyze rates and delivery tools offered by different in-cart rates and delivery technology providers to find the best fit for your needs. Connecting the Dots Many steps towards AI-powered delivery rates are already part of your carrier spending analysis and cost reduction efforts. Leverage existing data, conduct A/B tests, and explore advanced cart technologies. By sharing your data and implementing the right solution, you can expect a 40% increase in both sales and customer satisfaction!
Krish Iyer is VP Strategic Partnerships & Industry Relations, Auctane. He can be reached at krish.iyer@auctane.com.