BY JOSH DUNHAM
THE CLOSED LOOP OF SHIPPING EXCELLENCE
O
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