EMBARKING ON YOUR MULTI-CARRIER JOURNEY A shipping strategy that utilizes multiple carriers can be a boon to your bottom line, but there are best practices that should be followed in order to maximize your chances of success.
By Steve Beda
n today’s highly competitive retail market, the focus is on getting your product to a customer in the fastest, most convenient way possible. The challenge for most shippers is that consumers have been conditioned to expect near-zero shipping costs. Unfortunately, most shippers don’t have the luxury of an uncapped transportation logistics budget to drive this insatiable consumer demand. Given these market limitations, how does one ship faster while minimizing the total cost of transportation? The answer is a highly optimized supply chain that includes proper inventory management combined with the right carrier and service mix, including national, postal, and regional carriers. If done right, shippers can have their cake and eat it too when it comes to cutting costs and increasing customer satisfaction. If your long-term strategy is to improve delivery time while minimizing costs and reducing peak season risk, a multi-carrier strategy may be the right one for you. Embarking on a multi-carrier strategy is a journey, and the time and effort to get to your destination depends on where you start on the path. Assessing your current technological capabilities, your network distribution strategy, and your shipping profile (by customer ZIP Code)
are all important perspectives. No matter where you are currently, I have found it a safe bet to live by a simple philosophy: Think Smart, Start Small, and Scale Fast. Understanding your as-is state can be categorized into these basic areas: network design and topology, transportation execution strategy (shipment profile), and technological capabilities. To achieve the best result, the journey is best taken with input from IT, supply chain, transportation logistics, finance, and, of course, executive-level support. Network Design and Topology If we start with network design and topology, which is especially important if you’re embarking on an omnichannel strategy, knowing from where you plan to ship product is paramount. While inventory optimization is not a topic for this article, any changes to shipping volume as a result of executing an omnichannel strategy must be planned for and reflected in your choice of carriers and their respective volume commitments. This would include a good understanding of direct shipments from suppliers, from fulfillment centers, from stores, and reverse logistics into stores and/or fulfillment centers. Having a historical perspective of shipment activity and modifying it to reflect future
22 PARCELindustry.com NOVEMBER-DECEMBER 2019
network changes will be a key input into your overall strategy. Transportation Execution Strategy (Shipment Profile) Understanding your current transportation execution strategy and shipment profile (including carrier mix, service mix, transit times, and contractual volume and/or spend commitment) is also very important. A rich set of historical data should provide an excellent foundation of shipment activity for all of your delivery channels. This data also enables you to match your shipping characteristics with the proper set of national, postal, and regional carriers (by ZIP Code or postal code). Technological Capabilities Often one of the most compelling constraints is in the area of technological capabilities. Do you have the proper distributed order management (DOM) and/or warehouse management system (WMS) capabilities in all locations to implement a multi-carrier strategy that has the capability to route certain shipments under certain conditions to a specific carrier and service? This is important, as ultimately you will route shipments to certain carriers by a set of criteria — including but not limited to
PARCEL November/December 2019