Top Takeaways from Parcel Forum and CSCMP 2018
Top Takeaways from Parcel Forum and CSCMP 2018
Over the past two weeks, ScanData attended Parcel Forum ’18 in Chicago and the Council of Supply Chain Management Professionals (CSCMP) Edge 2018 in Nashville. Like years past, the networking opportunities and knowledge transfer were considerable, and energy levels were contagious. Clearly the continued industry growth, magnitude of change we face, and the desire to prepare for the future were top-of-mind for most attendees. For those of you that were not able to attend these two conferences, we put together a list of Top 10 Takeaways based upon what we witnessed in the many sessions we attended.
Visibility, Tracking, and Alerting – From Control Towers to mobile alerting, the status demands are high: customers want even more alerts (proactive) and timely responses to update requests (reactive). The customer once was satisfied with a delivery estimate with periodic update; these customers now expect delivery updates that improve as the delivery gets closer to their house along with photographic proof of delivery. Not only does this delivery confirmation please the customer - especially in densely populated areas that experience high levels of theft - it also reduces claim volumes.
Carrier Negotiations – Regularly reviewing and negotiating carrier contracts is critical and when you do so, you must dive very deep into the details of your contract. For example, accessorial charges are growing faster than base freight cost. For some shippers, accessorials can be as much as 30% of their overall transportation spend. In addition, take care to review the duration of the discount; sometimes the accessorial discount is only good for one year. Your parcel TMS solution should provide you with data that can help drive conversations with carriers during contract negotiations, as well as the most accurate data to forecast future transportation costs.
Execution – It is one thing to negotiate a contract with a carrier, but the value is really in executing against that contract. Without a shipping system that can optimize to the new carrier contract, much of the value negotiated can be lost. Also, your parcel TMS solution should provide you with data regarding expected vs actual costs. Do not assume the contract rate will be equal to your billed rate. Good carrier execution can yield an additional 13-18% savings.
Regional Parcel Carriers – The domestic parcel industry is still primarily a duopoly, but Regional Carriers are experiencing rapid growth despite the fact that they still have a relatively small market share compared to the leaders. Presentations on the hot topic were pervasive; most highlighted the potential savings of 20-40% that can be realized if you can induct at a regional’s hub. The advice given was for shippers to share as much forecast information as early as possible with these carriers (to position them for success) and to ensure that your parcel TMS is fully integrated with multiple carriers (offering you flexibility among them). Also, many pointed out that when selecting a regional carrier (or any carrier for that matter) to remember that even though they are not working for you, they do represent your brand. You may want to only consider carriers with uniformed delivery drivers with a corporate-branded fleet.
Last Mile Density – The fact that over 30% of the cost of delivery is attributed to the last mile had many talking about how to improve delivery density. Suggestions included encouraging consumers to utilize alternate delivery locations to take advantage of commercial delivery rates, and tactics to proactively bundle B2B shipments for customers that have multiple buyers at a single location.
Omnichannel – Ship-from-store is a known tactic to reduce costs, but isn’t viable for all. While inventory accuracy, store layout, and store geography are often barriers to true omnichannel, many have reported that their parcel TMS is not omnichannel ready. An investment in a solution that enables omnichannel may often yield a significant ROI worth considering.
TMS Replace versus Upgrade – There were many parties that discussed the deficiencies of the products they still have in place that were implemented 8-10 years ago (prior to the parcel boom). Some were developed in-house in simpler times, and others were out-of-the-box and have been modified over many years to meet changing needs. Debates were prevalent regarding the best approach to solve these problems. While the opinions varied greatly, three suggestions seemed consistent:
- Rely on experts and don’t try to build in-house since it is impossible to keep up with the industry trends
- Define the requirements of your operations and optimize your to-be processes before you go to market looking for a new solution
- If your 10-year-old system isn’t serving your needs now, then an upgrade is very unlikely to help out much.
Packaging and the Packing Process – DIM factors continue to rise for both inbound and outbound shipping to the point where investing in technology and alternative packaging is now worthy of significant organizational prioritization. The options explored included cartonization technologies, cube scanners, dynamic packaging, and of course renegotiation of DIM rates in contracts. The issue seems to be particularly significant for those organizations that drop ship for multiple vendors that have a wide variety of packaging standards. At some point, your volume will dictate process optimization. Automated packaging machines are one solve and identifying the right time to implement could help provide significant reduction in labor, transportation costs, and yield positive ROI within a year. Your parcel TMS solution should provide you with the data that can help in determining if an automated packaging solution is right for you.
Business Continuity Planning – Make the plan and take the plans seriously. We all should learn from the Gap’s Fishkill, NY fire. The Gap team deserves praise for their performance in such a difficult situation; they freely admit that hard work helped them succeed and more planning would have alleviated some of the pain they faced. Use them as an example to get the funding, and to motivate your organization to mobilize your company around building a comprehensive contiguity plan for anything that could possibly shut your business down. This plan should also be communicated to your carriers.
Outsourcing – An essential question merchants need to address is whether to outsource logistics, manage in-house, or combine the two models. Merchants should explore if fulfillment should be a core competency. It has long been assumed that retailers should use a 3PL or at a minimum a traditional carrier. Since delivery is so important, should it be a core competency? While considered expensive, do you consider a company fleet? Many are looking to Amazon’s new program to incentivize entrepreneurs to create their own courier network for Amazon deliveries.
We realize this piece is very high-level, and if you’d like to drill down on any of our recommendations, please reach out to us with questions or comments. We also welcome opportunities to deliberate or dispute our insights and recommendations – no conversation is off limits. You are an expert and we'd love to speak with you.