IDENTIFYING HIDDEN COSTS THROUGH PROVEN PRACTICES
You may have implemented a good strategy to control your shipping costs for the products and services you supply to your customers. However, there is likely more on the table that you may have overlooked.
Some business leaders do not consider shipments generated from their business operations vs. their distribution network as areas to control cost. This is not an intentional oversight; it’s just not visible on a daily basis. Plus, the costs are so spread out that managers don’t see the aggregated shipping spend for the entire organization. If you do not have a view into these shipping costs, you are over-spending.
An enterprise-wide desktop shipping application that can be utilized by home-office and field employees can help you control this insidious expense.
OVERSPENDING: ROOT CAUSE OF THE PROBLEM
You may have a main office location, remote sales offices, branch offices, a distribution facility or all of the above with numerous employees. You may also be part of a company that either ships products or one that may send other business content, such as documents, contracts, etc., through delivery carriers.
In either scenario, your employees decide which services or carriers to use and those decisions are often made without considering cost or available alternatives which results in overspending. Another key driver for overspending may be that no single person or department is accountable for managing those expenses.
NO UNIFORM PROCESSES
If you don’t incorporate rules for the use of next day/overnight services, employees are free to use those services at their leisure. Abusing the convenience of next day/overnight delivery services versus maximizing their utility can cost you considerable sums of money. Other services may serve your delivery needs just as well at more reasonable rates.
Carriers’ Air-bills offer limited choices of expedited but costly “air” services. These forms are pre-printed with an account number that anyone who finds the form can use. A simple check of the pen is a powerful tool that attributes to overspending since the ease of access often neutralizes any incentive to search for cost-effective alternatives.
ADDRESS CORRECTION FEES
Address corrections fees are additional costs that are added to your carrier invoices post shipment for each address that may contain mistakes, be incorrect or even if the recipient moved. The package may get delivered because the carrier is familiar with the location, however will still charge address correction fees due to inaccurate information. Those costs can add up overtime with $10 or more per shipment for sometimes just a simple typo.
INTERNAL ACCOUNTING OVERSIGHT
Most remote shippers have their own account. They can simply sign-up for an account or use an Air-bill.
You may have too many accounts spread across your organization. What does each carrier account do? It generates an invoice. So think about this, you have a remote employee who ships a package every once in awhile – do you know the cost of processing, reconciling and paying a shipping invoice? A couple of packages generated by a remote employee, even with your discount rate, could cost your company more than the shipments themselves when you calculate the entire operating cost increase over time.
THE AFFECT ON YOUR BUSINESS
Without tools and rules, your employees can easily make unnecessarily expensive shipping choices.
How do you monitor shipments today? Do any of these problematic factors sound familiar?
- No centralized shipping process for every location within your company
- No centralized process for every employee who can generate a shipment
- No company-wide business rules for non-production shipping
- Using Air-bills
- No centralized shipping system that can be used by every employee
- Minimal or no use of contracted discount rates by employees in remote locations
- Remote employees who create their own carrier accounts
- Lots of carrier accounts
- More employees working remotely or telecommuting year over year
- Excessive use of the express service options
If you say, “Yeah, that’s us” to any one of these circumstances, you are spending more than you should for shipping. You could realize 15 percent to 30 percent in potential savings by incorporating a desktop shipping strategy into your organization.
I use the word gold in the title of this whitepaper for a simple reason. Gold denotes a highly valued commodity. If you control the means and methods your employees use to make shipping decisions, you have struck gold in the conveniently exchangeable form of found money. You won’t need a shovel or pick ax to get to the gold. All you have to do is tend to your shipping procedures.
SOLVING YOUR PROBLEM
Let’s go back to your main problem: employees who ship packages at anytime from any location without any control or rules. An enterprise-wide desktop shipping application will eliminate all of the issues out lined in this whitepaper. It will allow your employees to remain in control of their own shipping decisions and empower them to make smarter shipping choices based on the rules and controls you establish.
Implementing an enterprise-wide shipping application brings an intrinsic set of benefits:
Ensures that all shipping is processed through a single platform and common process
Enforces carrier/service restriction-based business rules and business mandates by user; allows access to select service levels you want to designate, i.e. no overnight/next day shipments
Restricts use to only your discounted contract rates
Eliminates post-shipment charges through address validation for each shipment before it is processed
Generates international import/export documentation that reduces charges and avoids delays
Always processes with current carrier rules and shipment criteria
• COST MANAGEMENT AND ACCOUNTING
Reduces and eliminates carrier account by moving your shipping to cost center- based accounting
Reduces the number of carrier invoices your organization receives
Mandates cost center, project and department cost tracking for every shipment
Integrates shipping accounting data into your back-office systems for simpler allocation
• PRESENTS CARRIER RATE AND SERVICE COMPARISONS TO THE SHIPPER FOR SMART CHOICES
• SAVES MONEY BY USING ALTERNATIVE INSURANCE PROVIDERS
• MONITORS MISUSE OR UNAUTHORIZED SHIPPING ACTIVITIES
OVERSPEND WILL GROW
It is more important than ever to take action. There are several contributing factors to consider that will exacerbate your current overspend without implementing a desktop shipping strategy. Consider this:
Your mobile workforce; each year more and more employees will work remotely and according to an IDC study in 2010, 72% of all US workers worked remotely all or part of the time in 2009 and projected to grow 75.5% by the end of 2013
Carrier rates rise every year. If you concluded that you are over spending, those costs will continue to climb.
Ten to fifteen percent of all U.S. addresses change each year, higher for businesses (NCOA). Address correction fees will continue to rise if you don’t have a desktop shipping application with up-to-date address validation.