In the current economy-- filled with IT spending restraints and tight cash flow, it is difficult to make a significant IT investment in hopes of a tangible return on investment. This is where the idea of SaaS (software as a service) shines.
Historically, shipping software- which often includes sophisticated integration into other business systems (as well as customized business rules)- bears a considerable, up-front cost.
However, in light of the number of businesses cutting back on IT spending, integrated, multi-carrier shipping software has now become available at modest monthly fee. In addition to avoiding the upfront cost, in many cases there is no long-term commitment required with an SaaS shipping system either.
As a result, there is considerably less risk and upfront cost associated with implementing an SaaS Shipping System.
Now that initial cost has been eliminted as a hurdle, let's consider three of the many areas of improvement that a third-party SaaS shipping system can provide:
More Seamless Integration
The integration capabilities of free, carrier provided systems (such as UPS WorldShip and FedEx Ship Manager) have definitely improved over the years. However, they are still light years behind the capabilities of a multi-carrier shipping system with a rules-based integration engine. With a carrier system, integration typically requires creating a database table (or import file) which matches the carriers' requirements. With the appropriate multi-carrier system, there should be no need to make any changes to your database nor any limitations on what data can be imported and exported. For example, international shipping is often a tedious, time-consuming process in a carrier-provided system. However, with a third-party shipping system, line item data (such as product description and value) can be imported automatically. In addition, all shipping data including list and/or discounted shipping charges, tracking #s and more can be exported in real time (or batch) directly back into your database or host system.
Since free, carrier-provided shipping systems are used by thousands of users with diverse requirements, these shipping systems are designed to do everything for everybody. This has resulted in having just about every option and input field spread out all over one busy looking screen. An ideal multi-carrier system should permit you to fine-tune the screen to eliminate unnecessary options and, most importantly, to streamline the shipping process by reducing key strokes. In addition to full access to all data, options and parameters, a multi-carrier shipping system with a rules-based integration engine can automatically perform logical functions which eliminate manual steps such as activating certain parameters including Signature services, Email Notification, Alternate Billing, Insurance, and more.
Reduction in Freight Costs
Why do UPS and FedEx give away free systems? These carriers more than recoup the cost of the system by maintaining a monopoly within many customers' businesses. While automatically rate shopping between UPS and FedEx will not always yield significant savings, there are many cases where rate shopping can yield considerable savings. With a system that can automatically compare multiple options to find the cheapest method, you can reduce your shipping charges-- increasing your profit margins and enabling you to be more competitive-- particularly when selling online. While virtually any carrier services can be compared including LTL (less than truckload), one of the most common comparisons is between UPS and Postal or FedEx and Postal. When shipping direct to consumers, the residential, delivery area or rural fees often applied by UPS and FedEx (which can be substantial) can be eliminated when using the postal service. So, by incorporating this type of comparison automatically, freight charges can be reduced effortlessly.
Providing Proof-of-Delivery data is a critical challenge that many HME/DME (Home & Durable Medical Equipment) suppliers face. Proof-of-Delivery (POD) data is often required in order to receive payments for Medicare claims.
In many cases, timely claims processing depends on the HME/DME supplier's ability to provide proof that a package was delivered to a patient (or customer). The faster this process can be completed, the more quickly claim payments can be received. So, naturally, any automation that can be applied to this process is beneficial.
Carrier provided shipping systems such as UPS Worldship and FedEx Ship Manager are not capable of automatically tracking shipments and posting proof-of-delivery results back into your database.
The two most common solutions are (1) a custom tracking solution or (2) a third-party shipping system. In both cases, the automatic tracking must also result in either storing the results in your order management or other host system or by generating reports or export (Excel) files.
Some third-party shipping systems can automatically track every package shipped routinely until every package is delivered. As the results are updated, they should be able to automatically post the delivery date, time, signed for by, etc information back into your business system. Tracking results are generally also available from search screens within the shipping software and in reports and export files that can be generated by the shipping system.
When Medicare claims processing is problematic due to slow and manual Proof-of-Delivery processing, the cost for a third-party shipping system can be quickly and easily justified.
There's no question that you can save money by implementing shipping software that automatically compares rates between carriers.
However, another great way to save money is by shopping around for parcel insurance. Many shippers are not aware that they do not have to insure their packages directly with the carriers (such as UPS, FedEx, Postal Service, DHL, etc.) Let's face it, these carriers are not in the insurance business. So, why should they offer competitive insurance rates?
There are many great, third-party parcel insurance carriers out there including Shipsurance (formerly DSI), U-PIC and PIP (Parcel Insurance Plan). These providers offer savings of up to 50% (or more) off the carriers' rates.
Here's how parcel insurance works... Rates are based on $100 units. For example, if your parcel has a declared value of $400, it contains (4) $100 units. For UPS, FedEx and USPS Express Mail, up to $100 of every shipment is covered at no cost. So, parcel insurance is necessary to cover the additional $300 (or 3 units) of value above the base $100.
In 2009, UPS and FedEx charge $0.65 per unit (with a $1.95 minimum). The average third-party parcel insurance carrier rates are approximately $0.25 per unit (typically with no minimum). So, if you process 25 shipments per day valued at $300, your approximate monthly savings would be:
UPS/FedEx = $1.95 (min) x 525 pkgs /mo = $1,024
3rd Party Insurance = 2 Units x 525 pkgs /mo x $0.25 /unit = $263
Estimated Savings: $761 per month
Most shipping systems have standard support for these third-party parcel insurance providers. So, if you insure a large percentage of your shipments but your shipping system does not accommodate third-party insurance, now is the time to consider a shipping system upgrade. With a monthly savings of $761 (in the example above), the return on investment would be extremely rapid.
Generally speaking, once you activate third-party parcel insurance in a shipping system, the declared value no longer gets sent to the carrier and you begin paying the carrier for just the actual freight charges. Then, on a monthly basis, a printed report or electronic upload is transmitted to the insurance carrier to generate a bill for your discounted premiums.
In summary, if you ever insure packages for over $100 or if you insure postal packages at all, you should look into using third-party parcel insurance.
I recently ordered laptop memory from a MAJOR online retailer that was delivered in a half cubic foot box. [Pause while you picture this. Hint: picture a marble getting delivered inside a shoe box.]
This is a clear indication that many shipping operations have failed to adjust to the recent but significant changes in volume-based pricing. Apparently, it seems, many shippers do not realize that size does matter.
A half cubic foot box (6" x 12" x 12") which weighs up to 1 lb gets billed at a 5 lb rate. Sent by UPS Next Day Air® to zone 6, the 2008 list rate would have been $48.25. The 1 lb rate would have been only $32.55. Appropriate- sized packaging would have yielded a savings of $15.70.
You should make every effort to avoid getting "dinged" after the fact for dimensional weight charges that you did not and cannot pass along to your customers. If customers prepay for (estimated) freight charges, you should be sure to understand which products result in dim weight charges. Be sure to factor in this incremental amount or do what you can to reduce the dim weight charges through better packaging.
Building real-time rate shopping into your Order Entry process (taking both weight and dimensions into consideration) can eliminate this issue automatically. However, this requires that you store this data for your products, do not perform a lot of re-packing, and that you have the ability to integrate a rating engine into your Order Entry system and/or Shopping Cart.
Many shippers under estimate how significantly these charges can snowball and how easily a once-profit-generating shipping operation (or at least breakeven) can turn into a losing proposition.
Many third-party shipping systems can be configured to automatically prompt users for dimensions for express and/or ground shipments. They can also prompt the user to enter just a box code and then automatically recall dimensions for commonly used boxes. If your product dimensions are ever known, these dimensions can be imported too. Then, in all cases, dimensions can be incorporated into the rate.