Malvern's Shipping Software Blog

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.

Increased Efficiency
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.

Fulfillment shippers face many diverse challenges as they manage outbound shipping for multiple, unrelated clients. So, having a flexible, rules-based shipping system (which can be quickly and easily configured to accommodate ever changing business rules) is mission critical.

While a complete list of possible, client-specific requirements would be endless, here is a short list of specific examples to consider before discussing how to solve these types of challenges:

• For some clients use your own prepaid carrier accounts, but for other clients, use the clients' prepaid UPS and/or FedEx account #s.
• For one client, all shipments need to be Signature Required
• For one client, all shipments need to be insured for 80% of the order value over $300.
• For one client, choose the cheaper method between UPS Ground Residential and Priority Mail.
• For one client, bill all FedEx shipments third-party to client's FedEx account.
• Print the Client's Order # and PO # on the label for one client and print just the Client's Order # for all other clients. 
• For one client, upload two special billing references fields to UPS and FedEx.
• For some clients, print the client's name and address as the (ship from) return address. For other clients, print your name and address. For a third group of clients, print just the client's name but your return address.

Do these sound familiar?  Well, as you know, the list goes on and on. In many cases, there are multiple business rules for each client and they may change over time. The rules and changes to them may be taken care of by manual procedures or they may be handled automatically by configuring business rules in a shipping system.

It is difficult to expect shipping system operators to remember a variety of rules especially when they are subject to change. Mistakes are very likely to happen which can be costly, eat into your profit margins and potentially cost you your client's business. The cost of training, re-training and supervision can be considerable too.

A better alternative is to implement a rules-based shipping system. With a rules-based, multi-carrier shipping system, implementing rules such as the examples above is not much more difficult than defining the rules in plain English. It is often done by simply creating a text file containing the rules that is then accessed by the Shipping System.

Using Scripts to Handle Business Rules
In an ideal shipping system, these rules are written in a user-friendly, non-proprietary language-- such as vbScript. If you have an IT staff or are willing to roll up your sleeves, you can create and maintain the rules on your own and on the fly. Otherwise, you may outsource the script-writing to the shipping system vendor or to a programmer.

Here are two examples of how simple the syntax is for a couple common business rules:

Rule #1

Plain English

For client ABC, activate Signature Required for all of their UPS shipments.

Corresponding Script

If Client="ABC" And Carrier="UPS" Then ShipSetField("PODService","DCS")

NOTE: A shipping system installer will typically create these business rules, but the scripting is something that can be accomplished by an end-user or a third-party. In some cases shipping system specific syntax like ShipSetField ({Field Name}, {Field Value}) needs to be learned, but these are typically simple and well documented.

Rule #2

Plain English 

For client A, use UPS Account # 111111
For client B, use UPS Account # 222222
For client C, use UPS Account # 333333
For All other clients, use Prepaid House Account

Corresponding Script 

Select Case Client
Case A
     ShipSetField("BillShipNo","111111")
Case B
     ShipSetField("BillShipNo","222222")
Case C
     ShipSetField ("BillShipNo","333333")
Case Else
     'Comment: default to prepaid house account
End Select

As you can see, implementation of a rules-based system is simple, straight-forward, and is more practical, in many cases, than managing business rules with manual procedures. It can eliminate a lot of time, effort and costly mistakes. If your system is not currently capable of handling scripts, it may make sense to consider an upgrade.

Both UPS and FedEx offer date guaranteed deliveries for ground shipments.  So, why pay considerably more expensive shipping charges when a ground service level may be guaranteed to arrive on the exact same day as a next day or two day express service? 

Consider this... The 2008 published rate for a 10 lb UPS Next Day Air® shipment (to zone 2) was $25.45. The ground rate for a shipment that would arrive on the exact same day was only $5.59. So, if this shipment was diverted to ground, the savings would have been $19.86 (or 78%).

Many shippers cannot be bothered to take advantage of this easy, cost saving step.  The typical excuse is that it's too difficult and too time consuming to justify the effort. The truth is that it does not take very many "local" express shipments to make it worth your while. So, here's how to estimate your potential savings and how you can start benefiting from this idea immediately.

From your shipping software, run a report containing the express shipments you sent out to Zone 2 over an extended period of time-- e.g., 6 months or 1 year.  Do the same for ground shipments.  Using these reports, calculate and compare the average charge per ground shipment to the average charge per express shipment. Next, multiply the difference between the two averages by the total # of express packages. The result is a rough estimate for the potential for savings over the reporting period. 

Now that you see the potential for savings, you need to implement a simple "business rule" into your shipping process.  

First, you should speak with your parcel carrier and request ground delivery standards based on your origin zipcode. (You can usually get this from the carriers' websites too.)  Normally, this is a color-coded map which you can use to help make these decisions manually.

Alternatively, a significantly more efficient approach is to configure a rules-based shipping system to perform this determination automatically. That is, configure your shipping system to automatically compare the ground transit time for every express shipment that is processed. Then, automatically switch to ground when the delivery dates are the same.

If your shipping software cannot accommodate this type of logic, it may be time to start considering an upgrade.  In many cases, this feature alone can justify the cost of capable, third-party shipping system. 

As a final note, while implementing logic like this, there is another detail to consider.  In your Shopping Cart or Order Entry process, you should be sure to use generic shipping options like "Next Day" or "Second Day" instead of specific methods such as "FedEx® Priority Overnight" or "UPS Next Day Air®". This gives you the latitude to switch to a ground service when appropriate without misleading a customer.

There are several regional, small parcel carriers across the country that can offer significant advantages over using UPS and FedEx.

Here are a few benefits:

Expanded Next Day Ground Delivery Area: Regional carriers typically offer significantly expanded next day ground delivery areas. So, more of your customers can benefit from next day deliveries at ground delivery pricing.

Reduction in Shipping Fees: UPS and FedEx assess over 85 different accessorial charges (such as Delivery Area Surcharge and Residential Delivery Fees). These accessorial charges can add up to 28% to the cost of a shipment. In fact, 50% of the zip codes in the continental US are assessed a delivery area surcharge. These zipcodes account for approximately 20% of the volume moving through the UPS and FedEx networks. Most regional carriers do not pass along delivery area or residential surcharges.

Extended Shipping Day: Regional carriers enable you to extend your shipping day and boost productivity by offering later pickup times.

If your operation can benefit from using a Regional Carrier, you should develop sound business rules for incorporating the regional carrier. For example, you might configure your shipping system to automatically select the regional carrier for all supported zip codes. Alternatively, while the regional carrier is most likely to cost less in all covered destinations, you might consider rate shopping between the regional carrier and UPS and/or FedEx for each shipment within the coverage area. This way, you guarantee maximum cost savings.

One regional carrier in particular is OnTrac. OnTrac delivers to a population of over 55 million people in the six largest western states (California, Arizona, Nevada, Oregon, Washington and Utah.) This area accounts for almost 20% of the U.S. economic output. For more information about OnTrac, visit www.ontrac.com.

Other regional carriers include: Spee-Dee Delivery (IA, IL, MN, NB, ND, WI), Lone Star Overnight (TX and OK), and Eastern Connection (from ME to VA) .

If you are one of the many shippers that feel like rate shopping (comparing carrier rates) is too difficult or too time consuming to justify the effort, you simply may not have an adequate shipping system in place.

With the right shipping system, you can employ any combination of three common types of rate shopping. This will typically reduce your shipping charges immediately and, in some cases, dramatically.

Third-party shipping systems can automatically determine the best method for shipping domestic and international small parcel and LTL shipments. When the best method is based on rate only, the comparisons should include all applicable parameters such as package dimensions, residential fees, delivery area and fuel surcharges, discounts, customer preference, transit times and more.

Here's a brief explanation of the three methods:

Rate Shopping Screen
Users can view a complete list of rates for multiple carriers and service levels from a single rate shop screen. Service levels are typically sorted by cost and the user can easily select the preferred method with a single click. This approach is only suitable when the number of shipments that need to (or can be) rate shopped is relatively low.

Bestway Carrier Selection
With bestway carrier selection, a shipper can pre-define several configurable rate shop codes such as economy or ground, next day, and two day. When a bestway code is imported or selected during the shipping process, the appropriate methods get compared automatically (such as UPS Ground, FedEx Ground and Priority Mail). With bestway, the comparison and the resulting carrier selection occurs automatically. That is, the shipping system operator does not need to do anything extra. This approach is ideal when a significant percentage of your shipments do not need to use a specific, pre-defined shipping method. 

Business Rule Logic
For many shippers, price is not the only factor when determining the best shipping method. More complex criteria is involved such as customers' preferences, business channel, transit time, order value, geography, weight, etc. In some cases, for example, shippers do not want to give up cumulative, overall volume-based discounts with such carriers as UPS and FedEx by spreading their volume across too many carriers. So, logic-based "business rules" can be defined to accomodate these situations. That is, by identifying specific situations in which rate shopping can occur and exactly which rules can be applied to each situation, a process which would normally be too complex to perform manually can occur automatically. 

To summarize, third-party shipping systems can easily help reduce your own freight expenses and/or make your business more competitive by reducing shipping charges that you extend to your customers.

Endicia is a leading provider of internet postage solutions. They offer a robust application called DAZzle which manages your prepaid postage (purchasing, etc) and generates postal shipping labels.

When it comes to low-volume postal shipping, DAZzle is adequate as a stand-alone application. However, for shippers looking for more advanced functionality (such as incorporating additional carriers, batch processing, rate shopping, sophisticated integration, custom labels and more) an integrated shipping solution is necessary.

Here are some of the more common areas where a shipping system with integration to Endicia can add value:

Multiple-Carrier Rate Shopping
In addition to shipping through the postal service, many Endicia users also use UPS, FedEx, DHL and other carriers. In many cases, a primary factor in determining the carrier and service level is the price. So, in order to streamline the use of multiple carriers and to maximize the savings associated with comparing rates, a shipping system capable of automatic rate shopping is necessary.

A shipping system function (commonly referred to as) "bestway carrier selection" enables the shipping software to choose the best (cheapest) method from two or more configurable methods-- such as Priority Mail, UPS Ground and FedEx Home Delivery. Because this happens automatically, bestway solutions are ideal for medium to high volume shippers.

A multi-carrier rate shop screen is an alternative (manual) method for selecting the cheapest method. A rate shop screen is typically a grid or chart of available service levels sorted by cost.  The user can select the appropriate method (without consulting other applications, rate charts, the internet, etc).  With a single click, all of the rates appear. 

Obviously, automatic bestway carrier selection is more efficent, but in many operations, a combination of both methods are used. 

Automatic Batch Processing
Batch processing is the automatic printing of multiple shipping labels all. Batch processing is ideal when product weights are known. Since each item does not need to be weighed, multiple shipping labels can be processed all at once (instead of individually.) For example, an internet retailer might downloaded orders received in a shopping cart and print all of the shipping labels at once-- automatically.

Batch processing can be used for a single carrier (e.g., just postal shipments through Endicia) or with multiple carriers-- such as UPS and FedEx too. When combined with other functions such as integration, packing list printing and rate shopping, batch processing can offer dramatic improvements to overall efficiency.

Host Integration
Users of the stand-alone DAZzle application generally do not have any efficient means of seamlessly integrating shipping data (import and export) with their host business systems or databases.

Integration is one of the most common benefits of Integrated DAZzle partner solutions. The most basic integration involves importing shipping address based on an Order # and exporting tracking #, shipping charges, etc.

More sophisticated integration might include bestway rate shopping codes, additional reference data, package contents, package dimensions and virtually any other relevant shipping data. Integration might also include "business rules" to automatically perform decisions or steps that would normally be taken manually.

Custom Labeling
The DAZzle label designer software is very flexible in its ability to print custom fields, doc-tabs and more. However, in order to take full advantage, integration is typically necessary to pass through the additional label data automatically.

A Case Study
This online retailer of iPod accessories, batteries and chargers downloads orders from a shopping cart into a .csv file once per day. Since the weights for all products are known, the shipper uses a batch processing function in their third-party shipping system (Malvern Manifest System) to generate all labels automatically. The 4" x 8" labels include a customized Packing List section listing the SKU, quantity and description for ever line item within each order. The shipper processes about 200-300  postal shipments daily in fewer than 30 minutes. Prior to implementing batch processing, it took nearly a full day. In terms of operational improvements alone, the return on investment in their third-party shipping system was approximately 5 weeks.
 

PR: wait...  I: wait...  L: wait...  LD: wait...  I: wait... wait...  C: wait...  SD: wait...

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.

On May 11, 2009, the U.S. Postal Service will be increasing thier rates again.  Fortunately for parcel shippers, prices for most services--particularly Priority & Express Mail-- were already increased in January and will not be increasing again this May.

However, other service levels including First Class Mail (domestic & international), Parcel Post and Media Mail as well as virtually all special services for both domestic and international shipments will be increasing (including certified mail, COD, Delivery Confirmation, Insurance, etc).

The increases apply to both Retail and Commercial rates. So, whether your operation uses an internet postage provider (such as Endicia or Stamps.com) or Postal Manifesting, your rates will increase.

If you are using third-party shipping software, be sure to update your system with these new rates. This is particularly important if you use automatic rate shopping between multiple carriers (such as UPS and/or FedEx) to choose the most cost effective shipping method.  Or, if you pass along the charges calculated by your shipping system to your customers.

Here is a short list of the service levels that will be increased:

• First Class (Domestic & International)
• Parcel Post
• Media
• Library Mail
• Bound Printed Matter
• Special Service Fees (Domestic & International)

For more information about the new rates, visit here.

For a PDF of all of the rates, visit here.

One of the main purposes of shipping systems, other than printing shipping labels and maintaining records of shipments, is automating what would otherwise be an extremely laborious process of shipping packages. Automation is accomplished by integrating the shipping system with the customer's host order-entry system (or database). 

Most of the information required to ship a package resides in some sort of order management system, and by integrating the two systems, the data can be made to flow seamlessly to and from the shipping system, thereby eliminating the need for manual keyboard entry.  Not only is time and effort dramatically reduced, but transcription errors are avoided as well.

There are two primary methods for moving data from the order management system or database to the shipping system.  First, a customer-provided process is used to export data from the host system (orders database, shopping cart, etc) to an Excel, CSV, or text file with the required information.  In the second case, the shipping system is configured to connect directly to the host system's database and to import the required information automatically using ODBC, XML, tcp/ip and other "real-time" methods.

The same two methods apply to moving data from the shipping system back into the host system. The shipping system can create an export file (with tracking #s, shipping charges, etc) that gets read back into the host system in a batch.  Or, the shipping system can "push" the export data back into the host system in real-time via ODBC, etc.

The primary benefits to integrating the import process:

• Reduction in manual entry errors
• More efficient shipping process (fewer keystrokes to ship a package)
• No need to maintain an additional customer address databases on the shipping system. 

The primary benefits to inegrating the export process: 

• Reduction in manual entry errors (keying shipping charges, etc back into host system)
• Improved customer service with real-time access to shipping status, tracking #s, etc