Malvern's Shipping Software Blog

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.