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.

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...

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.

Ideally, the only time you should be measuring a box during the shipping process is when it's not a standard box size.  That is, when it's not not a box that's part of your normal inventory.

As parcel carriers continue to increase the significance and pricing impact of dimensional rating, it is critical that you know when dimensions are necessary and, most importantly, to be able to enter them quickly-- if not effortlessly. 

Consider, for example, if you have to measure and then type 12, tab/click, 18, tab/click 16, Enter... to record the dimensions (12×18x16) for a specific box. In even a small to medium-sized shipping operation (50+ packages per day), you are wasting TONS of valuable time.

If your shipping process does not require any packing (combining of products), then the ideal process is to record your product dimensions in your database and to have your shipping system automatically import the dimensions.

Since that is an "ideal" solution which does not apply to many shipping operations, consider using a shipping system that stores a complete list of your commonly used box sizes. This way, instead of remember or re-entering dimensions, you can recall them very easily with a single code.

Better yet, you can create this database of box codes and then create a laminated sheet with a barcode for each box type (some boxes actually have a barcode of the box code right on the box).  Now, place the package on the scale, Scan the Order #, Scan the Box Code, hit Print...  With this streamlined approach, you can literally cut the shipping time in half.

As you may be aware, if you are not capturing dimensions for all of your boxes you could be getting hammered on rate adjustments. If you don't know, you should review the adjustments in your last few months of freight bills.

If you are entering dimensions and employing a manual process to do so as described above, you are getting equally hammered- if not more so- on unnecssary labor expenses.

So, if you are spending too much time entering dimensions or paying significant penalties for dimensional charges that were not previously calculated, you should consider shipping software than can automate this process for you.

Many B2C shippers struggle to effectively manage (let alone reduce or eliminate) residential and delivery area surcharges.

Before discussing this further, let's consider the 2009 UPS Ground rates for a 1 lb package shipped from Malvern, PA 19355 to: 

A commercial address in Yorklyn DE, 19736
Rate: $4.34 

A residential address in Townsend DE, 19734
Rate: $9.27 

The combination of the residential and extended area surcharges result in more than doubling the shipping charges here. (Neither rate includes a fuel surcharge.)

These significant surcharges commonly trigger two negative scenarios. First, abandoned shopping carts are often the result of checkout sticker shock. That is, the consumer is about to make a purchase online but ends the transaction when the shipping charges are displayed.  The alternative, is to not pass along these fees to the consumer.  However, this directly reduces or even eliminates the profit built into the sale.

One proven strategy to avoid or eliminate these fees is to use a carrier that is optimized for the last mile. (The "last mile" refers to the final stage of the delivery-- from the nearest carrier facility to the final destination.)

The United States Postal Service maintains a significant advantage for many types of shipments bound for residential, rural and remote areas. This is made possible by the sheer number of vehicles and delivery personnel. As a result, several carriers now offer service levels which leverage the vast network of postal services trucks and postal workers.

The solution is to simply include the Postal Service (which does not charge any of these fees) when comparing rates for residential shipments. However, UPS, FedEx and DHL have all teamed up with the Postal Service now to offer composite solutions called: UPS Mail Innovations, FedEx SmartPost and DHL GlobalMail.

With these shipping methods, the primary carrier (e.g., UPS) transports the package most of the way and the Postal Service performs the last leg of the delivery. The advantage to these combines methods is the advanced tracking capabilities offered by UPS, FedEx and DHL and the low cost of the final USPS delivery.

So, for any business that ships direct to consumers, it is important to be aware that under many circumstances, the Postal Service and these other methods offer considerable savings when compare to standard Ground shipping.

Now, the trick to taking advantage of these alternatives is to implement a seamless process for selecting the most cost effective carrier or service. For real efficiency, you should consider a shipping system which can automatically compare and select the cheapest method without any user interaction, whether this might be USPS or a composite method.

Your shipping software should be configured with "business rules" to accommodate simple or sophisticated logic.  For example, a simple cost-based comparison might be to automatically choose the cheaper of FedEx Home Delivery and Postal Priority.  A slightly more sophisticated comparison might take transit time into consideration by comparing UPS Ground and Priority Mail for Zones 7-8 and UPS Ground and UPS Mail Innovations for Zones 2-6. 

A final note... because the composite services often use economy postal services for the final delivery, you should clearly indicate to your customers that they are choosing an "Economy" shipping method. Shipping options labeled "Standard" or "Ground" may falsely set your customers expectations.  So, if you choose to offer one of these methods, you should consider calling it something like "Economy (3-10 business days)".