In a bid to keep distribution costs down, companies are considering alternatives that they might have overlooked in the past.
“We’re seeing more postal aggregators being used to drive the cost of getting the product to the customer down,” says Doug Bushong, president of Ronks, PA-based logistics management firm Jay Group. An aggregator or consolidator will truck a merchant’s orders throughout the country, placing them into the postal system once they’re closer to their final destination.
Given the myriad aggregators out there, a number of merchants are working with third-party logistics providers to help them select the most efficient and cost-effective shippers for their varied needs. In short, says Tom Davis, most recently director of supply chain with Pittsburgh-based manufacturer Calgon Carbon Corp., “these companies match your load with a carrier.”
C.H. Robinson, an Eden Prairie, MN-based provider of supply chain and logistics services, offers a Web-based system for companies that ship no more than 200 truckloads a month, says Sherry Thomas, a Memphis-based national account manager with the company. The merchant loads into C.H. Online its customer names, addresses, contact information, and loading instructions; the system then runs the data through a series of calculations to determine the least expensive way to move the goods to their destination. The merchant can also track the goods as they travel to its customers.
C.H. Robinson doesn’t charge for the system; its goal, Thomas says, is to obtain the freight business of the merchants that use the tool. Because C.H. Online is Web-based, the merchant incurs no expenses to get up and running; all that’s required is access to the Internet.
Tulsa, OK-based ConnectShip, a subsidiary of United Parcel Service, is a provider of shipping application software. So it’s surprising to hear its product development manager, Chris Guzik, say that using a third-party logistics (3PL) provider, rather than a multicarrier manifesting software application, makes sense when a merchant needs the additional services a logistics provider can offer. For instance, a 3PL provider can maintain inventory and handle replenishments and returns, among other functions.
But when a merchant decides to go with software instead, it typically wants either an integrated solution suite or the ability to easily integrate order and warehouse management functions. “Marketers want to purchase a single software solution that does what they need, not purchase a bunch of pieces and make them fit together,” says Guzik.
Because ConnectShip’s tools are Application Program Interface (API) based, the shipping functionality can easily be integrated into other applications, without the need for additional software. As a result, various departments, including customer service and accounting as well as the warehouse, can keep tabs on where orders are going and when they’re expected to get there.
ConnectShip’s tool set starts at about $10,000 and can run into six figures. Most customers process at least 1,000 packages a day or have multiple distribution centers. Many are working with homegrown warehouse management or order management systems and want to integrate their carriers’ business rules and compliance logic within these systems.