For most omnichannel businesses, the cost of shipping now exceeds the sum of all other fulfillment costs including direct and indirect payroll, benefits, facilities and utilities and packing supplies. Businesses need every advantage they can to evaluate, reduce or control the rate of shipping cost increases.
Parcel shipping growth will continue to rise at a rate of 17%-28% each year between 2017 and 2021, and by 2020, same-day delivery will drive up logistics costs as a percentage of revenue by 50%, according to recent analysis by Gartner.
From consulting with omnichannel companies, we feel there are many business benefits of a shipping software system. Many today offer rate shopping, preparation of international documentation, analysis of shipping data and enterprise-wide control from multi-locations including DCs, stores and suppliers. These systems help control accelerating shipping costs.
Features and Functional Requirements
As you consider the many vendors offering shipping software, here are 20 considerations and questions covering features, requirements and support. Obviously, small-to-medium-sized businesses will not have the same requirements as an enterprise or international retailer.
Considerations for Shipping
What are the throughput requirements (packages per hour and day) for your distribution network, including all locations? Take into account all types of documents and packages from all locations including stores, warehouses and drop shipments from manufacturers and suppliers.
- How can “best-way” shipping benefit customer service and reduce costs based on shipping rates, service levels and delivery time?
- What real-time business rules for shipping and manifesting can you implement?
- Carrier compliance is extremely important. Which solutions provide immediate support for rate changes, updates and creation of labels and documents including hazmat, manifests and international shipping?
- Does the solution have address validation to reduce carrier charges for undeliverables and residential addresses erroneously classified as commercial?
- How fast does the system rate shop and generate labels?
- What processes can be eliminated from your existing shipping and manifesting environment to make it less manual and more efficient, and speed up packages shipped per hour?
- Does the solution support multi-carton orders which require different carriers and service levels, such as LTL and expedited packages on one order?
International Shipping
- Does it produce customs-related documents, including certificate of origin, commercial invoices and shipper export declaration? Is it certified for ACE direct filings?
- Does the solution handle shipping both to and from other countries? Can it support international carriers?
Scalability
- As you grow, can the solution scale from one work station to enterprise-wide? What functionality can be added to help your company grow and change? What are the additional costs?
Customer Service
Does the solution provide complete track-and-trace capability both internally and externally? Does it allow complete order visibility to the customer, including queries about package status and destination?
Information Technology
- How intuitive is the user interface?
- What integration requirements are there for your OMS, ERP and WMS systems?
- What technology do you need to accommodate things like barcode reading, weighing scales and automation?
Vendor Support
- Consider the implementation expertise of the software providers. How turnkey will the implementation be? What responsibilities will you have?
- How do software updates work? Are new system releases and features updated automatically?
- What is the overall support process? Is it 24/7?
Data Analysis and Reporting
- What reports are available in terms of analytics and audit? What other data is accessible?
- Is there a dashboard giving you a management console view of key shipping metrics?
Moving Forward
Like any other systems project, document your requirements and send an RFP to a short list of qualified vendors you believe can meet them. Analyze the responses and invite 2-3 best candidates to go through the demonstration phase including a deep dive into features, functions, benefits and pricing.
Selecting a highly functional shipping software system may be one of the best ways to deal with the continual escalation of shipping costs.
Brian Barry is president of F. Curtis Barry & Company