Cover Story: Retailing for Dummies
Improve Your Shipping Operations in 2013
What does your company's shipping operation say about your business? Does it support your business strategy and help distinguish you in your market? Is shipping an afterthought, with practices and policies disconnected from your mission statement?
Logistics has long been integral to the success of market leaders. Consider the promulgation of home PCs fueled in part by Dell's direct ship strategy, a novelty in the computer industry in the 80s; Wal-Mart's drive to low-cost leadership through cross-docking and other logistics advances; Zappos.com's meteoric growth as the result of exceptional customer service, free shipping and hassle-free returns; the role membership-based shipping programs have had in Amazon.com's online market dominance.
Align Shipping With Your Strategic Mission
Regardless of the products and services you sell online, what strategic business are you really in? Convenience? Speed? Reliability? Economy? Choice?
If you sell "economy," ensure that shipping and returns are free or low cost, even if only via deferred methods. If you sell "speed" or "cutting edge," consider same-day delivery options, even if your customers have to pay more for the service.
Logistics isn't a one-size fits all scenario. There are many strategies to consider that have enormous impact on your business. Centralize operations to leverage economies of scale or take a regional approach to ensure product is closer to your customers? Focus on core competencies and outsource logistics to a third-party provider, or develop internal expertise in this area? Maintain inventory and distribution facilities, or develop a drop-ship program with key vendors? Offer key customers free shipping upgrades? Develop free shipping or membership-based programs?
Challenge your operations management to align your company's shipping operation (and frankly, all divisions of the business) with its strategic mission.
Other Improvement Opportunities
Here's a few other areas that you can address to improve the effectiveness of your shipping program:
Benchmarking and metrics: Are you measuring pick/pack accuracy, throughput, ship and delivery accuracy? Metrics provide shippers an understanding of current standards of operation while offering opportunities to make ongoing improvements. Benchmarking allows you to measure how you stack up against industry peers.
Automation: Is it time to upgrade your warehouse management software and transportation management system? Today's technology offers significant opportunities to reduce costs and improve accuracy. Least-cost routing features choose the best carrier based on cost and speed requirements, while systems integrated to ERP allow for closed loop convenience from customer order to delivery.
Packaging: Inefficient packaging leads to higher transportation and material costs and contributes to the mitigation of carrier discounts due to oversize charges and dimensional weight adjustments. The Retail Industry Leaders Association recommends an evaluation of current materials and packaging designs, analysis of alternatives, and education and engagement with product suppliers, transportation vendors, retail buyers, customers and other stakeholders.
Carrier/service choice: Are you using a single carrier for the majority of your shipping? You may find service improvements and cost-reduction opportunities by adding additional service providers to your carrier mix. The U.S. Postal Service, postal consolidators (FedEx SmartPost, UPS SurePost, DHL Global Mail) and regional carriers (OnTrac, Eastern Connection, Spee Dee Delivery, LaserShip, PITT OHIO and Lone Star Overnight) offer multiple shipping solutions and benefits to compliment parcel giants UPS and FedEx. — Rob Martinez is the president and CEO of Shipware, an transportation spend management consulting firm. Rob can be reached at rob@shipware.com.
