We’ve got to reduce these shipping costs! How?
56% of retailers say shipping cost is their most significant fulfillment challenge, according to an omnichannel and fulfillment benchmark report led by Retail TouchPoints and Deposco.
There is never a time when the cost of fulfillment isn’t under pressure. In flush periods, supply chains operate flawlessly and are the silent partners in any ecommerce or B2B. When there is a financial pinch, the supply chain is expected to find the savings quickly and protect margins. A WMS (warehouse management system) does this and does it well.
LEARN MORE: Automatically shop rates across multiple carriers to lower your shipping costs by 2-20%
Rate shopping is a vital component of that
Rate shopping can mean different things to different companies. It depends on many factors, from their primary modes of fulfillment to the nature of the product they deal into in the average order quantities. The primary goal is to create a clear menu of shipment options that cover your geographic region with the most cost-effective modes for your promised service level agreements (SLAs).
Modern business has upended that in some meaningful ways.
I’ve got 99 (shipper) problems
In simpler supply chains of the past, you’d go all in with a handful of carriers—a single server, exclusive lanes split between carriers. You’d annually renegotiate rates and volumes. It was very predictable and manageable.
The problem is that a smaller firm works with smaller carriers. They operate locally or in smaller regions. What about the person who ordered in Alaska? Or in Canada? Will they support you there? No, you have to build a patchwork of carriers to cover all your serviced regions. How do you make that easy for your operators to execute on?
You’ve got some agreements with the large consolidated shipping carriers, but you don’t have the volume to negotiate better rates. You don’t get Big Box rates without Big Box business to award.
And that’s before you have to sit down, often annually, and go through this whole process again. The previous year, it was calculated that the major parcel carriers issued an average of 8% in general shipping rate increases, according to Reveel Group.
You’re getting mediocre results for a whole lot of running around. Rate shopping in WMS provides a better way to reduce shipping costs in just a few clicks.
More than rates, shop for experiences
To get out of the cycle of negotiating rates every year, work with a Parcel / Carrier Network. There’s no one-size-fits-all, but these firms handle the grunt work and then move into things like tracking and trace, billing support, and conflict resolution.
The key is to find a WMS system that gives you access to services you want to offer. For example:
- Tusk Logistics focuses on getting you access to a large array of small, regional carriers, and handling the electronic data interchange (EDI) for you, meaning you just work with one network.
- ShipX focuses on carriers that have a net-zero goal, providing the opportunity to pass your rate shopping through the lens of social responsibility (while reducing shipping costs and fulfillment time).
- Essential Hub (eHub) focuses on 3PL solutions and offers several service enhancements around the data sharing and coordination of those operations.
There are many more, but the key focus shifts to the business outcome of reducing shipping costs and not the meticulous sourcing and maintenance of tens or hundreds of contracts.
Is your WMS ready for rate shopping?
Automate decisions, reap benefits
If you’ve brought in 100 carriers with different rules, regions, and use cases, how can you expect a person to make the right decision in a timely manner? Trick question.
All that complexity requires system support to realize the savings – every order, every load. You need to do it consistently and predictably. Otherwise, your customers and workers alike won’t know what to expect. That leads to dissatisfaction and churn.
Deposco’s WMS software supports these networks natively by integrating them into our Rate Shopping engine. So just as the supply chain is the silent partner of the business, the warehouse management system becomes the silent driver of operational controls.
Rather than presenting your full menu, the user gets a few options to review based on the ideal options for this order. Then they get a different set of curated responses for the next.
By focusing only on the best answers, scenario by scenario, the average Deposco customer reports savings of 2% to 20% per shipment through our advanced Rate Shopping tools. Those same organizations report a staggering 34% reduction in Time in Transit while saving costs. The organization saves money; the customer receives a real service level improvement – win, win.
Less financial pain, happier warehouse teams. What’s not to like?
Reduce the cost of fulfillment fast
The supply chain is incredibly complex. Deposco’s WMS ensures that the latest improvements – process, information, integration, shipping costs – are always driving your long-term growth. Read why our WMS shipping integration solution recently earned the FedEx Compatible Platinum award.
Explore all of our WMS software integrations.