#parcelspendmanagement

In the era of growing technological advancements, the landscape of parcel spend management has undergone astonishing transformations. The concurrency of global trade, e-commerce, and innovative logistics solutions has given rise to a complex web of small parcel carriers, each contending for a share of the parcel shipping market.  

Effective parcel spend management is no longer an option but a critical requirement for businesses of all sizes. Providing timely delivery while controlling costs is essential to remain profitable in today’s dynamic market. Companies that fail to implement efficient and cost-effective ways of managing parcel spend will undoubtedly fall behind. 

Advanced data analytics, rapid software solutions, and real-time tracking capabilities have allowed businesses to gain critical insights into their shipping expenses, the performance of their carriers, and what their customers want. The information is easy to understand and helps companies make rational decisions. 

Effective parcel spend management that utilizes these technological advancements can prove to be a differentiator in the upcoming holiday season. With major celebrations knocking on the door, the market always experiences a surge in online shopping, resulting in greatly increased parcel shipping volumes. Lack of proper parcel spend optimization during peak periods can increase shipping costs and result in delivery challenges. 

A vital question that haunts many businesses is: What is the preferable way to avoid deflating profits and potential customer loss due to shipping challenges? For starters, companies can navigate through erratic times using parcel spend optimization strategies. 

Parcel spend optimization is a vital aspect of parcel management that helps organizations reduce their small parcel shipping expenses. It enhances overall efficiency, improves productivity, and positively impacts your bottom line.  

This article delves into the factors that make parcel spend management strategies successful. So, hang tight — here we go. 

The critical success factors for effective parcel spend management are: 

Data transparency & analysis: Technological advancements have enabled companies to streamline parcel shipping operations by effectively utilizing shipping data. This includes analytics, rate optimization, and real-time tracking for informed decision-making. Essential data points such as shipping volumes, carriers, destinations, and costs are collected, consolidated, and analyzed for successful parcel spend management implementation. 

Shipping rate negotiation: Another factor for success lies in how well you negotiate (or renegotiate) your shipping contract with your carrier(s). A skillful negotiation is necessary to ensure favorable shipping rates and terms. Key elements of the negotiation process include conducting periodic agreement reviews, comparing and benchmarking current rates with industry standards, and employing modern technology such as data analytics to identify new cost-saving opportunities. 

Service level optimization: It’s crucial to strike the right balance between the cost and the level of service you’re receiving. To achieve this balance and optimize your parcel spend, you must carefully evaluate the available services and then select the most cost-effective options that will help you meet your customers’ expectations. It’s essential to avoid paying for speed or features that may not be required for your specific needs. 

Real-time tracking & visibility: This is a valuable tool for businesses to enhance the customer experience and streamline operations. Providing customers with up-to-date information on their shipments’ status empowers companies to improve transparency, build trust, and promptly resolve any address-related issues. Additionally, businesses can optimize delivery routes by analyzing the data collected through shipment tracking, thus reducing transit times and improving efficiency. 

Packaging optimization: Carriers use dimensional weight as a pricing factor for parcels, making the package’s size as crucial as its weight. Minimizing the shipment’s dimensional weight is the key to getting the most cost-effective shipping rate. Selecting the correct package size, using efficient packing techniques, and ensuring the parcel is securely packed to prevent damage during transit are all important. 

Invoice audits: Businesses must review carrier invoices regularly to detect and rectify billing errors or discrepancies. This ensures accuracy in billing and prevents the incurrence of unnecessary expenses. By auditing your carrier invoices, you confirm that you are paying only for the services you received, which helps maintain financial accountability and avoid unnecessary expenses. 

In the current dynamic market, where customer expectations and shipping volumes are changing rapidly, companies need to implement effective parcel spend management strategies in order to maintain profitability and deliver a positive customer experience. By embracing these strategies, companies can effectively manage their shipping expenses, optimize shipping processes, and enhance visibility across their supply chain.  

Capture Big Savings on Parcel Spend Management

This is the golden era for the e-commerce industry and fast and free shipping as both customer expectations and demand are growing exponentially. However, many businesses are facing difficulty dealing with parcel shipping. Carriers across the globe are running at full capacity, and shipping costs are unparalleled. That’s why it's crucial for businesses to find parcel spend management to optimize their parcel spend. 

What Is Parcel Spend Management? 

Parcel spend refers to the transportation cost associated with parcel carriers. That includes parcel weight, distance, and service level. Parcel spend management is using technology to analyze your parcel data and manage your parcel spend costs. 

There are also several additional fees squeezed into your parcel contract that could affect your shipment invoice unexpectedly. 

When it comes to parcel contract management, the goal is to select the most cost-effective and optimized carriers so that you won't leave money on the table. It's all about having the just right partner, strategy, and technology.  

Conventional parcel delivery business models have revolved around service level and pricing capabilities usually catered by USPS, DHL, FedEx, or UPS. But not around the constantly changing needs of the shippers who purchase and use these services to meet their customer demands. 

As a business entity, you need to keep your eye on the pricing ball: 

Many of these parcel providers are asset-based, have stakeholders to report to, and government regulations to follow. That’s why they add extra fees and rates in order to meet their sales targets. Now, this is the kind of money you can save and use somewhere else. 

This pricing puzzle gets more complicated by excessively complex matrices like third-party billing fees, shifts in the dimensional pricing index, oversized and unauthorized packages, frequent changes to fuel charges, handling charges, etc. 

Almost every parcel carrier makes changes to their individual tariffs, which can make a sizable difference in your parcel spend, parcel shipping, and parcel cost management which eventually hamper your bottom line. 

Pricing ambiguity and constant pricing changes can specifically impact growing businesses that struggle to thrive in the market and compete with the big players. Considering all the above factors, you need a proper tool with adequate amounts of technological backup to full fill all your parcel spend needs. 

Where Does Parcel Spend Management Add Value? 

It identifies each business's distinctive characteristic, which parcel service providers use to build their cost-to-bill model. 

It identifies key driving points in parcel service provider's profitability metrics, including pick and drop cost, line haul, air feed, and total cost per stop. 

It builds a business model that factors in package cost and clearly defines a comprehensive strategy around technology, pick-up and delivery densities, freight rates, dimensional weight factor, seasonality, fuel surcharges, and service level demand from your customers. 

So how can you harness these constantly growing changes, to take control of your parcel spend, avoid getting stuck into overly charged costs and inefficient practices, and achieve advanced service levels and retail customers? Find a parcel spend management service. 

But you shouldn’t settle for any parcel spend management. After all, any service provider can offer you with a total savings of 4-5% on average. 

But at TransImpact, we have not only the expertise but the technology to find 15-20% hidden savings on your parcel shipping agreement.