Logistics and transportation managers know how many small packages they're shipping, where they're going, and how much they cost. But their co-workers in administration, sales, and marketing may have little or no understanding of their own parcel shipping spend.
Many of those "desktop shippers" don't use the automated shipping systems that transportation pros do to select carriers and analyze shipping activities and costs. And it shows: A survey of more than 500 companies conducted by ARC Advisory Group and Parcel magazine found that nearly 20 percent of respondents with "poor" desktop shipping practices no standardized shipping rules or visibility into shipping spend and activities saw their costs rise by more than 20 percent. Only 1.5 percent of respondents who use multicarrier automated solutions saw costs rise to that degree.
The benefits of using automated systems appear to go beyond just helping users keep cost increases in check. Nearly one-fifth of the respondents who use the systems saw their parcel-shipping costs drop by as much as 20 percent, ARC says in the report, The High Cost of Poor Desktop Shipping Operations. Users reduced their use of costlier service options (37.9 percent cut those costs, compared to 12 percent of all respondents) and minimized or eliminated some accessorial fees (20.7 percent, versus 4.5 percent of all respondents). One of the ways automated systems help control costs is by improving compliance with carrier-selection rules set by the shipper. Yet surprisingly, less than 20 percent of the respondents who use those systems reported 100 percent compliance with such guidelines. One possible reason is that shippers aren't utilizing all of the software's features. Another is that there will always be a need for exceptions, said study author Adrian Gonzalez in an interview. But shippers can keep exceptions under control by instituting a formal approval process. "If you have to get a manager's approval, in general people will take a step back and question expensive service options," he said.
Should logistics care about who's shipping what from the back office? The two shipping environments are indeed different, but if both fell under logistics' responsibility, managers could leverage the office spend more effectively, Gonzalez said.
At the very least, logistics could educate the administrative side. And it appears that the latter has a lot to learn: The No. 1 reason why desktop shippers bought multicarrier shipping software was to reduce shipping costs, yet "improved visibility of spending" ranked low on their list. The failure of desktop shippers to recognize the connection between the two, Gonzalez said, underscores the "untapped opportunity" desktop shipping represents for many companies.