Wednesday, May 12, 2010

Whats more important?

A question recently posted in the Parcel Shipping Group on Linkedin:

What's more important for managing your shipping logistics costs: multi-service single carrier solutions- for example, working with one carrier (e.g. UPS) but being able to take advantage of multiple services (parcel vs. freight) to reduce costs; or multi-carrer solutions (e.g. UPS, Fedex, DHL) to find arbitrage opportunities to reduce costs?

My opinion:

Over the years I have seen companies take several approaches to this question. Many have gone with a single carrier and their provided shipping system, some have gone with multiple carriers and multiple carrier provided systems, others have gone with a Third Party solution with multiple carriers configured in it.

The companies that have taken the third party solution approach have far better control over their shipping processes, their shipping data, their carrier relationships, and ultimately their costs.

The reasons for this are numerous. Flexibility, you only have to train users on a single system, your shipping data in a single silo regardless of carrier, which can include all modes of transportation rather than dispersed amongst carrier provided systems, or in a stack of hand written Bills of Lading. You have a single point of integration rather than supporting multiple integrations from carrier provided systems assuming they are integrated at all, to allowing yourself the ability to analyze your shipping data internally and compare your analytics to the analysis the carriers provide you. Or to easily provide that information to an outside firm for the analysis, not too mention what the open architecture brings to the negotiation table.

While 3rd Party shipping solutions do come with a price tag, if designed, managed, and utilized effectively the ROI can be very impressive. I recommend taking control of your transportation expenses.

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