PARCEL November/December 2023

A LOOK BACK AT

PAGE 28

NOVEMBER-DECEMBER 2023

AMAZON SHIPPING: CHALLENGING THE DUOPOLY?

PARCELindustry.com

PAGE 12

NORMALCY BIAS AND THE CURSE OF THE NOW. PAGE 10 AUTOMATING THE LAST MILE FOR SUCCESS. PAGE 22 OPTIMIZING YOUR OMNICHANNEL STRATEGY FOR A POST-PANDEMIC WORLD PAGE 16

O T E E R E IB H R K C C I CL SUBS

CONTENTS ///

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Volume 30 | Issue 5

06 EDITOR’S NOTE

12 16 18 22 26

Goodbye, 2023; Hello, 2024

By Amanda Armendariz

12 AMAZON SHIPPING: CHALLENGING THE DUOPOLY?

22 SETTING UP THE LAST MILE FOR SUCCESS WITH AUTOMATION

14 OPTIMAL PACKAGING REGIMES

24 MUTUALLY BENEFICIAL DATA: USING DATA TO IMPROVE CUSTOMER EXPERIENCE AND PROFITS

By Caleb Nelson

07 SUPPLY CHAIN SUCCESS Managing the Peak Season

By Baris Tasdelen

By Jeff Haushalter

08 OPERATIONAL EFFICIENCIES It’s Time for a Self-Check Up

By Susan Rider

09 PARCEL COUNSEL Anatomy of a Lawsuit, Part Two: And Now You Are in Court

By Brent Wm. Primus, JD

16 OPTIMIZING YOUR OMNICHANNEL STRATEGY FOR A POST-PANDEMIC WORLD

By Billy Carter

18 THE LOST ART OF INPUT MANAGEMENT

By Jess Windham

10 INDUSTRY INSIGHT Normalcy Bias and the Curse of the Now

By Joe Wilkinson

20 THE 2023 CARRIER SATISFACTION SURVEY: OUR READERS RATE THE CARRIERS

By Amanda Armendariz

4 PARCELindustry.com  NOVEMBER-DECEMBER 2023

By Antonio Amadasi

By Matthew Kulp

26 NAVIGATING MICROSERVICES WITHIN THE SUPPLY CHAIN

By Ninaad Acharya

28 PARCEL FORUM ’23 NASHVILLE WRAPS UP WITH RECORD-BREAKING SUCCESS: NEXT STOP, DALLAS!

By Allison Lloyd

PRESIDENT CHAD GRIEPENTROG

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NOVEMBER-DECEMBER 2023  PARCELindustry.com 5

EDITOR’S PICK

Here are some of the most-read articles on our site in recent weeks. If you haven’t already checked them out, you might want to — there is some great information in there!

EDITOR’SNOTE

GOODBYE, 2023; HELLO, 2024

By Amanda Armendariz

T

he last editor’s note of the year always throws me for a loop. It’s so cliché to say that time flies, but in our industry, it really does. I always feel like the year is just starting as I focus on gathering editorial for the upcoming year’s issues, and before I know it, another year is under our belts, and we’re gearing up to start the whole cycle over again.

One thing I noticed in 2023 is that now, even more than in the past, logistics professionals truly recognize the importance of networking and educational opportunities shared with other industry peers. I’m sure this growth is exacerbated, in large part, to the rapid-fire changes our

6 PARCELindustry.com  NOVEMBER-DECEMBER 2023

industry experienced during the pandemic still looming fresh in our minds, even four years out. No one wants to be caught unawares like that again. Of course, our industry as a whole has always been one that seems eager to learn and stay ahead of the curve, so this increased enthusiasm is welcome, but not necessarily surprising.

Nowhere is this energy and excitement for learning more apparent than at our annual PARCEL Forum. Be sure to check out the wrap-up article on page 28. Not only does it perfectly encapsulate the energy found at this year’s event, but we’ve also highlighted the best tips our attendees took away from the sessions. Whether you were able to attend this year or not, we hope you join us in Dallas, September 16-18.

We hope that your holiday season is a success, both personally and professionally.

And we thank you for letting us be your industry resource, year after year. We look forward to continuing that partnership with you in 2024.

As always, thanks for reading PARCEL.

Maximizing Shipping Efficiency with a Diverse Carrier Portfolio: Easier Said than Done?

By Scott Riddle

Discover the 3 Next-Gen Eco-Friendly Packaging Materials Driving Business Sustainability

By Emily Newton

UPS 2024 General Rate Increase: What You Need to Know

By Paul Yaussy

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SUPPLYCHAINSUCCESS

MANAGING THE PEAK SEASON

By Baris Tasdelen

G

uiding your peak season strategy requires knowledge of carrier tendencies. Periodically, carriers introduce a new charge or implement new ways of calculating cost to shippers, leading to significant shifts in pricing dynamics. Some of these changes are permanent, such as dimensional weights, remote area surcharges, and large package and overmax fees. Others, initially perceived as temporary, over time become permanent — like the peak surcharges, now rebranded as demand surcharges.

When COVID-19 impacted the market in 2019-2020, the sales shift from brick-and-mortar stores to online marketplaces dramatically accelerated, causing a huge demand spike on the parcel carriers. At that point, a peak surcharge was arguably justifiable, and carriers implemented different surcharges for residential, oversized, and international packages. Three years later, however, that demand has dissipated. Carriers are left with extra capacity built during the peak period, yet shippers incur peak/demand surcharges that apply year-round. From January to October, a milder set of surcharges are applied to residential and oversized packages, and from October to January, they increase based on a complex calendar and methodology.

There are a multitude of approaches that shippers can employ to tackle the holiday peaks: Create your own peak: Demand Surcharges are most expensive from October to January. One strategy that a retailer can employ is to drive the sales to mid-summer through incentives and sales campaigns. Carriers use June/July volumes as a baseline while calculating the peaking factor. Increasing the baseline will help reduce the peaking factor during the holiday season.

Get closer to your customers for oversized and long zone packages: Carriers are penalizing large/oversize/ overweight boxes, and the surcharges are more expensive for higher zones. What’s worse is that the annual rate increases have been hitting the higher zones more in recent years, including with the 2024 GRI. If your operation has multiple DCs, make sure to stock the large SKUs in all DCs and fulfill from the closest warehouse.

If ship-to-store is an option, incentivize buy online, pickup in store (BOPIS) for larger boxes. Finally, look for 3PLs that are willing to deliver those large boxes without charging hundreds of dollars in surcharges. This will allow you to place the SKUs closer to your customer, reducing the cost and transit time.

Add USPS to the carrier mix: USPS is the largest parcel carrier in the US, and its recently introduced Ground Advantage service offers competitive pricing. USPS also announced that it won’t charge any peak surcharges in 2023. Moving some of the non-time-critical shipments to USPS will reduce the peaking factor for UPS and FedEx, resulting in savings from multiple avenues. We have seen sporadic operational challenges with shippers who switched recently to the Ground Advantage, and it is yet to be seen how this service performs during the 2023 peak; however, we

believe USPS should be considered a viable addition to most mid- to large-size shippers.

Negotiate better discounts for your program: Carriers have extra capacity thanks to USPS, Amazon, and the regional carriers. UPS has lost shippers during the Teamster negotiation uncertainty, further increasing its capacity.

According to FreightWaves Pricing Power index, the shippers have the upper hand at the negotiation table. Both UPS and FedEx announced 5.9% GRIs for 2024, but the accessorials and peak surcharges are going up at higher rates than the 5.9%.

Shippers should be able to negotiate some of these charges to reduce the burden of increased cost during the peak season.

In summary, the key to a successful peak season lies in understanding the primary drivers of your parcel costs, necessitating a comprehensive grasp of your parcel data.

Additionally, readiness to add or switch carriers or 3PL providers when necessary is crucial. Shippers currently hold significant negotiating power, and should capitalize on the current economic landscape to mitigate shipping costs effectively.

Baris Tasdelen is Manager at Körber Supply Chain. He can be reached at baris.tasdelen@ koerber-supplychain.com.

NOVEMBER-DECEMBER 2023  PARCELindustry.com 7

OPERATIONALEFFICIENCIES

IT’S TIME FOR A SELF-CHECK-UP

By Susan Rider

W

e often talk about opportunities within the four walls of your distribution center, such as things to do and items to purchase for better productivity and throughput. Those items are very important, but one key oversight is the management team. What should you or your leadership team be doing to increase productivity and efficiency? When was the last time you did a self-checkup on your leadership skills and retainment tactics? It’s a valid point considering that companies with multiple facilities often receive an increase in productivity just by a management change, with no change to equipment or facilities. Leadership is not easy, and it is unfortunate that a lot of companies don’t invest enough time or money on the development in this area of their leaders.

In 2023, the average turnover rate across the US (according to an HR study by Forbes Advisor) was 3.8%. Turnover consisted of 2.5%, with layoffs/firings making up the rest. What’s your average turnover rate?

Most distribution centers run higher than this national average, so do not panic, but take a self-assessing view of this number. The national average tenure is 4.1 years.

Tenure rates can be good and bad. Recently, I worked with a facility where the average tenure was 18 years, and all the processes were still very much completed in paper and worksheets. Change management will be critical in a new process or equipment installation.

This is an example of one extreme; on the other side of the spectrum, a new workforce where the turnover is very high will require processes and procedures to be constantly retrained because the benefits and features are not inherent or are being used without any tribal knowledge. If your facility is one where the turnover is

8 PARCELindustry.com  NOVEMBER-DECEMBER 2023

in the acceptable range, you have overcome one hurdle already. If not, know that 58% of people were retained for three-plus years with a structured onboarding experience. This is an area that most facilities I’ve been in for over the last 30-plus years need a lot of assistance with. It is not acceptable to show a video to new recruits over the course of two days and then say, “Okay, you’re ready!” especially when you consider that there may be a language barrier between the language of the video and the language spoken by your new workforce. When you have a structured onboarding experience, over 75% should and will hit their first performance metrics. The Forbes Advisor study showed that over 88% of new recruits left because of insufficient onboarding programs. It is a significant piece of your retainment program and definitely needs a review.

In this same study, it said 32% of new hires leave before 90 days because of company culture. What can you do to improve company culture?

Plenty! But unfortunately, it will have to be something you and your team develop; you cannot buy company culture in a box and instantly deploy. The first step in building a great company culture is getting to know your team and the members that encompass it. What are their strengths and weaknesses?

Put together a plan to address their weaknesses, which

will automatically enhance their strengths. If you want everyone on the team to excel and be committed to the overall success of the facility, they need to feel you/your team are committed to them.

Building a culture includes: setting clear objectives and expectations for your team; having a people-first approach and being concerned about their well-being; providing feedback and recognition to employees; leading by example and displaying your desired behavior; and establishing diversity and inclusion initiatives.

The culture has a lot to do with your leadership style, and a good leadership style may require you to get out of your comfort zone especially if you run a facility that has no HR staff. Often some of the culture enhancement can be given to HR to drive. You and your team need to know the distribution team. You need to be visible and not just on the easy days but the hard days too. If you go out and you see the team sweating and needing water on one of the hottest days, bring in a cooler and pass out water. Show them you care, don’t just say it! And make sure you are developing your core leadership team to do the same.

Susan Rider, President of Rider & Associates, Supply Chain Consultant, and Executive Life Coach can be reached at susanrider@msn.com.

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PARCELCOUNSEL

ANATOMY OF A LAWSUIT, PART TWO: AND NOW YOU ARE IN COURT

By Brent Wm. Primus, JD

I

n the September-October 2023 issue of PARCEL, we looked at the legal terms used in litigation through the Summons, Complaint, and Answer stage. In this installment, we will look at legal terms used once the proceedings have been commenced.

When a Defendant files its Answer, it may also assert a Counterclaim. In effect, the Defendant is starting a lawsuit against the Plaintiff. The Plaintiff’s responsive pleading is called a Reply to Counterclaim.

The next phase of a lawsuit is called Discovery. This term refers to the various methods by which the parties can obtain information from the other parties.  Interrogatories: These are written questions which are served upon the opposing party. The opposing party has the obligation to answer these questions under oath.

Further, the answering party must take reasonable steps to obtain information available to it.  Request for Admissions: These are used to attempt to narrow the issues. At trial the parties do not have to prove any matters which have been admitted. For example, in a lawsuit for loss and damage to cargo, a Request for Admission might ask a defendant motor carrier whether it admits or denies that it was the carrier transporting the shipment.  Request for Production of Documents: This is used to obtain copies of documentary materials.  Deposition: This term describes the process whereby the attorney for one of the parties asks questions of a

witness under oath in order to determine what they know or don’t know. Depositions are held with a Court Reporter who makes a transcript (a verbatim written record) or audio or video recording of the questions and answers.

Before the Trial of a lawsuit, there are often Pre-Trial Motions. A Motion is a request to the Court for an Order. For instance, one party (the moving party) may seek an order of the court compelling the other party to answer interrogatories. Procedural motions could relate to matters such as a request for a change of venue or a continuance (an extension of a time limit) or a stay (stopping) of proceedings.

One common and critical pre-trial motion is a Motion for Summary Judgment. Such a motion is a request by one party to have the matter determined by the Court prior to trial. The party bringing such a motion must convince the court that there are no factual issues in dispute and accordingly no need for a trial. In considering this request the court would typically consider Affidavits (sworn written statements) and documents submitted by the parties.

Most litigation is resolved prior to Trial either by settlement or pre-trial determinations. If not so resolved the matter is set for trial. The primary purpose of a trial is to determine the relevant facts.

This could be either a Jury Trial or a Court Trial without a jury.

There are also many terms relating to Trials. One is subpoena. This is a Court Order which compels a person to come to court to testify.

There are no excuses allowed and there can be substantial penalties for failing to obey a subpoena. The only way to avoid having to appear is for a party to bring a Motion before the Court to quash (cancel) the subpoena.

A term used in Jury Trials is voir dire. This is a French term meaning “to speak the truth.” It refers to the process whereby a prospective juror is asked questions by the Judge or a party’s attorney to determine if the person has any biases.

Once a Trial has been completed, a losing party may Appeal the decision to a higher Court. The United States Supreme Court gets to decide which appeals it accepts for review. The first step of this process is for an appealing party to file a Petition for Writ of Certiorari asking the Court to hear its appeal and stating the reasons why it should. All for now!

Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A. and the Senior Editor of transportlawtexts, inc. Previous columns, including those of William J. Augello, may be found in the “Content Library” on PARCELindustry.com.

Your questions are welcome at brent@primuslawoffice.com.

NOVEMBER-DECEMBER 2023  PARCELindustry.com 9

INDUSTRYINSIGHT

NORMALCY BIAS AND THE CURSE OF THE NOW

By Joe Wilkinson

W

e’re all busy. The day-to-day noise of the transportation function is never calm and peaceful. This is especially true as we ramp into and through peak and GRI season. But urgent is the enemy of strategic, and the tactical issues of today tend to overshadow the more strategic elements of our roles as transportation leaders. The things that don’t squeak loud enough tend to get left alone to operate as they always have. That is, until the squeak becomes a roar, and now we’re dealing with something a little oil and effort can’t fix.

Normalcy bias is the tendency to minimize the risks (and opportunities) based on overreliance on historical norms. We see this bias in the transportation realm repeatedly and consistently, and it is something we need to be cognizant of, and to mitigate, if we don’t want to have to re-learn hard lessons.

Prior to 2020, most small shippers were still single-sourcing with one national parcel carrier. While larger shippers were often utilizing multiple carriers, it was typically with an eye toward exploiting cost differentials, rather than for mitigating capacity risk. Luckily (or unluckily), this didn’t hurt shippers too much when capacity tightened, as the capacity shortfall spanned carriers, and even shippers that were well diversified had capacity issues. In other words, everyone was in the same boat. But in a carrier-specific situation, let’s say a looming labor dispute at a specific carrier, or maybe a technology exploit, the bias toward single-sourcing could have a dramatic impact on shippers’ ability to execute shipments.

Nor is this the only example highlighted by the pandemic. As lockdowns became common and social distancing became the norm, the US economy saw an unprecedented

10 PARCELindustry.com  NOVEMBER-DECEMBER 2023

growth of e-commerce. This is what brought about the capacity issue in the first place. Carriers scrambled to increase capacity, both flex capacity and fixed, to ease the strain and to take advantage of the growth. However, they planned and executed growth as if the growth they were seeing would extend into the future indefinitely. And after all, why not? Many of the economic prognosticators predicted it would do exactly that. But nothing lasts forever, and the business cycle comes for us all. So, when parcel volume began to first slow and then fall in late 2022, the carriers were left with the unattractive prospect of excess capacity. That was a problem for the carriers, and as volumes continue to contract, the problem becomes bigger and bigger, all because fixed capacity was built with the expectation that e-commerce growth would continue in perpetuity.

Luckily, this situation was a net positive for shippers as it, combined with new entrants into the carrier market, has resulted in a more competitive, more shipper-friendly market. But the inverse could just have easily been the case (remember 2020/2021?).

“We’ve been a UPS (or FedEx, or anyone) shipper for 20 years!” Really? A single carrier has been the optimal carrier partner for you for two decades, with no additional cost, transit, or service opportunities with any other carrier? It’s a cliché at

this point, but it’s a cliché for a reason: Just because you’ve always done it one way, does not mean it’s the right way.

Now that we’re all on the same page that normalcy bias is a hazard, and that it has sharp teeth, what can you do to avoid the bite?

Don’t Go it Alone Establish a peer group that meets regularly to discuss the transportation landscape, macro-economic implications, trends in carrier performance and pricing, and opportunities for cooperative actions.

Ideally, this group will be made up of leaders from other organizations, and a mix of both those within your specific industry as well as from other industries. The goal is to avoid insular thinking; to get outside the box and expand the perspective.

Obviously, there is a balance to be maintained between what is shared and what is held close. But avoiding the temptation to share nothing and hear everything will produce better results.

Embrace the Pot Stirrer How many times have you seen a strategy presented and immediately all heads start nodding and everyone gets on board? Well, maybe.

But maybe not. The Law of Unintended Consequences can be mean. Assigning one person in the meeting/ workgroup to assume the role of contrarian can be extremely valuable. By assigning a person to this role explicitly,

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you remove the stigma of conflict, leaving the contrarian free to explore risks and alternatives more openly.

Block Out the Time On a bi-weekly, or at least monthly, basis, block out an hour (two is better) for a macro assessment. Turn your ringer off. Ignore incoming emails. Even go offsite if you need to. Whatever you need to do to separate yourself from the immediate and allow the time to assess what your organization is doing simply out of habit or ritual.

Consider the potential consequences of these non-decisions. Without distance and focus, you will never be able to zoom out and take the long view. And you will never be able to achieve either in the controlled chaos of the typical day in transportation management.

See It Coming Fighting normalcy bias isn’t solely about broadening your perspective and challenging assumptions. It is true that the items above are the best option for seeing events beyond the horizon. But no one anticipates everything. And black

swan events seem to be the new normal. Technology is the answer in these cases.

Visibility and reporting tools are necessary. But they are simply insufficient in these situations. This is where artificial intelligence, or AI, comes in.

AI, through machine learning, can identify, communicate, scale, and quantify aberrations in even the largest datasets, recognizing trends that would not become apparent to humans for weeks or months.

AI-enabled solutions are an important tool in the savvy transportation leader’s toolbox.

It probably sounds like combating normalcy bias is going to require a fair amount

of time. It is. And it’s worth it. More to the point, failing to acknowledge and resist normalcy bias is risky in the extreme. The potential outcomes are large in scale and consequence. Don’t assume the status quo will continue into perpetuity. If the last three years have taught us anything, it is that change is inevitable, and those who can anticipate, and respond effectively, win.

Joe Wilkinson is VP, Professional Services (Transportation Consulting) at Intelligent Audit. He can be reached at joeywilkinson@ intelligentaudit.com

NOVEMBER-DECEMBER 2023  PARCELindustry.com 11

AMAZON SHIPPING: CHALLENGING THE DUOPOLY?

By Caleb Nelson

A

mazon is finally throwing its hat into the ring of carriers. Industry experts have long speculated the company would one day compete with FedEx and UPS — myself included, with a few articles in PARCEL noting that Buy With Prime appeared to be a step in this direction. Now, it is launching Amazon Shipping, a service that bears a closer resemblance to the national carriers than anything the company has offered before.

Amazon Shipping has one key distinction from other services like FBA or Buy With Prime — pickup. Other Amazon services require pre-shipping inventory to their warehouses. Amazon Shipping’s seven-days-a-week pickup allows shippers to integrate Amazon’s fulfillment services with their own distribution networks.

The service will deliver packages up to 50 lbs., in two to five days (notably, there’s no express/two-day option), anywhere in the contiguous US. Currently, pickups are only available in 15 metro markets, a major short-term

limitation. Amazon Shipping Director Michael Cox has shared the company has plans to expand pickup service areas, saying “anywhere Amazon has a facility, we want to be there, so it’s just a matter of when.”

So why would a FedEx or UPS customer consider adding Amazon Shipping to their carrier mix?

Here are the top reasons: 1. Capitalizing on the Carrier Diversification Trend COVID added fuel to the growing trend of parcel carrier diversification.

Shippers are adding multiple carriers into their mixes — seeking risk reduction, improved transit times, or cost savings. This trend won’t reverse.

The timing is right for a new player with a national reach.

Amazon technically launched Amazon Shipping in 2020 but put it on hiatus due to the pandemic. The relaunch was likely driven by its over-expansion of its network during COVID (the company has plenty of capacity to fill) and to capitalize on this trend.

12 PARCELindustry.com  NOVEMBER-DECEMBER 2023

2. Competitive Rates Amazon Shipping’s base rates appear to be very competitive. Ripley MacDonald, VP of Amazon Shipping, has shared that most customers pay 30% less than base rates with FedEx or UPS. The pricing structure itself appears to be simple compared to FedEx or UPS. Even if prices become more comparable, shippers might be attracted by the clarity in charges Amazon Shipping provides.

Notably, there’s no residential delivery surcharge. This is a home run for e-commerce businesses. Residential delivery surcharges are typically in the top three fees we see for shippers.

Residential final-mile delivery is by far the most inefficient segment of the supply chain. Amazon, however, has specialized in residential delivery, and does it with remarkable efficiency.

Similarly, Amazon won’t charge extra fees for weekend deliveries. For e-commerce companies looking to satisfy their customers’ desire for the fastest delivery possible, this could be a significant source of savings.

SUBSCRIBE FOR FREE! 3. Speedy Claims System Amazon touts a system that will resolve most claims within 24 hours. This is a far faster turnaround than the major carriers, or even other Amazon services, offer. The promise of fast, hassle-free claim resolution could be a welcome change from the auditing process most shippers are used to.

It’s clear why Amazon Shipping could become a player in the parcel carrier market — but just how aggressive will the growth be?

Capturing a share of the market is a lucrative opportunity, but the timing of the relaunch is most likely driven by an immediate need to fill excess capacity.

The deferred service times of two to five days support this theory, as Amazon is showing a reluctance to dedicate its fastest, most prioritized deliveries to Amazon Shipping packages. For now, it is trying to fill up empty space in trucks.

Still, that doesn’t mean the company won’t be aggressive in growing its customer base.

Carrier and delivery services are estimated to be a $163 billion industry in the US. Winning even a fraction of market share from FedEx or UPS could earn any carrier major profits. And Amazon is the most well-positioned to do it.

The industry hasn’t seen an entry to the market quite like this since DHL’s first attempt at entering the US market, which failed and led to an eventual 10-year exit from the US. Unlike DHL, Amazon has a diverse portfolio of revenue streams. Amazon Web Services (AWS) alone generated over $23 billion in operating profit in 2022. It’s possible that Amazon could use profits from its other branches to supplement Amazon Shipping, operating it at a loss to gain initial market share before adjusting pricing.

Additionally, Amazon already has a built-in customer base using its other services: 1.9 million businesses sell on Amazon. Some consider that eligibility requirement a limitation,

but it’s no small group of potential shippers.

Amazon Shipping’s (re)launch will be remembered as a watershed moment in the world of parcel delivery. While the initial rollout is limited, the service’s potential impact on the broader e-commerce and shipping landscape cannot be underestimated. Promises of competitive pricing, simplified fee structures, and a strong focus on customer satisfaction all position Amazon Shipping to attract a range of shippers seeking to diversify their carrier mixes.

Amazon Shipping has a long way to go before the FedEx/UPS duopoly can be considered a triopoly. Still, after years of analysts “crying wolf” that each new service was a step towards becoming a true competitor, that day has finally come.

Caleb Nelson is Chief Growth Officer at Sifted, a Logistics Intelligence software company.

NOVEMBER-DECEMBER 2023  PARCELindustry.com 13

shipped, less void fill, lower accessorials, and less damage to the environment.

Companies with optimal regimes minimize these costs.

OPTIMAL PACKAGING REGIMES

By Jeff Haushalter

O

ptimal packaging makes the right tradeoffs to balance throughput, cost, damage, and branding.

Simple adjustments to optimize packaging can save 15% to 30% of total supply chain costs and reduce damage.

Sustainability and cutting shipping costs are priorities in today’s competitive marketplaces.

The easiest and fastest way to success is to redesign your shipper regime. A shipper regime is a collection of cartons, bags, totes, and other containers used to hold a customer’s orders. Regimes usually range from a few sizes and dimensions to the hundreds.

Good regimes have many attributes.

They elevate the brand, tightly fit the order contents, protect items from damage, are cost-efficient, save expenses, and promote sustainability.

Good regimes are often invisible and delight customers with their elegance, efficiency, and simplicity. Bad regimes, on the other hand, appear sloppy, bloated, and wasteful, causing customers to wonder how they were designed.

Many companies are suspicious about the large supply chain savings that good regimes generate. Key savings areas include reduced dimensional weight, less packaging material, fewer cartons

Step 1: Identify Cost Drivers The first step in designing an improved regime is to understand the four sub-elements (see Figure 1) that drive cost. These key elements are interdependent. Your success depends on the items and quantities you sell, the rates (transportation and packaging) you have negotiated, the packaging (material, size, and grade) utilized, and your ability to match items with the best option.

Starting off are the items that you sell to your customers and how your customers, in turn, order them. This is called an order profile. The simplest order profile would be identically sized items always ordered in the same quantity. In this situation, only one container would hold all orders. The reality is that companies sell a wide range of items in differing sizes and that customers order multiple items in changing quantities.

Determining this historical order profile is a complex task that requires significant analytics and downloaded data. Actual past shipments should be deconstructed into ordered items, dimensions, and costs. This results in two files: an order file (containing order number, items, quantities, weights, and item dimensions) and an as-shipped (containing order number, carton dimensions, and scale weight) file.

It is possible to improve your carton regime if your company does not have good system information. Gather order shipment profiles from your shipping stations, by observation, or from carrier e-bills.

Key Metrics and Baselines This step also generates key operational metrics and baselines. These metrics guide the regime efforts, document your starting point, and put tradeoffs in perspective. Figure 2 provides a list of key metrics. These metrics fall into two categories: cost and operational. Cost metrics reflect the impact of current processes and decisions. Operational metrics reflect the complexity of your organization.

14 PARCELindustry.com  NOVEMBER-DECEMBER 2023

After the initial order profiling, invite key stakeholders in marketing, finance, sales, and product development to review the results. Determine the need for systemic changes like culling items, altering pack sizes, bundling commonly ordered items, or reducing size variants.

Many leading companies also vet new products by a packaging and shipping team to assess how they will integrate with legacy products. Large and oversized items may be beefed up to “shipalone” without an overbox. This often prevents choosing an even larger carton to contain the order.

Finally, add future initiatives and new product rollouts into the historical order profile. This combined order profile represents the items and potential orders that your packaging regime needs to accommodate. Evaluate any future regimes using this data.

Don’t Ignore Those Pesky Costs Next are the tariffs and costs that your organization faces. The largest of these costs is transportation. Transportation costs are comprised of base rates, accessorials, and surcharges. While some of these costs are unavoidable, dimensional surcharges and package minimums are the ones to pay attention to.

Carriers introduced dimensional surcharges to re-price shipments based on cubic density rather than weight using a dimensional factor. They penalize bulky lightweight items or cartons that contain significant void space. Minimizing this cost is an important regime goal.

Cost containment efforts usually focus on minimizing the number of cartons shipped per order to avoid the fixed freight costs associated with each carton. An optimal approach is to reduce the total cost (transportation, handling, and packaging) of fulfilling that order.

This cost-based approach may fit the order into one container, “split” parts of an order across multiple cartons, or beef up certain items to bypass cartonization and ship alone.

A second cost is damage. Damage can be overt or manifest itself over time by reducing quality. Quantifying this cost brings visibility to the problem.

Other costs include the material used to construct your packaging, void

SUBSCRIBE FOR FREE! fill, sustainability (carbon footprint), warehouse storage, and labor charges.

Together these allow a total cost approach that minimizes your entire operation’s expenses.

Next, we turn to packaging as a cost element. Packaging consumes material such as corrugated and plastics. Minimizing the consumption of this material has a direct bottom line benefit as well as sustainability contributions.

Companies typically add packaging variants (cartons, bags, and totes) that provide different volume and dimensional options. This allows a wide variety of packaging candidates to contain an order. For a specific order, one of these packaging choices usually has the lowest total cost.

Each additional package variant, however, has a burden associated with its use. There are setup, reordering, and warehouse storage costs. The regime’s goal should be to increase variants up until the point where their marginal costs exceed their marginal benefits.

Companies should review the effectiveness of existing packaging.

Phase out packaging that has low usage or impact and replace it with more efficient shippers. This prevents cartons from multiplying out of hand and leverages your purchasing volumes with your corrugators and shipping supply providers. Full truckload quantities also provide the best economies of scale.

Finally, our last cost component is cartonization, which determines what cartons to use, how many cartons to use, and what items should be put in each carton. Cartonization can be manual or automated, done pre- or post-pick, and should consider specific goals such as decreasing the number of cartons, minimizing total order cost, or improving throughput.

Over 30 to 40% of total order costs are embedded in picking, packing, and shipping sub-methods. Every company should have a repeatable, consistent, and efficient cartonizing process. Understand, document, and analyze this process for opportunities.

Companies can assess their cartonization maturity by analyzing the same combination of items ordered over time.

Key elements to look for are consistency

(items packed in a similar fashion), equal billable weights, and similar accessorials incurred. While consistency does not mean optimality, it does show a disciplined and in-control process.

Cartonizing process steps should absolutely include “boot camp” training of pickers, packers, and the shipping department. These employees are a first defense against preventable charges.

Topics should include rating parcels for cost, avoiding dimensional surcharges, flagging “bad” orders, and spotting recurring dimensional opportunities.

Step Two: Optimize After assembling these cost elements, the next step is to select the optimal number, type, and dimensions of your packaging. At one end of the spectrum is one single box used for all orders. At the other end of the spectrum are multiple boxes custom tailored for every unique order. In between are a balance of box shapes and sizes that trade off total cost and operational complexity.

Regime creation and testing is a complicated process well beyond the intentions of this article. However, here are some tips that can drive companies towards the correct number, type, and dimensions.

First, knowing how the cartonization assignment process works is a necessary part of designing the best regime. It makes no sense to have a well dimensioned box if it will never be matched to the right order. Evaluate all candidate regimes using your actual cartonizing methods and orders patterns.

Second, virtually all companies have

a Pareto (80/20) relationship to their order pattern. Focusing first on the 80% creates a core set of efficient cartons and bags that achieves many cost objectives.

Introducing additional variants to include the remaining 20% will decrease costs at a diminishing rate and affect a smaller subset of orders.

Thirdly, companies can use box-on-demand equipment to manage their orders that are more difficult to cartonize. This equipment creates a custom box using a generic corrugated blank. In this option, to speed throughput, simple orders go to the existing regime. High dimensional cost orders go to the on-demand equipment to minimize costs.

Lastly, companies can use mountain climbing algorithms to find high opportunity boxes. Like a climber searching in darkness for the top, extremely fast computers evaluate incremental “steps” to the regime design. This determines additions and reductions to total costs.

Use this method to find local cost minimums that then form the basis for new regime scenarios.

Optimal packaging requires making the right tradeoffs in terms of throughput, cost, and brand image. While many companies struggle to make the right choices, simple carton regime adjustments will help bring your supply chain costs back in line with your budget.

Jeff Haushalter is Partner at Chicago Consulting where he focuses on decreasing costs and improving service via warehouse operations, parcel spend management, and optimal packaging practices, among others.

NOVEMBER-DECEMBER 2023  PARCELindustry.com 15

BY BILLY CARTER

OPTIMIZING YOUR OMNICHANNEL STRATEGY FOR A POST-PANDEMIC WORLD

T

he impact of COVID-19 on many businesses has shown us the importance of having a robust omnichannel fulfillment strategy. Retailers that had only traditional brick-and-mortar operations in 2020 were forced to close their stores and lost significant revenue and profits as a result. These nationwide store closures caused many distribution centers to grind to a halt as well, which was catastrophic to both the labor force and to many businesses that had no choice but to accept government stimulus packages to remain afloat. While some retailers went completely under and closed their doors for good, those that had an e-commerce platform were considered “essential” and continued to run their online operations, fulfilling orders from their distribution centers.

Fast forward to today, and we are still feeling the fallout from the pandemic, with many traditional big box retailers undergoing massive store closures, and some even going out of business altogether. According to the National Retail Federation (NRF), retailers announced plans for approximately 3,365 store closures in the first half of this year, which is nearly four times higher than the roughly 895 store closures announced during the same time period last year. Store

openings in the first half of 2023 were also significantly lower than the first half of 2022, with US retailers announcing plans for 3,420 new stores during the first and second quarters of this year — nearly 33% less than the 5,080 store openings announced during the first half of 2022, according to data from consumer research platform The Daily on Retail.

While the COVID-19 pandemic may have accelerated the growth of online shopping, it is not solely responsible for the rash of retail store closures and decline in openings so far this year.

On top of dealing with everything from rising rental, labor, and interest rates to product shortages and price hikes, retailers were also struggling to cope with consumers’ lower spending and shifting shopping habits. Bankruptcies are also partially to blame, with the number of retail bankruptcies in the United States nearly tripling so far in 2023 over the first half of 2022, reaching a total of 16 in the first and second quarters of this year.

Despite online retail sales continuing to grow year after year, research shows there will always be a place for physical retail stores. According to Forrester, click-and-collect sales in the United States are estimated to reach $100 billion this year, with that number doubling to

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exceed $200 billion by the end of 2028. If this trend meets Forrester’s predictions, click-and-collect services — which include buy online, pick up in store (BOPIS) and curbside pickup — will account for 12% of US online retail sales by 2028.

So, what does this mean in terms of distribution and logistics? Given the change in consumer shopping habits, having a well-designed omnichannel fulfillment operation is required for survival. Today’s consumers are using multiple channels for their shopping experiences, so simply selling from a retail store or only offering goods online is no longer enough. Some customers prefer to use BOPIS and curbside pickup while others would like to place their order at the store and have it delivered to their home. The same holds true for returns, with customers wanting the flexibility to order online and return products directly to their local retail store. Fast shipping and consolidating orders into as few deliveries as possible are also common expectations today.

In addition to meeting consumer demands, keeping an eye toward growth and understanding the differences and nuances of the flow of goods across the various channels is also very important.

SUBSCRIBE FOR FREE! Retail distribution operations flow much differently than e-commerce fulfillment operations. Many retailers have distribution centers that were designed to support store replenishment, processing large shipments of case quantities. In some cases, these distribution operations have added the ability to fulfill online orders within the same facility; however, they have not been right-sized or optimized to handle e-commerce order fulfillment, which requires more labor and space to ship much smaller orders directly to customers.

Transforming to a Truly Omnichannel Approach One way retailers can support the transition to omnichannel operations is to leverage their physical stores as micro-fulfillment centers (MFCs). In addition to offering click-and-collect options like BOPIS and curbside pickup, retailers can utilize their brick-andmortar locations to ship online orders directly to customers, enabling them to maximize valuable warehouse space and reduce delivery times and costs.

With these increasing challenges and ever-growing competition, retailers must find ways to not only improve their service level offerings, but also keep costs affordable while meeting corporate and shareholder expectations for profitability. While an omnichannel approach offers many benefits for both retailers and consumers, proper planning and execution is required to ensure success. When building an omnichannel fulfillment strategy, companies must consider the following:  Where is our customer base located?  Where should our distribution center(s) be located to minimize delivery costs?  What is the service level agreement (SLA) being offered?  Can orders be fulfilled from a retail store?  What is our labor cost?  Will our distribution center have access to a significant labor force to utilize during peak times?  What is our order cycle time?  Does our distribution center have the capacity to meet the business

requirements during peak season?  Does our distribution center have the proper technology and automation to handle both e-commerce and retail sales volumes?  What is the proper balance between the use of labor and automation?  How do we handle returns?

In today’s dynamic environment, retailers must focus on building a flexible, resilient supply chain that is capable of adapting to constantly changing requirements.

Designing an efficient and cost-effective omnichannel strategy will enable retailers to meet customer demands while also remaining profitable and competitive.

Billy Carter is senior vice president of sales and marketing at Tompkins Solutions. Billy has more than two decades of industrial engineering and logistics experience, with a proven track record of developing and implementing leading supply chain solutions for e-commerce fulfillment and retail distribution operations. He can be reached at bcarter@tompkinsinc.com.

NOVEMBER-DECEMBER 2023  PARCELindustry.com 17

BY JESS WINDHAM

THE LOST ART OF INPUT MANAGEMENT Staying on top of incoming information and messages these days is harder than ever.

For shippers looking to get ahead this peak season — and beyond — here’s a simple system that can help.

P

eak season is here, my friends. For you shippers out there, this means orders and shipments are coming your way fast and furious. The pace and volume this time of year brings means it is actually a great chance to examine the status of our current teams and processes. By pushing our capacity to the limit, it gives us the opportunity to see how far our business can go. Unfortunately, though, for most shippers, peak season usually serves as a wakeup call that our systems need some work. No one wants to leave their customers unfulfilled (delivery pun intended), nor their team in a burnt-out heap come January, desperately searching job postings to find relief from the mayhem.

It’s a common refrain that the key to success during peak season is buckling down, working longer hours, and riding the lightning. But please, don’t fall into this trap. Hustle culture has created and popularized the myth that victory comes from driving yourself and your team harder, all the time. But the real world shows us that it is, in fact, a myth.

There’s only so much you can push people, and there’s not enough time in

the day to overcome poor processes.

Luckily, there’s a better way. It’s called working smarter, and it comes with the added benefit of smiles, downtime, and rejuvenated creativity, even during peak season.

A major way that leaders find themselves overwhelmed during peak season is by the deluge of incoming information and messages. Orders and inventory are flying in, you’re CC’ed on every communication from your entire team, your bosses are asking for real-time updates on KPIs and annual goals… it’s a lot.

Trying to keep up with all this by sifting through cluttered inboxes, complicated folder systems, and multiple apps or SaaS solutions is a recipe for disaster.

Over the course of my two decades in logistics, I’ve developed a system for managing this constant, high-volume influx. I’ve personally used this system to manage 500+ emails a day, and seen my teams thrive when they’ve incorporated it into their own workflows. It’s simple to implement, but I won’t lie to you and say it’s easy. This system is only effective when you put in consistent effort. If you’re ready and willing to do that, though, it can be an absolute game-changer for you and your team.

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Let’s get to it, starting with a highlevel overview of the four steps.

1. Commit to Consistency The first lesson in managing your professional inputs is to put things in the same place every time. When you come home, do you put your keys in a different spot each time? If so, I feel for you, because I imagine you’re late to things a lot.

Whatever tool works best for you (and there are a ton out there), commit to using that tool to track all your messages and tasks. If that’s your inbox, productivity app, paper calendar, heck, even post-it notes, stick with that. Using multiple tools and trying to bounce back and forth will only lead to dropped balls in the end.

And remember: YOU are the best tool you’ve got. The physical or digital tool you choose doesn’t matter if you don’t use it properly. Focus on how you use it and using it consistently, as opposed to worrying about picking the best one.

2. Prioritize Prioritizing Not all communications are equal, and not all notifications demand the same response. These days, logistics leaders have many different types of messages coming their way, but ultimately,

SUBSCRIBE FOR FREE! each one is either asynchronous or in real-time. A blinking light or a ping that you received a message is obviously much different than someone standing in your doorway or asking you questions on a virtual meeting.

Understanding the different ways your boss, department, vendors, and customers communicate with you is crucial to prioritizing the messages and responding in an appropriate order.

3. Set It Down Once you’ve sorted and prioritized your inputs, the key to surviving and thriving in peak season is to set balls down, instead of dropping them. For this reason, I personally use Zero Inbox as my message and task management system and recommend all my teams do the same.

But Zero Inbox is just one example of how to get the job done. The concepts are the important part, and you can incorporate those concepts into your individual systems however they make sense.

On a tactical level, what Zero Inbox allows you to do is to stay up to date on

incoming messages, while setting balls down (creating tasks), then taking care of them at the appropriate time. With the added stress of peak season, being able to know exactly where you’re at and what’s next is huge to staying on top of things and continuing to move forward.

4. Be Honest with Yourself This is the hard part, for two reasons.

The first is that it’s tempting to look at what other people in the industry are doing and follow suit. If it works for them, it might work for you too, right?

Unfortunately, that’s not always the case.

Copying someone else’s system doesn’t work if you’re not going to use the system appropriately. So be honest with yourself.

Are you really going to create and update workflows in Asana, or are you going to continue to use your leather-bound paper notebook, because it feels amazing when you pick it up? Either one can work; it’s just about what works for you.

The second part is even harder. No one can do everything. Let me say that again, because Hustle Culture has

indoctrinated us to believe otherwise.

No one can do everything. Surviving and thriving during peak season is all about understanding this limit and knowing which balls you’re intentionally setting down. That’s the only way to avoid dropping them completely.

Like I said, managing your inputs better is simple, but it’s not easy. While it does take consistent effort, this system allows you to confidently keep track of your messages and comfortably walk away when you need to, knowing you’re on top of it. Gaining the bandwidth to survive peak season, to move your department forward, and still sleep at night… that’s the dream, right?

Jess Windham is CEO, Solving Work. She has been in logistics for 17 years and worked every side of the industry: carriers, shippers, and technology providers. Now, as CEO of Solving Work, she is focusing on the people behind the packages. Connect with her at https://www. linkedin.com/in/jess-windham/.

NOVEMBER-DECEMBER 2023  PARCELindustry.com 19

THE 2023 CARRIER SATISFACTION SURVEY: OUR READERS RATE THE CARRIERS

Carrier Performance On a scale of 1-5, with 5 being the highest rating.

Customer Service FedEx | 3.61 UPS | 3.58 USPS | 3.14

By Amanda Armendariz

On-time Service Performance FedEx | 3.67

Editor’s Note: This article originally ran online as we didn’t have enough space in our September/October issue, but we wanted to make sure our

UPS | 4.07

regular readers of the print issue saw these survey results as well.

USPS | 3.22 Our 2023 carrier satisfaction survey is here! We take a look at how readers view the carriers with respect to a variety of factors. Check it out and see how your experience compares to that of your peers.

Delivery Performance

(driver courtesy, package handling)

FedEx | 3.80 UPS | 4.01

Did you use FedEx in the last 12 months for domestic parcel shipping?

Did you use UPS in the last 12 months for domestic parcel shipping?

USPS | 3.47

Claims Processing FedEx | 3.27

13.58%

21.59%

UPS | 3.20 USPS | 2.48

Yes No

Yes No

Refunds for Late Delivery FedEx | 3.05

78.41%

86.42%

UPS | 3.00 USPS | 2.59

Pricing (published rates for service levels,

Did you use USPS in the last 12 months for domestic parcel shipping?

willingness/fairness of negotiations)

FedEx | 3.53 UPS | 3.15

25.64% Yes No

The number of "yes" responses are up slightly compared to last year.

74.36%

20 PARCELindustry.com  NOVEMBER-DECEMBER 2023

USPS | 3.11 Readers' perception of customer service and on-time service performance went up across the board compared to last year.

Other items were a mixed bag, with some companies improving but others receiving a lower score than in 2022.

SUBSCRIBE FOR FREE! 2.33%

Other Insights into Our Industry

68%

32%

YES

16.28%

44.19%

16.28%

NO

4.65% Over two-thirds of our respondents reported reaching out to their carrier rep to discuss concerns about how to handle volume growth, supply chain disruptions, etc.

It’s great to see shippers being so proactive!

16.28%

Needing to achieve better pricing was the overwhelmingly popular answer when asked why our readers modified their primary carriers.

This is the same as last year, but the percentage amount increased from close to 29% to 44%.

Needed to achieve better pricing Dissatisfied with service Changed our level of service (i.e., air to ground) Diversified to use more carriers

14.58%

Reduced the number of carriers used Previous carrier was unable to help us effectively during the COVID-19 pandemic

39.58% 41.67%

What is your biggest complaint about your primary domestic parcel carrier?

Accessorial Charges | 26.56% Claims Processing | 4.69%

Very well; they addressed all concerns and handled them to the best of their abilities

Customer Service Response | 12.50%

Somewhat well

Driver Behavior | 1.56%

Not at all; we experienced significant disruptions that we feel could have been handled by the carriers to at least some extent

Fuel Surcharges | 1.56% Fuel Surcharge Reversals | 3.13% Invoices | 3.13%

Out of those who reached out, the number who said the carrier handled their concerns very well went up by 10 percentage points compared to last year, and the number who said the carriers didn’t handle it well at all decreased even more than that. That’s what we like to see!

Negotiating Contracts | 4.69% On-time Performance | 15.63% Pricing | 12.50% Refunds for Non-performance | 1.56% Relationships with Carrier Reps | 4.69% Residential Deliveries | 1.56% Service Failures | 4.69%

47% YES

53% NO

When asked if there was enough competition in the parcel industry to keep prices low and service good, the numbers were almost identical to last year.

Tracking | 1.56%

0

10

20

30

40

50

60

70

80

90 100

Accessorial charges took the #1 spot this year when asked what our readers’ biggest complaint with their primary carrier was. Last year, the biggest complaint was on-time performance.

NOVEMBER-DECEMBER 2023  PARCELindustry.com 21

By Antonio Amadasi

SETTING UP THE LAST MILE

S

FOR SUCCESS WITH AUTOMATION

ure, every mile is technically the same distance. But just ask a distance runner and they’ll assure you that not only is the last mile the longest, but that it can be the difference between a personal best and collapsing just shy of the finish line. It’s not a terribly different story with last-mile distribution in parcel and logistics operations.

There’s often a misconception that because the last-mile depot is a small operational center, it isn’t worth the level of investment in material handling automation typical of larger facilities.

But the last mile is really where value is created, as couriers and shippers are paid when the parcel reaches the end customer. For inbound packages, it’s where the delivery journey ends, with parcels moving through the last-mile depot to their final destinations, but it’s also where many logistics missions begin, with last-mile operations collecting outbound parcels from origin points at customer locations and initiating their movement onward through subsequent stages in the network. For these reasons, last-mile depots have huge implications not just for the efficiency of parcel operations within the last mile, but for the entire network.

Typically, a major hub will be served by several regional hubs, which will in turn be connected to a cluster of

10 to 20 last-mile depots. It’s key to view last-mile operations through this lens — not just each depot in isolation, but the relationship and influence each one has on the cluster of depots, and on the regional and major hubs upstream.

Think of each last-mile depot like a finger and the cluster of them as the hand. The fingers are more capable collectively, working in unison as part of the hand. The body — the regional and major hubs — doesn’t have the same maneuverability and efficiency without the individual fingers working properly.

Growing Demand for Materials Handling Automation in the Last Mile Demand for automated solutions in lastmile facilities has increased dramatically in recent years, for a few reasons. For one, volumes are growing. There’s been significant growth in demand and need for last-mile delivery transportation, and several forecasts anticipate massive expansion over the coming years. By 2030, the demand is expected to double in North America, nearly double in Europe, and more than double in Asia-Pacific. E-commerce growth is playing a major role, but lean inventory and retail replenishment practices are helping to drive greater demand for last-mile solutions, too. Retailers want to replenish their stores with lower quan-

22 PARCELindustry.com  NOVEMBER-DECEMBER 2023

tities of individual SKUs more often, to minimize their inventory costs and better align supply with shifting demand. These smaller, but more frequent, deliveries place a greater share of the burden on last-mile operations.

At the same time, labor scarcity is making it more challenging to keep up with this demand, and customers have developed very high expectations for quality. Packages must arrive on time, without damage, and ideally with free or low-cost shipping. Parcel operations turn to automation to drive improvements in key performance metrics, like reducing their cost per parcel and the total cost of ownership of their equipment and increasing the time they can spend making deliveries, rather than handling parcels within the facility. Major and regional hubs have been automated, and now last-mile depots are getting their much-deserved time in the sun.

Where Can Automation Fit in Last-Mile Facilities?

Cross-docking is a prime target for automation. Since it’s rare for parcels to be stored in last-mile depots, transporting parcels from one door to another is a common, repeatable task that can be assigned to robotics, like autonomous mobile robots. Sortation is another function where automation

SUBSCRIBE FOR FREE! can offer support, and also enhance the safety and security of parcels. For today’s shippers, in many ways having information about the parcel’s location is just as or more important than having the parcel itself, and track and trace is much easier with automated systems.

For example, a sorting system installed for an express courier leverages barcode readers, automated weight and dimensioning, and x-ray machines. Connected software transmits the shipment data captured by the sorting machine in real time, enabling security and ongoing optimization through detailed configuration of the sorting process and control management. For another organization, a fully automated switch sorter with a loop layout allows parcels to recirculate, minimizing manual interventions for tracking lost parcels or parcels where data does not scan properly on the first read. The automated system also optimizes the facility space, with bidirectional sorting allowing both outbound and inbound parcels to be processed on the same line.

Each last-mile depot is different, with unique operational requirements, delivery strategies, and even operational windows.

Take, for example, a hypothetical express parcel plane that lands in the morning in a densely populated city. Parcels with local destinations may be distributed nearly immediately. But others need to cover greater distances and are transported by a truck that reaches a depot in another region that afternoon. The urban depot must handle packages as soon as they arrive that morning, while facilities elsewhere may need to operate at peak capacity during a later window.

Modularity Is Critical Automated solutions must fit the requirements of each individual depot, without forgetting that the depot is still one of many within the larger network. To fit this dual requirement, a modular approach to automation is the answer. Whereas an automated system that is entirely custom can be costly and time-consuming to design, implement, and maintain, modularity allows operations to meet

their specific requirements, using relatively few elements that are common with those used elsewhere within the network. Few is an operative word here — if we imagine modularity in terms of Lego bricks, operations should strive for the kits with only a few unique kinds of blocks. This blend of flexibility and standardization allows modular systems to be quickly deployed and makes them easier and more cost-efficient to scale, service, and repurpose if the depot needs to change or relocate.

While last-mile depots have been the last leg of logistics networks to adopt automation, it’s clear that they can’t be the last priority for parcel operations.

As our running buddy would remind us, although the speed required might make distribution feel like a sprint, it’s a marathon. And a strong finish in the last mile doesn’t just determine that split. It influences the results of the entire race.

Antonio Amadasi is VP, Operations – Last Mile Solution Center, FORTNA.

NOVEMBER-DECEMBER 2023  PARCELindustry.com 23

BY MATTHEW KULP

MUTUALLY BENEFICIAL DATA: USING DATA TO IMPROVE CUSTOMER EXPERIENCE AND PROFITS

I

n today’s digital age, data has emerged as a driving force behind modern business strategies. Companies across various industries are harnessing the power of data to drive growth, enhance operational efficiency, and create exceptional customer experiences. The strategic use of data not only boosts profitability but also cultivates customer loyalty and satisfaction. Businesses that recognize the potential of data are better positioned to make informed decisions, identify growth opportunities, and create personalized experiences for their customers. However, merely collecting data is not enough; the real value lies in effectively analyzing and leveraging that data. In this article, we will explore how businesses can leverage their data to enhance the customer experience and increase profits.

Data Collection and Analysis The first step towards utilizing data

effectively is to collect and analyze it looking for patterns and insights.

Businesses can gather data from many sources, including customer interactions, transactions, social media, website analytics, ERP systems, accounting systems, warehouse management systems, and more. By utilizing advanced analytics tools and techniques, companies can extract meaningful and actionable information from this data.

Personalization and Segmentation Once a business has gathered and analyzed its data, the next step could be to use this information to create personalized experiences for customers. Data-driven insights enable companies to segment their customer bases according to various demographics, behaviors, preferences, and purchase history.

Personalization can take various forms, such as customized product

24 PARCELindustry.com  NOVEMBER-DECEMBER 2023

recommendations, targeted marketing campaigns, and individualized communication. By tailoring offerings to individual customer needs, businesses can increase customer engagement and drive higher conversion rates.

On the operations side, businesses can identify faster moving stock keeping units, or SKUs, and slower moving SKUs. They can further explore different processes and automation for servicing each of the SKU segments.

Further, they may look for SKUs that are commonly ordered together and use that information for storage strategies, shelf presentations, website groupings, product bundling, or other uses that benefit both the business and their customers.

Predictive Analytics for Demand Forecasting Predictive analytics involves using historical data and statistical algorithms

SUBSCRIBE FOR FREE! to forecast future trends and outcomes — also the foundation for artificial intelligence technologies. Businesses can leverage this technique for demand forecasting, allowing them to adjust inventory levels to reduce overstocking and minimize stockouts. Accurate demand forecasting helps businesses allocate resources and capital efficiently, reducing costs associated with excess inventory or missed sales opportunities.

These benefits can directly translate into higher profitability.

Enhancing Customer Support Data can significantly enhance customer support. By analyzing customer interactions and feedback, businesses can identify common issues.

This information can then be used to develop proactive solutions and self-help resources. Many businesses employ AI-powered chatbots and virtual assistants to provide instant and roundthe-clock support to customers. These tools utilize historical data to offer relevant solutions, resolving queries and issues in real time. The lack of personal touch can be made up for in efficiencies and cost reductions.

A/B Testing and Iterative Improvement Data-driven decision-making is a continuous process. Businesses can leverage data to conduct A/B testing, comparing different strategies, offers, or designs to identify the most effective approach. A/B testing, also known as split testing, refers to a randomized experimentation process where two or more versions of a variable are shown to different segments of customers at the same time to determine which version has the maximum impact. This continuous improvement process ensures that companies are constantly optimizing their strategies for maximum impact.

A modern spin on the old engineering plan-do-check-act (PDCA) cycle, A/B testing can generate increased information by cycling through multiple check/act cycles before the next planning phase. Whether it’s testing different website layouts, warehouse picking processes, or pricing strategies, A/B testing allows businesses to make

mation and comply with relevant data protection regulations. Safeguarding customer data is no longer optional — it is required to maintain your reputation in the industry.

informed decisions based on realworld data, leading to increased and improved customer experiences and increased profits.

Implementing Data-Driven Strategies Once you have gained insights from your data analysis, it’s time to implement strategies that leverage this newfound knowledge. Here are some ways you can use data to drive profits and enhance the customer experience:  Warehouse Automation: apply different technologies to different SKU segments and automate the order consolidation process that enables 24-hour order-to-ship promises.  Optimized Pricing: Dynamic pricing strategies use real-time data to adjust prices based on demand, competition, and other market factors. This can maximize revenue by offering the right price to the right customer at the right time.  Personalized Marketing Campaigns: Craft targeted marketing campaigns that resonate with specific customer segments. Personalized messages, recommendations, and offers can significantly improve engagement and conversion rates.  Improved Inventory Management: Utilize demand forecasting to optimize inventory levels. This prevents overstocking, reduces storage costs, and ensures products are available when customers want them.  Enhanced Customer Support: Analyze customer support interactions to identify common issues and pain points. This enables you to proactively address concerns and provide better assistance.  Loyalty Programs: Design loyalty programs based on customer preferences and behavior. Rewarding loyal customers with personalized incentives can foster long-term relationships and repeat business.

Data Security and Privacy While data can undoubtedly drive profits and enhance customer experiences, it’s essential to prioritize data security and privacy. Implement robust cybersecurity measures to protect customer infor-

Ethical Considerations and Data Privacy While data can provide tremendous benefits, businesses must also prioritize ethical considerations and data privacy.

Collecting and using customer data comes with a responsibility to safeguard sensitive information and respect user preferences. Ensure compliance with relevant data protection regulations, provide transparent opt-in mechanisms, and allow customers to control their data.

The Road Ahead As technology continues to evolve, so does the potential of data-driven strategies. Emerging technologies like artificial intelligence, the Internet of Things (IoT), augmented and virtual reality, and distributed ledger technology are poised to further revolutionize how businesses use data. Staying ahead of these trends and embracing innovative approaches will be crucial for maintaining a competitive edge in the digital landscape.

The strategic use of data has the potential to give your business a competitive advantage by enhancing the customer experience while at the same time increasing profitability. By collecting, analyzing, and leveraging data-driven insights, companies can personalize offerings, predict future trends, improve customer support, and drive efficiency into their operations.

In this data-driven era, the businesses that harness the power of data will undoubtedly thrive in the marketplace.

If your business does not have time or resources to focus on these analytical strategies, consider hiring an independent engineering consultant to assist you in meeting your goals.

Matthew Kulp is EVP, Managing Partner, St. Onge Co. Visit www.stonge.com for more information.

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BY NINAAD ACHARYA

NAVIGATING MICROSERVICES WITHIN THE SUPPLY CHAIN

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Managing the shift to a microservice architecture from selection to implementation he supply chain technology market has been growing rapidly, and one of the most interesting areas amidst this growth has been the shift to cloud.

According to a survey, supply chain executives reported cost reduction and increasing efficiency are the key drivers for this shift. As companies seek efficient and adaptable solutions to maintain a competitive edge, one such approach gaining widespread popularity is the implementation of a microservices architecture.

Microservices architecture is a powerful software approach that can revolutionize supply chain tech. Imagine breaking down your complex application into smaller, independent fragments called “services.” Each service focuses on a specific functionality, making a system more resilient and scalable.

The beauty of microservices lies in their independence.

These services work seamlessly together without complex coordination. Development teams can work on different services simultaneously, making updates and improvements without affecting other parts of the application.

Microservices architecture, with its nimble and adaptable nature, allows you to quickly respond to the ever-changing demands of the market. It’s like having a bunch of mini-applications that work harmoniously to keep your supply chain running efficiently.

Here’s why microservices architecture stands out: Enhanced Scalability In the supply chain, demand can fluctuate significantly.

Microservices allow individual services to scale independently, enabling you to handle varying levels of demand without affecting the entire system. This means you can easily expand your operations during peak seasons or times of increased activity.

For example, a well-known 3PL’s legacy systems were designed to deploy on separate servers for each new client.

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Through rearchitecting a cloud-native multi-tenant application built on the principles of microservices architecture, new client implementation was reduced from over a month to under a day, ensuring there were no deterrents to scaling.

Improved Flexibility The supply chain industry is subject to constant changes, from shifting market trends to evolving customer demands.

Microservices offer the flexibility to adapt quickly to these changes. Each service can be developed, deployed, and updated independently, allowing you to make necessary adjustments without disrupting the entire application.

Streamlined Maintenance Managing a large monolithic application can be cumbersome when it comes to maintenance and updates. Microservices’ modular nature allows you to focus on specific services without affecting others, making maintenance tasks more straightforward and reducing the risk of system-wide issues.

Faster Time-to-Market While microservices architecture requires more effort in development compared to a monolithic approach, the resulting benefits are significantly greater in terms of delivering the end solution to the market. Development teams can work concurrently on different services, leading to accelerated delivery of new features and functionalities.

This allows you to respond promptly to market opportunities, gaining a competitive edge.

Improved Fault Isolation In traditional monolithic applications, a single bug or issue can bring down the entire system. Microservices offer better fault isolation since each service operates independently. If

one service encounters an issue, it won’t affect others, ensuring higher application availability.

Increased Innovation Microservices allow for a more agile development process, encouraging innovation within the supply chain industry. The ability to quickly experiment with new functionalities and ideas can lead to breakthroughs and more efficient workflows.

Easy Integration with External Systems In the supply chain, integration with various external systems, such as logistics partners or inventory management tools, is crucial. Microservices’ independent nature facilitates smooth integration with external systems, making it easier to create a connected and cohesive supply chain ecosystem.

Case in point, an e-commerce brand wanted to use a carton cubing tool that uses AI to perform calculations on how to best fit X number of items into a box and the most efficient way to ship them. However, they needed a solution to interject orders from the source to calculate the dimension data while also integrating with their current warehouse management system (WMS). By creating a custom middleware based on microservices architecture, they were able to resolve this problem. Instead of each item from the same order going out in different boxes, the middleware helped in consolidating the orders, allocating gift boxing and other functionalities.

Decentralized Decision-Making With each service focusing on a specific functionality, decision-making becomes more decentralized. This can lead to better autonomy for development teams, fostering a culture of ownership and responsibility, which ultimately contributes to improved performance and efficiency.

Continuous Delivery and DevOps Microservices architecture promotes a continuous delivery and DevOps approach. Smaller, independent services are easier to test, deploy, and manage, enabling faster release cycles and ensuring a more responsive supply chain operation.

Microservices Architecture Best Practices in Supply Chain Microservices architecture has become a key practice to develop efficient and scalable solutions. Here are some best practices of how microservices architecture can be leveraged: Modular Design Break down your supply chain application into smaller, focused services. For example, separate inventory management, order processing, and shipment tracking functionalities into individual microservices. This approach allows for easier maintenance, updates, and independent scaling of specific services based on demand.

Asynchronous Communication Implement messaging systems and event-driven architectures to enable asynchronous communication between microservices. This ensures that services can exchange information

without waiting for real-time responses, enhancing system resilience and responsiveness.

Fault Isolation and Resilience Design microservices to be fault-tolerant and resilient. If one microservice experiences an issue, the failure should be isolated and not impact other services or the entire application.

Continuous Integration and Deployment (CI/CD) Embrace CI/CD practices to automate testing, deployment, and updates for microservices. This allows for frequent releases and reduces the risk of deployment errors.

If a warehouse management system utilizes microservices architecture for inventory tracking and order fulfillment, developers can regularly release updates to improve inventory accuracy and optimize warehouse operations.

Data Consistency and Integration Plan for data consistency across microservices by using appropriate data storage solutions and integration patterns. Events and messaging systems can help maintain data integrity while ensuring seamless communication between services.

Co-founder and CEO of Fulfillment IQ, Ninaad Acharya is an award-winning supply chain leader with nearly 20 years of experience in supply chain digital transformation and technology.

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