PARCEL September/October 2024

THE CASE AGAINST MULTICARRIER SOLUTIONS:

WHY A SINGLE CARRIER CAN BE MORE EFFICIENT

PAGE 26

DELIVERY IS THE NEW BRAND DIFFERENTIATOR.

PAGE 18

INBOUND LOGISTICS: KEY TECHNIQUES FOR OPERATING SUCCESSFUL FULFILLMENT CENTERS

PAGE 32

Itamar Zur

Sourcing:

Do I Need to Know

Wm. Primus,

Jay Kent 22 WHY REAL-TIME DATA IS CRUCIAL FOR STRATEGIC SUPPLY CHAIN DECISIONS By

William Wappler

24 A VIEW FROM WASHINGTON: A MAJOR CHANGE IN THE REGULATORY SYSTEM

Andrew M. Danas

26 THE CASE AGAINST MULTICARRIER PARCEL SOLUTIONS: WHY A SINGLE CARRIER CAN BE MORE EFFICIENT By Thomas

Andersen

30 DATA DOING DOUBLE DUTY: GROW PROFITABILITY AND TRACK SCOPE 3 SHIPPING EMISSIONS By

Stephanie Bixler

32 INBOUND LOGISTICS: KEY TECHNIQUES FOR OPERATING SUCCESSFUL FULFILLMENT CENTERS By

Ninaad Acharya

40 WAREHOUSE OPERATIONS MANAGEMENT: THE POWER OF AI IN BOOSTING EFFICIENCY AND ACCURACY By Nilay Parikh

42 5 STEPS TO BUILDING A SUCCESSFUL CUSTOMER- CENTRIC RETURNS EXPERIENCE By Mike Bentley

44 PARCEL’S ANNUAL CARRIER SATISFACTION SURVEY By Amanda Armendariz

09 PARCEL TMS PLATFORMS: INTELLIGENCE AT THE SPEED OF E-COMMERCE

EDITOR’S NOTE

GOING FOR THE GOLD

By Amanda Armendariz

Like many people across the world, much of my summer was spent watching the Olympic Games with my family. We were all especially interested in the gymnastics, synchronized diving, and various swimming events, and working from home allowed me to watch most of them live so as to avoid any spoilers! It was quickly decided, however, that my elder daughter could never be an Olympic judge; as she watched the events, her hands half-covering her eyes in fear of someone messing up, she would often say, “They’re all so good! I wish I could just give them all a gold!”

Well, that doesn’t work for the Olympics, but it can certainly work for your parcel operation. While there will naturally always be competition, every organization can take the steps they need to in order to ensure their parcel operation is gold-level standard. We’ve compiled numerous articles in this issue of PARCEL that will provide you with the best practices you need to implement to take your small-package operation to the next level, from ensuring your returns process is smooth and customer-focused, to deciding if multiple carriers or a single one is right for you, to optimizing AI in your warehouse, just to name a few.

As you peruse this issue, you’ll notice that several articles have PARCEL Forum ’24 speaker badges on the pages. If you’re attending this year’s show in Dallas from September 16-18 (and we certainly hope you are!), you can utilize this issue as a jumping-off guide to deciding which speakers you’d like to hear more from and which topics you’d like to learn more about. Of course, it’s impossible to include every speaker and topic in 48 pages, so check out PARCELforum.com for more information and to register. I’d love to see you there!

As always, thanks for reading PARCEL.

SUPPLY CHAIN SUCCESS

MODERN PARCEL SOURCING: CONTINUAL PROCESS OR A STRATEGIC EVENT?

By Andy Johnson and Chelsea Snedden

Parcel contracts usually last three years, so a comprehensive strategic sourcing event is crucial for optimizing your transportation budget. But is this event the end or just the beginning? While holding both carrier and shipper accountable is essential, ongoing monitoring throughout the contract’s lifecycle is equally important. This helps adapt to business changes, market fluctuations, and pricing adjustments.

Firstly, shippers should establish key performance indicators (KPIs) to track the effectiveness of the negotiated terms. Monitor real-world outcomes within your data to verify if carriers are adhering to their agreements. This includes confirming if rebates and implementation bonuses are being honored, which can directly impact cost savings. Assessing cost avoidance strategies is also extremely vital. A carrier missing several $100K benefits such as a cap on rate increases, hefty residential discounts, or fuel surcharge discounts can make or break profit margins, especially in a flatter supply chain market such as this one. Penalties for not tracking program performance could be increased surcharges, not achieving volume commitments, or decreased rebate benefits.

Additionally, shippers must maintain proactive communication with their carrier representatives after negotiations. Understanding the nature of your relationship with them — whether it is contentious or collaborative — can significantly influence contract outcomes. Keeping open lines of communication and having readily accessible contact information for carrier representatives is essential so there can be swift resolution of any shipping-related issues. This can help foster a productive partnership and address shipping challenges immediately.

Does the New Agreement Make Sense?

It is crucial for shippers to assess whether their contract remains sensible and advantageous given the evolving nature of their shipping needs. Consider if the agreement accommodates fluctuations in the volume of services used and potential changes in revenue tiers (and if that fits your program). Evaluate whether you are shifting towards more two-day services compared to ground shipping to compete with similar retailers. Additionally, review any clauses related to changes in service levels or pricing over the duration of the agreement to ensure they align with your current and anticipated shipping patterns.

What Is the Current State of the Market?

Continuous market monitoring can help shippers adjust their operational strategies. Current freight volumes are flat or down across all modes. From TL to LTL to parcel, YOY volumes are stagnant at best (or slightly down for many carriers). In May, FedEx reported mixed results for its fourth quarter. In July, UPS’s stock fell 12% after its second quarter earnings came in below expectations. Given current market conditions, many who ship goods are asking how long this shipper-friendly environment will last. If 2020-21 taught us anything, it’s that market conditions can shift rapidly, and those who don’t stay informed risk falling behind. Staying vigilant in monitoring the supply chain market post-negotiation ensures

that your logistics operations remain agile, responsive, and aligned with your business objectives.

Can Pricing Changes Still Happen?

Unfortunately for many, parcel carriers are constantly adding new surcharges to gain revenue. It is unwise to think that shippers are avoiding cost increases and pricing changes simply because they are locked into a three-year contract. Application rules may change for current surcharges, such as new ZIP Codes getting added to area surcharges. This can be extremely detrimental to programs of any size — remote area, delivery area, and extended delivery area surcharges can account for a sizeable spend on accessorials.

Best Practices for Monitoring the New Agreement

For many shippers, task number one will always be making sure the freight gets out the door and to the customer on time. There simply is not enough time in the day to monitor all the items laid out above. Working with a third-party provider/ consulting firm that has the time, tools, and knowledge base is a great option to optimize and monitor your new agreements in real time.

Andy Johnson is Project Manager - Parcel Consulting at Körber Supply Chain.

Chelsea Snedden is a Senior Transportation Consultant at Körber Supply Chain.

Parcel TMS Platforms: Intelligence at the Speed of E-Commerce

By Bob Malley, CEO Sendflex

I’ve been very fortunate to have had a front-row seat as parcel shipping technology has evolved over the years to meet various industry challenges. At Tracer, we developed PC-based Clippership software to automate highly manual multi-carrier weighing, rating, labeling, and shipping processes. At Pierbridge, we unified these same workflows across hundreds of enterprise locations and users, leveraging web service technology to its fullest.

With e-commerce transforming supply chains, logistics managers are implementing omni-channel fulfillment and diversifying their carrier networks. But now they face a new challenge: complexity. How do they optimize cost-effective decisions about when, where, and how to use carrier services? How can they embed intelligence throughout the order-to-invoice process without resorting to costly, brittle custom programming and lengthy project timelines?

Next-generation parcel TMS (Transportation Management System) platforms are designed to tackle these complexities. They combine optimization intelligence with high-speed performance to enable advanced planning and execution processes. Here are key features and benefits that distinguish parcel TMS platforms from legacy multi-carrier shipping systems:

In-platform Optimization Engine:

At the heart of parcel TMS is an optimization engine that calculates accurate rates, determines transit times, and applies business rules at super high speeds (thousands per second). This allows for iterative analyses in digital storefronts and order allocation, while enforcing cost-effective decisions in fulfillment and shipping without relying on slow, unreliable carrier rating APIs. With closed-loop machine learning tools, parcel TMS platforms get smarter the more they are used.

No-Code Business Rules:

Like traditional freight TMS systems used to manage heavy freight carriers, parcel TMS platforms empower business users to easily configure complex rules and transportation constraints. No code parcel optimization rules can be set up to control costeffective cartonization, consolidation, customer preferences, sustainability goals, and carrier service selections in minutes, rather than weeks of custom programming.

Carrier Contract Compliance Monitoring:

When implementing carrier diversification strategies, logistics managers must worry about losing primary carrier incentive discounts. Parcel TMS systems monitor primary carrier volumes in real-time and apply alternative carrier business rules only when incentive target tiers are met. They also monitor pick-up limits and cut-off times to ensure shippers can meet and keep their delivery promises.

Planning and Simulation Processes:

While legacy shipping systems excel at printing labels one order at a time during shipping, parcel TMS platforms identify cost-saving opportunities across multiple orders upstream from shipping. They also use historical shipping data to run and compare virtual “what-if” scenarios based on different business rules and rating assumptions, akin to IT professionals’ sandboxes for testing assumptions and reducing operational risks.

Cloud-Native, Microservice Architecture:

Unlike legacy systems that may merely “host” old technology in cloud environments, parcel TMS platforms are built from the ground up on a modern technical stack. This includes stateless microservices supporting continuous deployment, high security standards, and autonomous scalability.

Parcel TMS platforms provide all the features and capabilities that shippers need to enhance agility and manage costs in an increasingly complex and dynamic marketplace.

Bob Malley is CEO of Sendflex Technology. To learn more about their parcel TMS solutions, visit our booth at the Parcel Forum or contact Bob directly at bob.malley@sendflex.com.

PARCEL COUNSEL

WHY DO I NEED TO KNOW THIS LEGAL STUFF? TO IDENTIFY & MINIMIZE RISKS

By Brent Wm. Primus, J.D.

When I succeeded William J. Augello as author of this column in 2007, I knew the column would be about transportation law. It was not until later that I realized why it is so important for readers to know transportation law: to identify and minimize legal and financial risks in the supply chain. Thus, learning about transportation law is not merely an academic exercise — it has real-world economic significance.

Vicarious Liability for Accidents on the Highway

Vicarious liability is the imposition of liability on one person for the actionable conduct of another based solely on the relationship between the two persons. In transportation, this arises when a shipper or broker who hires a carrier is sued along with the carrier when the carrier is alleged to have caused a highway accident.

The liability is vicarious because neither the shipper nor the broker were behind the wheel of the truck. Jury verdicts for vicarious liability have been as high as $23,000,000.00.

One theory is “negligent selection.” The reasoning behind this theory is that the shipper negligently chose a carrier who was not safe. This is a risk that cannot be totally avoided, but through the development of careful practices and appropriate liability insurance, it can certainly be minimized.

Another theory is that the trucker is an employee of the shipper, not an independent contractor. If a shipper exercises too much control over the carrier, the independent contractor relationship is destroyed. This form of vicarious liability

can be avoided through proper contracting and appropriate conduct of operations.

Having to Pay the Same Freight Bill Twice

This situation arises when a shipper uses a broker, pays the broker the broker’s invoice, and then the broker fails to pay the trucker who actually moved the load. This is a risk that can be minimized through the use of due diligence in the selection of a broker. It can be further reduced by appropriate contractual requirements with the broker… and then spot auditing those contracts… and spot auditing the broker’s accounts payable.

Late Payment Penalties

These penalties arise when a carrier asserts a penalty against a shipper for paying “late.”

For most carriers, the allowed credit period is 30 days. Many carriers have tariff provisions that trigger a substantial financial penalty for paying “late,” i.e., 31 days or more.

The penalty can include a retroactive loss of a pricing discount. These penalties can be tens or even hundreds of thousands of dollars. This risk can be avoided entirely through contracts and with a negotiated reasonable late fee, e.g., one percent per month.

Criminal Activity

Since I wrote about the above three risks in April of 2019, a new risk — criminal activity — has exploded to the point where it is now called the “Frauddemic.” The scams

take many forms. Two of the most common are “imposter pickups” and identity theft of legitimate carriers and brokers.

The perpetrators of these crimes are very sophisticated and well-financed. They operate from locations throughout the world. They are extremely technologically knowledgeable. An expert in this field at a recent Transportation & Logistics Council Virtual Workshop stated that whatever protections one had in place six months ago are now obsolete.

Even the largest companies struggle to protect themselves. Most small- and medium-sized companies in America are not equipped to deal with this level of crime. Nevertheless, there are things that a parcel shipper can do. One is to explore obtaining insurance policies such as Cyber Insurance and Fraud and Deceit Insurance. Unfortunately, these policies offer limited coverage and premiums are rising rapidly. At a minimum, one should designate a person at your organization to educate themselves about this new risk and follow developments on prevention. 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 on the PARCEL website. Your questions are welcome at brent@ primuslawoffice.com.

THE IMPORTANCE OF CUSTOMER SERVICE IN RETURNS MANAGEMENT

By Tony Sciarrotta

Aconsumer’s top reason for leaving a brand is typically related to experience. PwC’s 2023 Customer Loyalty Survey notes that 37% of consumers surveyed said they leave a brand when they had a bad experience with the product or service.

According to research from Gdynia Maritime University, neglecting clients has very high costs, considering that dissatisfied customers tell an average of 11 people about their negative experience.

If a business provides good customer service only on the front end of a sale and a poor experience after the sale, it is likely to lose customers.

Market research firm eMarketer found that 83% of consumers surveyed think the post-purchase experience could be improved.

Indeed, when returns are not handled properly, they can destroy any trust that was created before the sale and damage a business’s reputation.

To improve returns customer service:

Be transparent about your store’s return policy. Display your policy in stores, throughout your website, and on your check-out page.

Reduce the time it takes to process a return. Customers want to get a refund or replacement product immediately.

Reduce the returns process by allowing customers to initiate a return automatically through the business website.

Offering prepaid return shipping labels eliminates the hassle for customers and streamlines the return process. Including prepaid labels in the original shipment or providing digital labels via email simplifies the return shipping experience.

Keep customers informed about the return status, refund progress, and resolution of any issues. This can foster trust and demonstrate a commitment to customer satisfaction.

Net Promotor Score Impact

Net Promoter Score (NPS) is a customer loyalty and satisfaction metric. It is calculated by asking customers a simple question: “On a scale of 0 to 10, how likely are you to recommend our company to a friend or colleague?”

According to a 2022 Forbes Business Council article, two-thirds of Fortune 500 companies use NPS.

Returns can directly impact a company’s NPS. When customers encounter product issues, such as defects, damage, or simply wanting to return an item, a seamless and efficient reverse logistics process can turn a potentially negative experience into a positive one.

Businesses can cultivate loyalty, reduce costs, and drive sustainable growth by prioritizing the customer experience throughout the entire product lifecycle, from initial purchase to potential return.

Mitigating Returns

While there will always be returns, mitigating them can also benefit customer service. For example, according to the 2023 National Retail Federation (NRF) annual returns report, online sales typically have a higher return rate, with 17.6% or $247 billion

of merchandise purchased online. That compares to 10.02% for pure brick-andmortar returns (excluding online orders that are returned in-store), or $371 billion.

Simple tweaks to a website, such as ensuring that every product listed has high-quality images and descriptions, implementing size guides and fitting tools, and asking customers for reviews and rewarding them for them, can help reduce returns.

In addition, monitoring and analyzing returns data can provide valuable insights into the reasons for returns, product quality issues, and areas for improvement. Leveraging analytics tools can help businesses identify trends, address recurring problems, and make datadriven decisions to enhance their returns management strategies.

Having a well-thoughtout returns process can prove beneficial in improving customer service, NPS scores, and, most importantly, returning customers. Mitigate returns where possible and analyze returns data to improve the returns management strategy without sacrificing customer service.

Tony Sciarrotta is Executive Director of the

Reverse Logistics

Association.

The RLA offers various tools, white-papers, and monthly webinars that provide best practices in managing reverse logistics.

FRAUD PREVENTION AND DATA INTEGRITY IN THE WAKE OF DIGITAL DISRUPTIONS

By Hannah Testani

The recent Microsoft outage underscores the vulnerability of our digital infrastructure, significantly impacting industries like air cargo and shipping. As the industry continues to move toward more technological advancements, the occurrence of data breaches should be something shippers incorporate into their contingency plans. This recent situation highlights the importance for shippers to be proactive rather than reactive in managing logistics operations, data integrity, and preventing fraud. Leveraging the expertise of freight audit, analytics, and payment (FAP) companies is one of the ways shippers are able to maintain stability and security in these challenging times.

During major disruptions, such as breaches of data, fraudulent charges can easily slip through as companies manage the chaos. Advanced analytics and machine learning algorithms are some of the many solutions shippers can utilize to prevent fraud. These tools identify patterns indicative of fraudulent activities, such as unusual billing practices or irregular shipment routes. Sudden spikes in charges or unexplained changes in carrier performance can be red flags. With the ability to quickly detect and respond to potentially fraudulent activities, shippers can leverage these tools to stay ahead of potential threats and address them proactively.

A noteworthy case involving a top recognized FAP company detected a $10K spike in return services for a global eyewear manufacturer. This anomaly was the first indication of an organized fraud scheme. Bad actors manipulated return shipments, resulting in over $1M in fraudulent

activity and triggering an FBI investigation. Early detection by the FAP company could have limited the fraud to $10,000. This example illustrates the importance of early detection systems in preventing large-scale fraud. Another risk that is present is the tampering of data or unauthorized charges. Access to real-time visibility makes it difficult for fraudulent activities to go unnoticed and ensures shippers have reliable data to prevent and maintain control over their logistics operations. For example, these real-time visibility solutions can track all parcel shipments, normalize tens of thousands of exceptions, and categorize them into controllable versus uncontrollable exceptions. This categorization helps identify responsible parties and suggested actions, ensuring shipments arrive on time and mitigating potential fraud.

A case study involving a Fortune 100 high-tech company further illustrates the importance of real-time visibility. A company needed better visibility to gain more proactive control over their shipments. They turned to the aforementioned FAP company to provide real-time visibility on all parcel shipments, allowing them to manage exceptions and stay ahead of issues proactively. The solutions provided by the FAP company enabled logistics professionals to determine which shipments needed micro-management

to ensure on-time delivery and provided the necessary data to track and monitor all activities, reducing exceptions and effectively managing those that occurred.

Freight analytics is vital for data-driven decision-making. By analyzing historical and real-time data, shippers can make informed decisions about shipping methods, carrier selection, and route optimization, leading to cost savings and improved efficiency. Establishing key performance indicators (KPIs) through freight analytics helps evaluate supply chain performance, identify areas for improvement, and monitor logistics efficiency over time. Proactive data analysis allows shippers to optimize their operations and mitigate risks before they escalate.

Significant disruptions like the recent Microsoft outage increase fraud risks for shippers. Implementing robust systems and leveraging the expertise of FAP companies is essential for maintaining stability and security. These firms enhance verification processes, real-time visibility, data integrity, anomaly detection, and network optimization. By managing these aspects proactively, shippers can safeguard their operations and finances against fraud, ensuring resilience during major crises.

Hannah Testani is CEO, Intelligent Audit.

HAS AN INCREASE IN REGULATIONS LED TO A DECREASE IN INTERNATIONAL PACKAGES?

By Merry Law

Editor’s Note: This column originally ran in the September/October issue of our sister publication, Mailing Systems Technology, but we thought our PARCEL readers would find it relevant, as well.

As international mail documentation requirements have increased, international postal package volumes have declined.

The USPS and the Global Postal Network — the designated postal operator of the UPU’s member countries and their suppliers — are depending on small packages from e-commerce to maintain mail volumes sufficient to continue an effective international mail network. The designated postal operators are those appointed by their respective countries to deliver mail nationally and send mail internationally in line with the UPU’s treaties and regulations.

These operators send international mail to the designated operators in other countries. Although many countries have a liberalized postal sector and more than one postal operator, the designated postal operators send mail only to the designated operator in another country. Designated operators in other countries send US-bound mail to the USPS, the US designated operator.

The number of packages flowing internationally from one designated postal operator to another has decreased. Near-shoring, consolidators, free ports, and any other route options allow mailers to bypass the designated operator in their home country and inject packages or any mail in, or closer to, the destination country. Packages entered through these alternative routes usually require commercial documentation. This documentation may cover a large

group of packages, eliminating the need for customs forms on each package and simplifying the paperwork for the mailer. The mailer or their agent can then use the designated postal operator or an alternative for last-mile delivery.

Many of the requirements for more information and documentation originate with national laws around customs controls and tax collections. These regulations apply to packages entering via commercial or postal routing. The UPU and the designated postal operators have no control over those authorities. However, the postal operators are obliged to comply with the laws and regulations, resulting in more requirements and paperwork for mailers. Each country, of course, enacts its own laws. So, the requirements for the entry of packages into a country vary from nation to nation. Fortunately, many countries require the same information based on the standard customs form. Unfortunately, a few countries are requiring additional information. These additional pieces of information may not have a specific space on the customs form or in the SSF and may require additional documents.

Private-sector services can provide more services than the designated postal operators provide in clearing packages through the customs process. These might include the services of a customs broker to resolve any issues that come during customs clearance and any duties paid by the sender of the package. This customs payment is referred to as Delivery Duty Paid (DDP),

as opposed to Delivery Duty Unpaid (DDU), where the package’s recipient is required to pay any duty. Until recently, postal packages were all DDU. Some postal services now offer DDP; the USPS does not, although it is working on a DDP solution.

The designated postal operators have an obligation to provide universal service under the UPU agreements. They offer the most complete last-mail delivery services in most countries. (The exceptions to that are the failed or failing postal operators in some less-developed countries.) How many packages enter from a foreign country via commercial routes and are then entered as domestic mail with the designated postal operator is not known. Nor do we know whether this is better or worse for the postal operators’ bottom line, including for the USPS.

The complex environment of near-shoring, free ports, commercial consolidation shipping, and international postal transport has made analyzing whether there is or isn’t growth in international packages to consumers difficult. The reports looking at this have not, to date, looked at all the options; it may not be possible with the complexities involved in this changing and challenging marketplace.

Merry Law is President of WorldVu LLC and the editor of Guide to Worldwide Postal-Code and Address Formats. She is a member of the UPU’s Addressing Work Group and of the U.S. International Postal and Delivery Services Federal Advisory Committee.

WHY DELIVERY IS THE NEW BRAND DIFFERENTIATOR

BY ITAMAR ZUR

In many e-commerce organizations, shipping is still viewed primarily as a cost center. Logistics teams are often tasked with optimizing routes, minimizing carrier expenses, and streamlining warehouse operations to reduce overall shipping costs. While cost efficiency is undoubtedly important, this narrow focus overlooks the untapped potential of shipping to drive significant business growth.

In an era where convenience, speed, and transparency are paramount, a seamless and positive delivery experience can be the difference between a one-time buyer and a loyal advocate.

That’s why the delivery experience has quickly transformed into a critical success factor for retailers looking to boost customer lifetime value (CLV). This critical metric, representing the monetary value, or total revenue, a customer brings to a business, is increasingly linked to the quality of the delivery process. The “last mile” — the final leg of the customer journey from warehouse to doorstep — wields immense power to shape brand loyalty and drive repeat purchases, contributing to an increased CLV of 51%.

The Evolving Landscape of Customer Expectations

Today’s consumers are not just seeking

products; they’re seeking experiences. They expect seamless, convenient, and personalized interactions at every touchpoint, from browsing an online store to receiving their order on their doorstep. In fact, a recent Incisiv study revealed that logistics leaders who prioritize a superior last-mile delivery experience benefit from substantial increases in checkout conversion rates, average order value, repurchase rates, CLV, and net promoter score (NPS).

While product quality and price remain important, delivery has become a key differentiator in a crowded marketplace. Brands that invest in creating a superior delivery experience can reap substantial rewards:

Increased Customer Satisfaction: Fast, reliable, and transparent deliveries create positive emotions and build trust with customers.

Higher Repurchase Rates:

Customers who have a positive delivery experience are more likely to return for future purchases, contributing to an increased CLV.

Minimizing Returns: Clear communication and efficient delivery processes reduce customer frustration and the likelihood of returns, impacting both the bottom line and customer satisfaction. Reducing indirect costs: Getting products delivered on time and placing them exactly where consumers expect to

receive them reduces costs related to handling “Where is my package?” calls, refunds, rebates, and additional delivery attempts.

Enhancing Brand Reputation: A seamless shipping experience contributes to a positive overall brand perception, reflected in a higher NPS, which can attract new customers through word-of-mouth recommendations and be a determining factor in a customer’s purchasing again. A recent Gartner study notes that 21% of customers are more likely to repurchase following a positive delivery experience.

By embracing this customer-centric approach, e-commerce companies can leverage shipping as a strategic asset, not just a logistical necessity. This shift in perspective requires collaboration across departments, from marketing and customer service to operations and logistics, to ensure a unified focus.

Key Elements of a CLV-Boosting Delivery Experience

To leverage delivery as a driver of CLV, companies should focus on the following key elements: speed, reliability, transparency, optionality, and customer service. While not every order needs to be delivered overnight, speed is important. Communicating a clear delivery promise

(date and time) and then meeting this promise is crucial. Ensuring deliveries arrive in good condition is also paramount.

Proactive communication about potential delays can help manage customer expectations. Providing real-time tracking information and clear communication throughout the delivery process empowers customers and builds confidence.

Don’t miss Ita’s session on Crafting CustomerCentric Success at PARCEL Forum ’24

Dallas on Tuesday, September 17.

Offering a range of delivery options, such as same-day, scheduled, or alternative pickup locations, allows customers to choose what works best for them. Finally, having responsive

and helpful customer support available to address any issues that may arise during the delivery process increases customer confidence and improves the ability to resolve issues quickly if and when they occur.

Creating a CLV-boosting delivery experience requires investments in technology, infrastructure, and partnerships. This includes:

Optimized Routing and Scheduling Software: Utilizing advanced software can help streamline delivery operations, reduce costs, and improve efficiency.

Real-Time Tracking and Visibility: Investing in technologies that provide real-time visibility into the location and status of shipments enables proactive communication with customers.

Last-Mile Delivery Solutions: Partnering with innovative last-mile delivery partners can offer access to a wider range of delivery options and expertise.

Data Analytics: Leveraging data analytics and AI can provide valuable insights into customer preferences, delivery performance, and areas for improvement and optimization.

In the e-commerce era, the last mile is not the end of the customer journey; it’s the beginning of a relationship. By recognizing the pivotal role of delivery in shaping customer perception and loyalty, companies can turn this crucial touchpoint into a powerful engine for long-term growth and profitability.

As consumers increasingly prioritize convenience and experience, investing in a seamless and customer-centric delivery experience is no longer a luxury; it’s a necessity for businesses that want to thrive in the digital age. The last mile, it turns out, is the first step towards building lasting customer relationships and driving CLV.

Itamar Zur founded Veho based on the belief that getting a package should be a pleasure. With support from a team of industry veterans from FedEx, Uber, and Amazon, Zur and his co-founder Fred Cook have grown Veho to provide the most transparent, customer-centric, and flexible shipping solution for brands radically focused on first-rate customer experience.

RETAIL SUBSCRIPTIONS: ARE THEY RIGHT FOR YOU?

Subscriptions such as Amazon Prime, Target Circle 360, and Walmart + continue to be popular ways for retailers to attract and retain customers by offering incentives such as product discounts, free returns, and free shipping. Types of retailer subscriptions vary from annual subscriptions, such as those offered by the aforementioned companies, to monthly curated box subscriptions such as Stitch Fix, BarkBox, and FabFitFun.

Customers who embrace subscriptions tend to enjoy the convenience and frictionless experience. According to Maximize Market Research Pvt. Ltd, the global subscription e-commerce market size was estimated at $120 billion in 2022 and is expected to reach nearly $640 billion by 2030.

But are subscriptions right for all retailers? With new billing platforms, remote customer support, and digital services, it may be worth considering.

Subscriptions are not new. Robbie Kellman Baxter, a consultant specializing in subscription business models, notes the business model dates to trade guilds in the 12th century. And in 1926,

for example, a book mail order service debuted a new subscription service, The Book of the Month Club. It started with 4,000 subscribers and climbed to more than a half million of them within 20 years.

Among the benefits are that retailers enjoy a steady revenue stream and a wealth of data. Data can transform how companies procure their products and design products, and it can help reduce waste.

Also, knowing how many subscribers there are makes it much easier to forecast how much inventory is needed for a subscription service, which can help minimize excess product.

A Coresight Research consumer survey found that 56.9% of surveyed consumers are members of at least one loyalty program, and more than half spend more with retailers once they join their loyalty program, a net 39.5% higher overall spending. Of those surveyed, 75.4% valued the discounts such programs offer, followed by free or discounted shipping, at 63.2% of total respondents.

However, retailers that offer subscrip-

tion services have a few drawbacks, such as the cost to acquire customers, the difficulty of retaining customers in a highly competitive subscription market, and the need to continuously find new ways to provide value and delight customers.

The largest retail subscription service is Amazon Prime. Consumer Intelligence Research Partners estimates that 180 million people had a Prime membership as of March of this year, an eight percent increase from 2023.

“Free” Delivery

The increasing cost of transportation, particularly the last mile, has led numerous retailers to offer “free” delivery as part of a subscription service to offset those costs and for some retailers to profit. Amazon, Target, and Walmart all include free shipping as part of their subscription services. Free shipping is also offered by such retailers as Sephora, which offers a loyalty service based on various levels; Barnes & Noble, which offers two membership levels ranging from free to $40 a year; and Best Buy, which offers three membership levels ranging from free to almost $200 a year.

Studies have shown that offering free delivery as part of a subscription service can help compensate for delivery costs, reduce customer churn, and be a significant revenue source. In fact, researchers from North Carolina State University and Texas A&M University calculated that membership-based free shipping programs (MFS) deliver a monthly average increase in net customer revenue by 12.75%, or $19.93.

The study also found that the free shipping benefit may motivate consumers to purchase more often and increase members’ purchase variety and impulse purchases.

However, free shipping might hurt retailers’ financial outcomes as the increased sales may not offset the lost shipping revenue and other associated costs.

As such, retailers are advised to price subscriptions accordingly, considering transportation costs and other operational and marketing costs that need to be considered within the pricing. Retailers may also need to raise

product prices to help cover the costs not covered by the subscription price.

When considering the transportation costs and assuming the costs are optimized, the North Carolina State University and Texas A&M University study found that a lower free shipping threshold may result in smaller effects on MFS as the unlimited free shipping benefit becomes less attractive, whereas a higher membership fee may prompt members to purchase more to make their investment worthwhile.

But remember, the increased sales may not be able to offset the lost shipping revenue. Finding that sweet spot between a too-low and too-high membership fee is critical.

Optimizing Transportation Costs

If a retailer’s transportation costs are not optimized, or if the retailer is unsure if they are, it is best to have a third-party advisory group with deep expertise review the contracts to ensure they are receiving the absolute best rates, discounts,

surcharges, etc. We have consistently seen reductions in net delivery costs of over 16%, so now is the time to re-negotiate. Additionally, companies must ensure they are utilizing the right service levels and transportation modes; some should consider lockers or other third-party drop-off or pickup locations to further lower their costs.

The retailers should align themselves with a third party that is able to provide them with a competitive advantage as it relates to (BI) Business Intelligence, trends/alerts, and auditing of invoices. In the competitive marketplace, it is imperative that you have the tools to proactively manage your complex supply chain and the customers’ expectations.

Are Retail Subscriptions Right for You?

Before you answer this question, it’s imperative to:

1. Do your homework.

2. Decide what type of subscription and what perks to include. If you offer free shipping, be sure that you can afford it

by optimizing your transportation costs.

3. Price the subscription service competitively — not too low and not too high.

If you do decide to offer a subscription service, be sure to establish key performance indicators (KPIs) to measure its success and tweak as needed.

Jay Kent is the founder of SLB Performance, a business advisory company that helps companies lower their costs and drive shareholder value for the company. Jay has more than 25 years of experience in growth and turn-around companies with deep expertise in supply chain, global/domestic transportation, operations, omnichannel, retail, B2B, third-party logistics, vendor management, manufacturing, procurement, contract sales, industrial engineering, inventory planning/ allocation, technology deployment, wholesale, and C-Suite executive leadership for medium to Fortune 150 companies.

WHY REAL-TIME DATA IS CRUCIAL FOR STRATEGIC SUPPLY CHAIN DECISIONS

How to implement solutions that improve planning, asset management, and risk mitigation in the supply chain.

By William Wappler

Arevolution is underway in how companies are expected to track assets and manage their supply chains. Pressure is rising from end users who have become accustomed to knowing where their goods are at any moment in their journey. For example, many last-mile and small-package logistics and shipping providers can deliver visibility to customers who expect exact location and status details, but struggle to understand or scale visibility of their own supply chain assets to run these complex operations.

The proper integrated hardware and software solutions can bring clarity to your supply chain, allowing you to do more strategic asset planning and risk mitigation than ever before. With the streamlining of your supply chain management, you will save time, improve customer service, and increase profitability.

How the Technological Revolution Is Affecting the Supply Chain

Before the use of computers became widespread, many supply chain operators used more manual methods, like spreadsheets, Post-it notes, and other less sophisticated procedures, to track products. That system of human-driven supply chain management no longer works in a world that has grown more complex.

The smartest companies are streamlining their supply chain data collection by employing the latest technology innovations, from radio frequency identification (RFID) to ultra-wideband (UWB) to cellular tracking and GPS data, to reduce costs and improve overall market competitiveness. Embracing technology can provide significant advantages over the competition and build market share.

Additionally, technology continues to improve. There are now systems that provide 99.9% or better data accuracy as companies track assets from warehouse to end user, which offers companies strategic asset planning opportunities. By combining industrial internet of things (IoT) technology with groundbreaking hardware and software, building a safe, secure supply chain is now within reach.

Using the Information to Improve Strategic Asset Planning

Providing company leaders with access to real-time data about the state of their supply chains provides them the critical information to make meaningful decisions about how to deploy their assets strategically. To receive accurate, actionable data, you must use the proper technology platform so manual tasks can be automated, operational decisions can be made with a source-of-truth dataset, and cost savings can be realized. This frees employees to solve strategic problems and seek future solutions that set your business apart.

Inventory management, which often costs between 25% and 33% of companies’ budgets, is another area where having specific, granular data will help you make smarter business decisions and improve profitability over time. The more data you collect and analyze, the more efficient your inventory strategy can be, minimizing waste while keeping inventories at levels sufficient to meet your customers’ needs. The top hardware and software options allow you to project customer demand trends using the extensive data you’re collecting. By using this, businesses can minimize the costs of overstocking inventory and paying additional fees for storage and transportation.

Demand forecasting data should be distributed throughout the organization to improve decision-making at all levels. When combined with additional data specific to your organization, these powerful tools allow for better long-term decision-making and mapping the path to a profitable future. The key is to ensure buy-in from everyone to make it as effective as possible and to reduce supply chain costs. Creating the complete data picture is the best way to provide you with the clarity needed to take meaningful action.

As you build the technological infrastructure necessary to digitalize your business, it is crucial to ensure the systems can interface, communicate with each other, and share data in real time. One of the key elements to creating this system is finding software that allows information to flow freely between different company departments and provides outputs that can be easily analyzed as supply chain conditions change. Supply

chain challenges don’t just affect the supply chain infrastructure. Problems in the supply chain can have an impact on the entire company and prevent it from reaching its revenue goals. Being able to execute on accurate data can be the difference between success or failure for your company.

Mitigating Risks with Artificial Intelligence and Machine Learning

Artificial intelligence (AI) and machine learning (ML) are revolutionizing supply chain management, improving efficiency and accuracy, and freeing executives and employees to determine how best to minimize risks through long-term strategic thinking. AI and ML do in seconds what it would take employees weeks to do, which provides companies with the real-time ability to identify patterns and trends. Observing the identified patterns allows for quick pivots to avoid inventory-driven delays.

ML algorithms can use historical data to predict what might happen in the future. This knowledge allows companies to foresee and adjust to potential supply chain disruptions like those that occurred during the pandemic in 2020. Instead of companies finding themselves reacting to changes, the predictive capabilities of AI and ML offer opportunities for proactive measures to mitigate risks, like diversifying suppliers or increasing safety stock levels.

To implement AI and ML programs effectively, companies must start by collecting supply chain datasets specific to them. The quality of an AI analysis depends on gathering and maintaining accurate input data, which is why it is crucial to deploy software platforms that capture the data with 99.9% accuracy.

Combined, AI and ML can transform the way companies think about supply chain management. With their predictive capabilities, they can streamline demand forecasting, optimize inventories, plan efficient tasks, and evaluate product quality before they reach end users. For example, AI can help warehouse managers anticipate potential equipment failures and service the machines before catastrophic problems occur. Such actions can reduce downtime and improve overall operational efficiency.

The Bottom Line

The technological revolution has reached supply chain management. Driven by advanced IoT, AI, and ML, companies can operate at unprecedented precision and efficiency. Collecting and integrating accurate datasets allows employees to improve asset management, strategic asset planning, and risk mitigation throughout supply chain operations. Embracing this technology is crucial to maintain an edge on competitors in the small-package shipping companies in an increasingly crowded market.

William “Bill” Wappler is the CEO of Surgere, an industry pioneer leveraging IoT technology to revolutionize the supply chain. Bill has more than 20 years of experience directing and executing technology strategy growth for global and Fortune 500 companies. Learn more and discover how to leverage Surgere’s supply chain expertise at surgere.com.

A VIEW FROM WASHINGTON: A MAJOR CHANGE IN THE REGULATORY SYSTEM

By Andrew M. Danas

Parcel shippers monitoring and seeking to predict federal legislative and regulatory policy trends usually must pay attention to all three branches of the federal government — the Congress, the courts, and the Executive Branch, with its regulatory agencies. This year, the most important federal regulatory development for parcel shippers, affecting all three branches of government, has been delivered by the Unites States Supreme Court.

In two cases, the Court has (a) upended the time limits for when federal agency regulations can be legally challenged and (b) eliminated a 40-year-old legal doctrine that required courts hearing such challenges to defer to agency interpretations of ambiguous laws. Combined, these two decisions may result in less predictability in the formation and interpretation of federal regulatory law and policy affecting parcel shippers.

Congress sometimes drafts statutes that are ambiguous or do not cover every issue within the intended scope of the law. When Congress authorizes a federal agency to implement and administer

such laws, the question can arise as to whose interpretation of the law governs — that of the federal agency or a reviewing court?

In 1984, the Supreme Court answered this question by adopting what is known as the Chevron doctrine of judicial deference to federal agency actions. Stating that “judges are not experts in the field, and are not part of either political branch of the Government,” in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., the Supreme Court stated that if a law was “silent or ambiguous with respect to the specific issue” a court reviewing an agency action could not “simply impose its own construction on the statute.” Instead, under Chevron the court needed to defer to the agency’s interpretation of the law if the agency offered “a permissible construction of the statute.”

For 40 years, the Chevron doctrine guided Congress, government agencies, and regulated industries in providing a framework as to whether a federal agency’s actions were lawful when interpreting a law. If a permissible reading of the law, the agency’s interpretation generally controlled.

The Supreme Court has now overruled the Chevron doctrine. In Loper Bright Enterprises v. Raimondo, the Court stated that Chevron was wrongly decided and is contrary to the Administrative Procedure Act (APA), a 1946 law that governs administrative agency procedures and actions. Going forward, the Court in Loper Bright held that while a court reviewing an agency’s regulatory actions can give careful attention to the judgment of the agency, the courts may not defer to an agency’s interpretation of the governing law. The court must instead make its own independent judgment as to whether the agency has acted lawfully.

In a dissenting opinion, Justice Kagan predicted in Loper Bright that: [T]he majority’s decision today will cause a massive shock to the legal system, “cast[ing] doubt on many settled constructions’ of statutes and threatening the interest of many parties who have relied on them for years.”

The Supreme Court’s second 6-3 decision, in Corner Post, Inc. v. Board of Governors of the Federal Reserve System, illustrates this possibility. In Corner Post, the Court held that the six-year statute of limitations for claims against a federal agency brought under the APA accrues when the party filing the claim against the agency is injured by the final agency action, not the date on which the agency may have adopted the regulation being challenged.

The Corner Post decision involved a truck stop operator who sought to challenge the validity of a 2011 regulatory action by the Federal Reserve Board governing debit-card transaction fees. Previously challenged and upheld by a federal appellate court in 2014, the lower courts held that the regulatory action had to be challenged in 2017, within six years of the date it was published.

The Supreme Court reversed, finding that even though the truck stop operator was not created until 2017 and started operations in 2018, after the six-year period had expired, it was entitled to challenge the rules because its claims arose from the date on which it was affected by the regulations, not the date

on which they were promulgated.

As Justice Jackson stated in her dissent, the practical effect of the Corner Post ruling is that:

“there is effectively no longer any limitations period for lawsuits that challenge agency regulations on their face. Allowing every new commercial entity to bring fresh facial challenges to long-existing regulations is profoundly destabilizing for both Government and businesses.”

The majority justices in both the Loper Bright and Corner Post cases answered the dissenting justices’ criticisms that the decisions will destabilize regulatory predictability by pointing out that many federal agency actions are immediately challenged when they are issued; that court decisions upholding regulations may be binding precedent on later cases brought by newcomers; that existing court decisions upholding regulations should not be set aside simply because they were upheld pursuant to the Chevron deference doctrine; and that the courts have expertise and are

charged in general with interpreting laws, even when the laws involve very technical subject matter areas or regulated industries.

Don’t miss Andrew’s session on the latest Customs’ modernized

broker regulations at PARCEL Forum ’24

Dallas on Wednesday, September 18.

Nonetheless, eliminating judicial deference to expert agency actions and allowing lawsuits challenging long-standing existing regulations by industry newcomers at the time the regulations are applied to them reduces regulatory predictability both for administrative agencies and the industries that

they regulate. This includes regulations of multiple federal agencies affecting parcel shippers and their operations. Congress can address this potential uncertainty by writing clearer, less ambiguous laws; establishing different statutes of limitations for challenging agency actions; and by writing the Chevron doctrine into law so as to require the courts to defer to reasonable agency interpretations of the laws that they administer. Whether it either will or actually wants to do so remains to be seen.

Stay tuned!

Andrew M. Danas is Partner, Grove, Jaskiewicz and Cobert, LLP. Visit www. gjcobert.com or email adanas@danaslaw. com for more information. The information contained in this article is intended to be general background information. It does not constitute and should not be relied upon as legal advice. Readers should contact a qualified attorney should they have a specific legal question.

THE CASE AGAINST MULTICARRIER PARCEL SOLUTIONS: WHY A SINGLE CARRIER CAN BE MORE EFFICIENT

BY THOMAS ANDERSEN

In the evolving world of logistics and e-commerce, companies are continually exploring ways to optimize their shipping strategies. One approach that has gained popularity is the use of multicarrier parcel solutions, where businesses leverage multiple shipping carriers to meet their various logistical needs. While this strategy promises flexibility and potential cost savings, it can come with significant drawbacks that can outweigh the benefits.

When considering using a multicarrier parcel solution, it’s essential for each company to weigh the benefits against the potential drawbacks. The complexity, increased operational overhead, and possible cost implications need to be carefully considered. For businesses with specific needs that align with the advantages of a multicarrier strategy, implementing such a solution can provide significant benefits in terms of cost optimization, flexibility, and risk mitigation. However, for many businesses, the services offered by one carrier may already meet their needs, making a single-carrier approach more efficient and cost-effective. This article delves into the reasons why relying on a multicarrier parcel solution may not be the best choice and how a single global, national, or regional parcel carrier can offer all the necessary services effectively.

Dilution of Volume Discounts

Shipping carriers typically offer volume discounts to businesses that commit to a certain level of gross spend. By spreading shipments across multiple carriers, companies may miss out on these discounts, resulting in higher overall shipping costs. As volume increases, so does the opportunity for more significant discounts from a single carrier. If these shipments are distributed among multiple carriers, the business may not meet the volume threshold for discounts with any one carrier, leading to higher shipping expenses.

Complexity and Integration Challenges

One of the primary disadvantages of a multicarrier parcel solution is the potential complexity involved in integrating multiple carriers into a cohesive system. Each carrier operates with its own set of APIs, software, and operational procedures, leading to significant integration challenges. The complexity can result in increased IT costs, extended implementation timelines, and potential disruptions to the supply chain. For example, an e-commerce company attempting to integrate services from UPS, FedEx, DHL, USPS, and/or regional carriers might face months of development work to ensure seamless operation. Each carrier requires different data formats, label printing processes, and tracking systems, which can complicate the integration and lead to frequent technical issues.

Increased Operational Overhead

Managing multiple carriers entails dealing with different billing systems, customer service departments, and performance metrics. This adds administrative overhead, as businesses need to reconcile invoices from various carriers, handle multiple points of contact for support, and monitor performance across different service providers. A company using a multicarrier solution may find itself overwhelmed with the task of reconciling shipping invoices from various carriers, each with different billing cycles and formats. This increased workload can lead to errors, inefficiencies, and higher administrative costs.

Inconsistent Service Levels

Different carriers offer varying service levels, delivery times, and reliability. Using multiple carriers can lead to inconsistent delivery experiences for customers, resulting in a negative impact to customer satisfaction and brand reputation. If a shipper uses multiple carriers, some deliveries might be delayed due to the variability in service levels among the carri-

ers. This inconsistency can lead to dissatisfied customers and negative reviews, damaging a company’s reputation.

Why a Single Global Carrier Can Suffice UPS and FedEx, and, in some instances, DHL and the USPS, have established themselves as industry leaders, offering comprehensive services that can meet the needs of most businesses. Here’s why relying on a single global carrier can often be more efficient and beneficial:

1. Comprehensive Service Offerings: UPS and FedEx provide the greatest range of services, as well as specialized shipping, logistics solutions, and value-added options. This includes a variety of reliable and cost-effective ground shipping solutions, including lower-cost hybrid services that may include utilizing the USPS for final delivery. There are also a variety of faster express delivery options for more time-sensitive shipments, same-day for immediate delivery, and various international options to most countries worldwide. There is a premium cost associated with this convenience, which should be weighed when considering all factors.

2. Advanced Technology and Tracking: These carriers invest heavily in technology to provide advanced tracking and real-time visibility into shipments. This technology allows businesses to monitor their shipments closely and provide accurate delivery information to their customers. A business can integrate these solutions into their systems, providing customers with real-time updates on their orders and enhancing the overall customer experience.

3. Consistent Customer Support: The major carriers have robust customer support teams that can assist with a wide range of issues, from tracking inquiries to resolving delivery problems. This level of support is often more consistent with what multiple carriers can provide and ensures minimal disruption to the business while maintaining customer satisfaction.

4. Global Reach and Reliability: UPS and FedEx have extensive domestic and international networks, ensuring reliable delivery services worldwide. Their established infrastructure and partnerships allow for more efficient shipping, making them ideal for businesses with global operations. By offering reliable domestic and international service offerings, shippers can avoid the complexities of dealing with multiple carriers.

5. Customizable Solutions: UPS, FedEx, and DHL offer customizable solutions tailored to specific business needs. Whether it’s customized delivery options, flexible pick-up and drop-off points, or specialized handling requirements, these carriers provide the flexibility that businesses often prefer.

Don’t miss Thomas’s session at PARCEL Forum ’24 Dallas on how to negotiate your 2025 contracts on Wednesday, September 18.

Why a Single Regional Carrier Can Suffice

While national and international carriers offer extensive networks and comprehensive services, regional parcel carriers present unique advantages that make them an attractive option for many shippers. The cost savings, faster delivery times, personalized customer service, flexibility, reduced

shipping zones, local market knowledge, and environmental benefits all contribute to the value of using regional carriers. For businesses that primarily ship within a specific geographic area, regional parcel carriers can provide significant benefits that enhance efficiency, reduce costs, and improve customer satisfaction. By leveraging the strengths of regional carriers, companies can optimize their shipping strategies and gain a competitive edge in the market. As the logistics landscape continues to evolve, the role of regional parcel carriers continues to grow, offering shippers a viable and often superior alternative to traditional national carriers.

Multicarrier Isn’t Always the Best

While multicarrier parcel solutions offer flexibility, the associated complexities, increased operational overhead, and potential cost implications can make them less appealing. The major carriers provide comprehensive service offerings, advanced technology, strong customer support, global reach, and customizable solutions that can meet the needs of most businesses. By focusing on a single carrier, businesses can streamline their operations, reduce costs, and provide a consistent and reliable delivery experience for their customers.

Thomas Andersen is Partner/EVP of Supply Chain Services for LJM Group.

DATA DOING DOUBLE DUTY

Grow profitability and track Scope 3 shipping emissions

By Stephanie Bixler

As companies assess Environmental, Social, and Governance (ESG) criteria as part of their corporate sustainability strategies, the environment (or “E”) remains a challenge as companies grapple with how to respond to climate change and manage the impact of their operations on the world around them. But organizational changes related to corporate sustainability don’t come without their share of tension and tradeoffs. Why? Because the costs and complexity of compliance remain at odds with profit targets.

In a recent survey by Morgan Stanley, 85% of respondents see sustainability as a value creation opportunity, although 69% cite an expectation of higher costs to comply.

This sentiment plays into recent trends where ESG has taken a backseat. According to Factset, earnings call mentions of ESG declined by two-thirds since 2021. Inflation and, more recently, artificial intelligence have taken center stage as focus shifted.

But business focus on the environment isn’t dead; rather, it might be intensifying. The SEC has proposed rules to enhance corporate climate disclosures, drawing significant attention. A major focus is on Scope 3 emissions, particularly in shipping, where these emissions are generated by third-party carriers. These can account for up to 70% of a company’s carbon footprint, according to the Global Impact Network. Although the SEC hasn’t yet mandated Scope 3 reporting, it’s expected to do so soon, and many companies are already starting to report these emissions internally. In some cases, it’s a requirement to bid on certain jobs, sell into certain global markets, or claim applicable tax exemptions.

Unlike the increased costs of reducing Scope 1 and 2 emissions, efforts to reduce Scope 3 emissions often lead to lower costs as it is achieved through distribution optimization. So, what steps can shippers take to realize these opportunities?

Overcoming Challenges in Reporting & Measurements

1. Data Collection and Categorization

Calculating Scope 3 emissions is complex due to multiple data sources involving different modes, carriers, lanes, and business segments. Emission factors vary by mode, and variables like distance, weight, mode, and service type make calculations challenging.

Approach: Accurate calculation and reporting start with correct data. Shipment data across modes must be normalized into a database. Freight pay and audit providers can handle this data consolidation; otherwise, shippers must consolidate invoicing data themselves.

Distance data is crucial. Truckload shipments provide mileage, while parcel and LTL use zone proxies. Shippers can estimate miles based on shipment zones (e.g., zone 6 = 1,400 miles, on average) or use API calls for precise distances, storing this data for future use.

Emission factors are unique to each mode and shipment leg. Specialized data providers can help. Shippers can also refer to the EPA, which publishes these factors. These need to be organized by mode, integrated into the data model, and maintained as updated by the EPA.

Want to learn more about how logistics companies are tackling sustainability head-on? Don’t miss the Going Green Learning Pod at PARCEL Forum ’24 Dallas on Wednesday, September 18.

2. Reporting Standards

Many evolving disclosure standards require expert knowledge. Companies often lack the systems and personnel with carbon management expertise to measure and analyze emissions effectively. Reporting emissions is one issue; reducing and measuring them is another. Shippers should remember the following:

1. Best practices include using standard reporting templates in a BI tool to measure basic carbon emissions across modes.

2. Define standard measures using a data dictionary that notes sources, inputs, and calculations. CO2 emissions are measured in metric tons, using mode-appropriate emission factors multiplied by the ton-kilometer of each shipment.

3. Partner with certified transportation vendors with estab-

lished emissions reporting, which provides scores and ranks emissions by carrier.

Practical Alignment Between Profit & Emission Objectives

1. Logistics Optimization

Once data is collected, normalized, and measures are established, it’s straightforward to assess the impact of distribution changes on carbon emissions.

For example, consolidating parcel and LTL shipments from suppliers to distribution centers removes shipments from the network. The cost and emissions impact of this consolidation can be tracked using the same data views.

A shipper can also switch from air to ground service for select ZIP Codes, maintaining transit times. This reduces emissions and costs without sacrificing customer experience.

2. Order Optimization

When shipment data integrates with order data, opportunities to enhance profitability while reducing carbon impact expand significantly.

Consider this example: At checkout, customers select shipping speed. If they were informed about the carbon impact of choosing next-day versus three-day shipping, their preferences might change. For brands aligned with climate impact and customer values, offering shipping options that factor in price and CO2 emissions can influence customer choices.

B2B companies also have unique opportunities. For instance, shippers can analyze the cost and CO2 impact across thousands of shipments to customer locations over time. They can measure the environmental impact and cost inefficiencies of under-utilized space in shipments — whether parcel cartons, LTL pallets, or dedicated trucks. Partnering with customers involves sharing data on waste in terms of cost and emissions relative to total sales, leading to distribution optimizations that benefit both parties, such as:

Setting economic order quantities based on SKU-specific shipping efficiencies.

Consolidating shipments using predefined rules.

Structuring freight rebates based on the cost-to-serve model.

Transparently pricing shipping costs and carbon offsets.

Data Is the Key

In navigating the dual demands of profitability and sustainability, shippers are increasingly turning to data as their ally to accurately measure and report Scope 3 emissions related to shipping, meet regulatory expectations, and uncover new avenues for cost savings and environmental stewardship. As the focus on ESG intensifies amid evolving disclosure standards, integrating robust data practices becomes a strategic advantage in shaping a sustainable future for global supply chains.

Stephanie Bixler is the Chief Product Officer at eShipping, premier managed logistics provider, and founder of Synapsum, the trusted data intelligence provider helping shippers improve profitability and win market share. Synapsum joined eShipping in February 2024.

INBOUND LOGISTICS : Key Techniques for Operating Successful Fulfillment Centers

By Ninaad Acharya

Inbound logistics refers to the process of receiving, handling, and storing goods coming into a warehouse. This process is critical for maintaining efficient and accurate inventory management and ensuring that products are available for timely fulfillment of orders.

Inbound logistics encompasses various types of transactions:

B2B Shipments: Typically involve larger, palletized shipments with a focus on bulk receiving and storage, requiring robust systems and processes to manage large volumes efficiently.

B2C Shipments: These are smaller, individual packages requiring detailed sorting and quick turnaround times, demanding agility and precision to meet customer expectations.

Returns: Require dedicated areas and processes for inspecting, restocking, or disposing of returned items, ensuring that returned goods are processed promptly and accurately.

People: Key Roles and Responsibilities

The success of inbound logistics heavily depends on the coordinated efforts of various stakeholders, including sellers, warehouse teams, and carriers. Each group has specific responsibilities that contribute to the efficiency of the entire process.

Sellers’ Responsibilities

Sellers play a foundational role in

ensuring smooth inbound logistics. Their responsibilities include:

Accurate Labeling and Documentation: Sellers must ensure all packages are correctly labeled with barcodes, SKU numbers, and relevant details. Including packing lists and bills of lading is crucial to avoid delays and errors during the receiving process.

Advance Shipping Notices (ASNs): ASNs provide warehouses with detailed information about incoming shipments, including quantities, product descriptions, and expected delivery times. This advanced notice allows warehouses to prepare and allocate resources efficiently.

Quality Control: Conducting thorough quality checks before dispatching goods helps prevent issues upon arrival at the warehouse, ensuring that only products meeting required standards are shipped.

Compliance with Warehouse Requirements: Adhering to specific packaging, labeling, and documentation guidelines provided by the warehouse ensures seamless processing and avoids additional handling costs.

Warehouse Teams’ Responsibilities

Warehouse teams are pivotal in managing the receipt, inspection, and storage of goods. Key practices include:

Automated Receiving Processes: Utilizing barcode scanners and other automated systems accelerates the check-in process, allowing rapid verification of shipment contents against

ASNs, reducing manual errors, and saving time.

Thorough Quality Inspection:

Conducting meticulous inspections ensures that all products meet quality standards. Immediate reporting of discrepancies helps resolve issues promptly, preventing disruptions in the supply chain.

Organized Storage: Efficiently organizing products in designated areas based on type, size, and demand facilitates easy retrieval and enhances inventory management, optimizing space utilization and improving access to goods.

Inventory Management: Implementing Warehouse Management Systems (WMS) provides accurate tracking of inventory levels, locations, and movements, aiding in maintaining up-to-date inventory records and supporting better decision-making.

Carriers’ and Transport Service Providers’ Responsibilities

Carriers and transport service providers are integral to the inbound process, with key responsibilities including:

Timely Deliveries: Ensuring shipments are delivered on schedule is critical to maintaining the flow of warehouse operations, preventing bottlenecks, and keeping the supply chain moving smoothly.

Accurate Documentation: Providing complete and precise documentation, such as bills of lading, delivery receipts, and proof of delivery, is essential for accurate record-keeping and accountability, facilitating the verification and acceptance of shipments.

Effective Communication: Maintaining open and effective communication with sellers and warehouses is vital for coordinating delivery schedules and promptly addressing any issues, ensuring all parties are aligned and can respond quickly to changes or challenges.

Process: Essential Documentation and Operational Best Practices

Effective processes and accurate documentation are the backbone of efficient inbound logistics. Proper handling of these elements ensures smooth operations and addresses common challenges.

Critical Inbound Documents

Accurate documentation is crucial for seamless operations. Key documents handled by different parties include:

Sellers: Packing lists, bills of lading, ASNs.

Warehouse Teams: Receiving reports, quality inspection reports, inventory records.

Carriers: Bills of lading, delivery receipts, proof of delivery.

Each document must be accurate and complete to facilitate smooth and efficient operations, ensuring all goods are tracked and verified correctly.

Addressing Operational Challenges

Operational challenges in inbound logistics are common but can be effectively managed with the right strategies:

Receiving Delays: Efficient scheduling, proper staffing, and automated check-in systems help mitigate delays, ensuring goods are processed quickly.

Shipment Discrepancies: Rigorous quality checks and accurate ASNs help

address discrepancies, ensuring that received goods match the expected standards.

Storage Space Constraints: Effective inventory management and layout planning optimize available space, preventing congestion, and ensuring goods are stored efficiently.

Don’t miss Ninaad’s session at PARCEL

Forum ’24 Dallas on harnessing robot-as-aservice for warehouse automation on Tuesday, September 17.

Technology: Leveraging EDI and Software Solutions

Technology plays a crucial role in enhancing the efficiency and visibility

of inbound logistics. Leveraging the right tools and systems can streamline operations and provide real-time insights.

Leveraging EDI for Efficiency

Electronic Data Interchange (EDI) enhances communication and reduces errors in inbound operations. Key EDI exchanges include:

EDI 856 (ASN): Provides detailed information about incoming shipments, allowing warehouses to prepare accordingly.

EDI 850 (Purchase Order): Communicates order details from buyer to seller, ensuring clarity and accuracy in transactions.

EDI 214 (Shipment Status): Offers real-time updates on shipment status, improving visibility and coordination.

EDI 944 (Warehouse Stock Transfer Receipt Advice): Informs about goods received in the warehouse, facilitating accurate inventory updates.

These EDI exchanges streamline the flow of information, reducing manual processes, and enhancing operational efficiency.

Software Solutions for Inbound Visibility

Visibility is key to effective inbound operations. Platforms that enhance visibility include:

Yard Management Systems (YMS): Manage the movement of trailers and containers, optimize dock door assignments, and reduce wait times by coordinating yard activities efficiently.

Enterprise Resource Planning (ERP) Systems: Integrate inbound operations with broader business processes, ensuring a seamless flow of information across the organization, providing a holistic view of operations, and aiding in better decision-making.

Warehouse Management Systems (WMS): Implementing WMS provides detailed tracking of inventory levels, locations, and movements, aiding in efficient space utilization and streamlined operations.

Transportation Management Systems (TMS): Optimize transportation routes, track shipments, and manage carrier relationships, enhancing the efficiency and reliability of inbound logistics.

Appointment Scheduling Tools:

There are tools that streamline delivery appointments, reduce congestion, and improve efficiency by ensuring resources are allocated effectively.

Digital Documentation Platforms: There are platforms that provide real-time visibility into shipment status, reducing the need for manual paperwork while enhancing transparency and efficiency.

Best Practices for Inbound Logistics

Combining advanced technology with best practices from leading logistics providers can significantly improve inbound operations. Implementing automation solutions and learning from industry leaders can drive efficiency and innovation.

Implementing Automation Solutions Automation significantly enhances inbound operations. Examples include:

Low-Cost Automation: Use barcode scanners, mobile receiving apps, and automated email notifications to streamline processes and reduce manual effort.

High-Cost Automation: Invest in

automated storage and retrieval systems (AS/RS), conveyor systems, and robotics for sorting and picking, enhancing efficiency and accuracy in handling goods.

Cross-Docking: Transfers goods directly from inbound to outbound shipments, reducing storage time, and speeding up the delivery process.

Lean Warehousing: Minimizes waste and optimizes processes through continuous improvement, enhancing overall efficiency.

Real-Time Data Analytics: Utilizes advanced analytics to monitor and enhance inbound operations, providing insights that drive better decision-making.

By adopting best practices, leveraging modern technologies, and proactively addressing challenges, warehouses can achieve greater efficiency and accuracy in their inbound operations.

Ninaad Acharya is CEO and Co-founder of Fulfillment IQ.

STOP AND SEE AT

There are many PARCEL Forum exhibitors who will help with your shipping and supply chain challenges. On the following three pages is a select group that you should make sure you stop by and see during your time in Dallas. After talking with them, you may see exactly how their solutions can help you tackle whatever issue is plaguing your small-package operation!

Efficiency in intralogistics relies on short routes, lean processes, and adaptable material flows. Our modular solutions automate the entire process chain and enhance labor effectiveness — from inbound handling and sorting to flexible product movement with AMRs, dispatch, and returns. Leveraging our expertise and smart technologies like warehouse software, RTLS/RFID, AMRs, and unit/parcel sorters, we optimize your logistics chain, reallocate labor, and maximize order throughput. We aim to be your most effective partner for intralogistics solutions. https://bowe.com/en/divisions/

Visit Caljan at Booth #316 to learn about our ergonomic solutions designed with the customers in mind. Discover how our equipment enhances comfort, reduces strain, and boosts productivity for your team. See firsthand our commitment to creating a safer, more efficient workplace through innovative technology that prioritizes the well-being of the operator. Join us to learn how Caljan’s user-centric approach can transform your parcel handling processes and elevate your business operations. For more information, visit CALJAN.com

Celebrating 101 years in 2024, CT Logistics is a global solutions provider helping clients to more effectively source, execute, pay, and analyze parcel and non-parcel transportation expense. CT offers a number of unique delivery models and options for large-volume shippers to outsource freight audit and payment, or a dynamic software platform that can be utilized to perform this function in-house. Comprehensive global spend visibility is driven by a powerful, customized business intelligence platform coupled with a deep suite of advisory services to more effectively negotiate large-scale shipping agreements. www.ctlogistics.com

Designed Conveyor Systems (DCS), founded in 1982, is a brand-agnostic systems integrator that provides custom full-scale warehouse designs and software solutions. DCS is based in Franklin, Tennessee, and utilizes consulting, engineering design, project management, installation services, and client support. Stop by Booth 328 to learn more about how we can help you keep your promises to deliver on time. www.designedconveyor.com

DMW&H can revolutionize your parcel operations with innovative, tailored solutions. Specializing in enhancing facility productivity, DMW&H offers expertise in integrating new components into existing setups or designing entirely new handling systems. Discover how our solutions streamline your first-, middle-, and last-mile processes. Our solutions provide the necessary flexibility to support the ever-changing landscape of the parcel industry, ensuring improved outcomes and scalability for future growth. From advanced material handling equipment to cutting-edge software, we provide comprehensive options to optimize your operations. Don’t let inefficiency hold you back — partner with DMW&H to turn logistical challenges into opportunities for success and stay ahead in the competitive market. www.dmwandh.com

Join us at PARCEL Forum ‘24 in Dallas, TX, and visit Engineering Innovation, Inc. at Booth #400! We are excited to showcase live demonstrations of our modular Chameleon® parcel-processing system. Don’t miss the opportunity to see it in action and discover how our innovative solutions can transform your business. While you’re there, have some fun with our claw machine and win exciting prizes. Stop by Booth #400 to experience the future of parcel processing and meet our welcoming, knowledgeable staff. We look forward to seeing you! www.eii-online.com

Ensign Equipment is exhibiting at PARCEL Forum 2024, Booth #406! Stop by to see the latest technology for converting bulk parcel shipments into singulation flow for sortation systems ranging from low to high volumes. Meet one on one with expert sales engineers who have spent countless hours creating tailored solutions for sortation centers and logistics facilities across the continent. Their deep understanding of industry challenges enables them to offer insights that can significantly improve your supply chain’s efficiency. Partnering with us will enhance your operational processes, reducing both processing time and costs. www.ensignequipment.com

Logistics data. All companies that ship products have it, but not all companies can effectively use it and act on it in a timely manner. Why? Leveraging logistics data for operational improvements is challenging without the right tools, integrations, and partners. Visit us in booth #606 to hear from Enveyo customers about how they overcame data-related challenges and optimized their shipping operations. Enveyo is the only logistics optimization tech provider at PARCEL Forum with a single platform that enables: logistics analytics & BI, shipment simulation, multi-carrier shipping execution, real-time delivery tracking, and freight audit & recovery. www.enveyo.com

Discover the latest in domestic shipping to streamline operations and enhance US delivery efficiency. Gain insights into our international shipping solutions for reliable deliveries to over 200 countries. Learn how our advanced returns management improves customer satisfaction and reduces costs. Meet our leadership team for expert advice and potential partnerships. Experience our technology-driven support for seamless, consistent shipping. Increase customer satisfaction with timely, accurate deliveries. Get personalized solutions from our experts and stay updated on our latest offerings, industry trends, and future evelopments for a competitive edge. epostglobalshipping.com

Stop by the EuroSort booth (Booth #335) to experience cutting-edge sorting technology that can revolutionize your operations. Discover our innovative Parallel Induction System, designed to maximize throughput and efficiency by eliminating the need for multiple auto-inductions. See firsthand how our advanced sorting solutions, including Split Tray, Push Tray, and Cross Tray sorters, can handle diverse parcel sizes with unmatched accuracy and speed. Engage with our experts to learn how EuroSort’s customizable and scalable systems can enhance your productivity, reduce costs, and improve overall customer satisfaction. Don’t miss this opportunity to transform your logistics with EuroSort. EuroSort.com

Visit our booth to discover FirstMile’s Xparcel, the ultimate solution for streamlined shipping. Xparcel offers customized service levels — Priority, Expedited, and Ground — tailored to your specific needs. It adapts to carrier performance and known bottlenecks, ensuring efficient delivery at the best all-in rates. With FirstMile, all your shipping needs are managed under one umbrella: one report for all shipments, one support team, one invoice, and one pickup. Experience the best claims service in the industry, along with a robust audit queue to catch billing errors, simplifying your logistics and maximizing efficiency. Come see how Xparcel can revolutionize your shipping operations! www.firstmile.com

Choosing Intelligent Audit means accessing a unique blend of technology-driven services designed for today’s challenging supply chain environment. Since 1996, their expertise in freight audit, recovery, business intelligence, and secure payment processing has empowered businesses to make informed, data-driven decisions. Their approach not only offers clarity in a volatile market but also provides actionable insights through the normalization and cleansing of data across carriers, modes, and regions. With Intelligent Audit, businesses benefit from cost-saving strategies, enhanced decision-making, and reduced operational anxiety, positioning them for strategic success in uncertain times. www.intelligentaudit.com

Master transportation spend through next-generation freight audit and payment with Körber Supply Chain Software. Learn from industry experts how to reduce total transportation spend, improve delivery performance, simplify the transportation spend management process, strengthen vendor relationships, and improve customer experience. Our approach to enhancing sustainability is featured on the agenda, where we will review options for measuring and reducing scope 3 emissions. Attendees will also hear from our customer, Backcountry.com, about how they transformed their transportation operations to address behavioral changes and evolving logistical needs of their customers. Körber is your partner for parcel shipping and fulfillment needs. www.koerber-supplychain-software.com

STOP AND SEE AT

Reveel is a parcel shipping intelligence platform that empowers companies to take control of their parcel shipping strategies with innovative AI-powered technology. As the only Parcel Spend Management (PSM) 2.0 platform, Reveel’s technology transforms complex data into actionable insights using advanced analytics, modeling, simulation, statistical analysis, and near real-time reporting. What used to take weeks — or months — can now be completed in-house in minutes. Whether managing day-to-day operations, in the middle of your carrier agreement, or about to renegotiate, Reveel’s easy-to-use solutions put you in control of your shipping. Stop by booth #723 and demo Reveel’s PSM 2.0 platform today. reveelgroup.com

When you need automation expertise — S&H knows. It takes knowledge, experience, and expertise to implement automation systems that solve real-world business challenges. Our team has a history of developing automation systems that improve operational performance in fulfillment, warehousing, and manufacturing facilities. We design, build, and install systems that are smart, innovative, and transformative. More importantly, these systems are designed with a client-first attitude and a goal of immediate and on-going benefits. Meet the S&H Systems team at Booth #128. When you need a partner that’s committed to your success, give us a call, and turn our expertise into your competitive advantage. https://shsystems.com

Modern parcel fulfillment is both complex and costly. Our next-gen parcel TMS platform simplifies intelligent, cost-effective decision-making across digital storefronts, order allocation, and fulfillment. Let us show you how easily you can configure intricate rules for cartonization, carrier selection, custom forms and label printing, rate markups, customer preferences, and more. Achieve in minutes what typically takes weeks of expensive custom programming. Run “what if” simulations against your shipping history, then operationalize spend reduction insights using our optimization planning tools. All of this at the speed of e-commerce: thousands of rates, transit times, and business rules per second. Sendflex.com

get you closer to your customers for faster shipping at lower rates. Unlike some competitors, we control and manage all operations, ensuring consistent service levels and adherence to SLAs. Reach 98% of the US population within two days via ground delivery, with next-day fulfillment and a 100% order accuracy guarantee. Our exclusive shipping methods ensure efficient, cost-effective delivery and enhanced customer satisfaction. Stop by our booth to learn more and start transforming your e-commerce fulfillment today. www.shipnetwork.com

Sifted provides logistics intelligence software and predictive analytics for parcel shippers of all sizes. We equip customers with the tools and data-driven insights to continuously automate and monitor their shipping spend, carriers, and contracts. At PARCEL Forum, Sifted will be showcasing our new core product, SiftedAI, at booth #706. SiftedAI offers a holistic approach, ensuring that no cost-saving opportunity is missed. The software transcends traditional consulting-based approaches, which narrowly focus on carrier contract negotiation and invoice auditing. With SiftedAI, businesses have peace of mind that their parcel operation is efficient and proactively managed. sifted.com

usbank.com/transportation-solutions/small-parcel

In the fast-paced world of logistics and supply chain management, effective warehouse operations management stands out as a critical component for success. The advent of artificial intelligence (AI) has revolutionized how businesses approach warehouse management, inventory management, and overall operational efficiency. With AI’s capability to enhance decision-making processes, optimize warehouse management systems (WMS), and automate warehousing operations, companies are now empowered to achieve unprecedented levels of accuracy and efficiency. Embracing AI within warehouse operations not only streamlines 3PL (third-party logistics) processes but also significantly improves inventory accuracy and warehouse safety, marking a transformative step forward in the logistics sector.

Warehouses are the beating heart that keeps everything running smoothly and efficiently. Without warehouses, the supply chain would come to a grinding halt, causing chaos and disruptions in the flow of goods and services. These massive storage facilities serve as the central hub where products are received, stored, and shipped to their final destinations. One of the key reasons why warehouses are at the heart of the supply chain eco-

WAREHOUSE OPERATIONS MANAGEMENT: THE POWER OF AI IN BOOSTING EFFICIENCY AND ACCURACY

By Nilay Parikh

system is their critical role in inventory management. They provide a safe and secure space for companies to store their products until they are ready to be distributed. Warehouses not only ensure that products are stored in optimum conditions but also help in streamlining operations by allowing businesses to have better control over their inventory levels. This enables companies to meet customer demands in a timely manner and avoid stockouts or overstocking situations. Moreover, warehouses play a vital role in facilitating the movement of goods between different stages of the supply chain. They act as distribution centers, where products from various suppliers are consolidated, sorted, and then dispatched to retailers or directly to customers. This consolidation and sorting process helps in optimizing transportation routes, reducing costs, and improving overall efficiency. Warehouses also provide value-added services such as packaging, labeling, and quality control, further enhancing the supply chain ecosystem.

Getting Started with AI Assessing Your Warehouse Needs

To kickstart the transformation of warehouse operations with AI, it’s crucial to evaluate the current state of your warehouse. This assessment should focus

on identifying key areas where AI can enhance safety, accuracy, and compliance. Consider how AI-driven processes could potentially elevate your existing relationships with shipping partners and customers, and significantly boost employee satisfaction and productivity.

Selecting the Right AI Solutions

Once the needs are clearly identified, the next step involves choosing the appropriate AI solutions that align with your warehouse’s operational goals. Some options utilize existing infrastructure like security cameras, which can help in quality control and ensuring stronger compliance across operations. It is imperative to select the right vendor depending on one’s needs to ensure a successful implementation.

Implementation and Training

Implementing AI in warehouse operations doesn’t have to be a daunting task. However, it is essential to ensure that all employees are adequately trained on the new systems to maximize the benefits of AI. This includes understanding how to interact with the AI tools to improve order fulfillment accuracy, increase safety, and, ultimately, achieve better revenue goals. A more important step even before getting started is to have robust data gathering mechanisms since the success of AI depends on the quality of the data.

Key Benefits of AI in Warehouse

Operations Management

Enhanced Accuracy and Efficiency

Artificial intelligence (AI) significantly boosts accuracy and efficiency in warehouse operations. By leveraging AI-powered algorithms and big data analytics, businesses can gain precise insights into inventory levels, demand patterns, and supply chain dynamics. This enables informed decision-making on inventory replenishment and stock allocation, thus avoiding stockouts or excess inventory, enhancing customer satisfaction, and reducing costs.

Improved Decision-Making

AI’s ability to handle complex data and automate redundant tasks allows warehouse managers to focus on high-level, value-added activities, which often leads to better decision-making, ultimately enhancing overall operational effectiveness and safety.

Increased Throughput and Growth

Implementing AI in warehouse operations not only streamlines processes but also drives significant improvements in

throughput and revenue goals. AI-driven processes lead to faster and more accurate order fulfillment, boosting productivity and satisfaction among employees. This, in turn, supports the achievement of higher revenue goals and builds a stronger reputation with shipping partners and customers.

Challenges in AI Adoption

Implementing AI in warehousing also comes with its own set of challenges. One of the main challenges is the initial investment required to implement AI systems and integrate them into existing warehouse operations. This includes costs associated with hardware, software, training, and maintenance. Additionally, there may be resistance from employees who fear that AI will replace their jobs. Overcoming these challenges requires careful planning, effective change management strategies, and clear communication to ensure that everyone understands the benefits of AI and how it can enhance their roles rather than

replace them. Clear communication about the benefits of AI, coupled with comprehensive training programs, can mitigate fears of job displacement and increase acceptance of technological advancements.

It is important to have a strategic approach to implementing AI. There is a lot of misinformation and hype around this technology, and understandably so. No technology in recent years has moved at the speed with which AI has grown. Ensure you are finding the right resources and support to help you be successful in this endeavor.

Nilay Parikh is the founder and CEO of Arvist, a warehousing AI startup. He has worked with various multinational software and manufacturing companies in various product management capacities. He has a Masters in Aerospace Engineering from the University of Southern California and spent close to seven years in the Additive Manufacturing and Supply Chain industry prior to starting Arvist.

5 STEPS TO BUILDING A SUCCESSFUL CUSTOMER-CENTRIC RETURNS EXPERIENCE

BY MIKE BENTLEY

While historically the topic of returns has widely been regarded as an afterthought by retailers within the context of their overall supply chains, the pandemic-fueled surge in e-commerce transformed it into an issue that can no longer be ignored. Total industry returns for merchandise in 2023 was $743 billion, or 14.5% percentage of sales. That means for every $1 billion made in sales, on average, a retailer will incur $145 million in returns.

It’s critical that retailers understand and harness the power of building a customer-centric returns experience to be successful and protect their bottom lines. In fact, a staggering 96% of consumers reported a good returns experience would lead to repeat business. So, how exactly do you foster a positive returns experience to supercharge brand loyalty? The answer can be boiled down to five key steps.

Determine the Right Strategy for Your Business

All returns policies are not created equal. Many retailers rush into a returns policy before performing due diligence to guide the strategy. For example, will you provide free returns? What will be your returns window? Why? Questions like these are critical to consider,

and the right answer can vary greatly depending on your brand’s values, goals, and products.

For instance, are you willing to completely cover the financial cost of the return to enhance customer satisfaction and loyalty? Or would you prefer to introduce a flat fee or variation in price based on item size to avoid shouldering the full shipping cost? Many of these answers will be influenced by your product. A free returns policy may make a lot of sense for one retailer, but it could become an extraordinary cost center for another depending on your niche (for example, weighing the cost of shipping a sweater vs. big, bulky appliances). Some retailers may even opt to let customers keep unwanted items and ship them a new one based on cost analysis (in other words, if the estimated charges for the return will exceed the value of the item).

As another point, one brand may opt for a more generous returns window while another may shorten theirs to create a sense of urgency. An apparel company may have a shorter 30-day returns window vs. a more lenient 90 days due to the seasonality of its product, which renders merchandise essentially obsolete once the weather changes.

Gather the necessary stakeholders to weigh the pros and cons (preferably tapping into historical data on cus-

tomer returns trends) to develop a strategy that best aligns with your business and customer values. Once established, ensure you clearly communicate your returns policy with concise directions that are easy to find on your website and/or packaging.

Offer Easy-to-Initiate Returns

No matter your strategy, providing an easy-to-initiate returns process is critical. Today, it’s becoming standard practice to initiate returns through a self-service portal rather than the traditional method of including a label in the packaging to streamline the customer experience.

Because more and more consumers do not have access to printers in their homes like in the past, retailers are largely moving to a 100% paperless experience. Rather than requiring consumers to print a label after initiating a return via an online portal, brands are increasingly issuing customers a QR code they can show at the drop-off returns location. In many cases, the consumer does not need to supply their own packaging either as that is handled by the drop-off location — creating a fully paperless and packageless returns experience.

Provide Flexible Drop-Off Locations

It’s imperative to offer various drop-off options to cater to diverse customer preferences. This may include returning items in-store, by mail, or through a drop-off location like the post office or a partner retail location. Smart lockers, which are becoming increasingly popular in Europe and could catch on in US urban areas in the near future, are also an area to watch.

While offering multiple drop-off locations is important, retailers can choose to offer incentives within their policy to encourage one option over another. For instance, companies with a brick-and-mortar location may offer free returns in-store only to minimize shipping costs and timing. Additionally, driving in-store foot traffic could lead to a customer ultimately opting to select another size vs. returning the product altogether, as an example.

Issue Fast Refunds

Customers expect refunds as soon as possible, preferring to get their money

back within days vs. the weeks that were considered acceptable in the past. Issuing refunds within 24 hours is quickly becoming the norm, largely driven by “the Amazon effect.” Retailers today are striving to deliver a similar experience to remain competitive and keep pace with customer expectations. With that, retailers are more focused than ever on issuing a refund once the package is scanned at the drop-off location.

Communicate, Communicate, Communicate

Customers are looking for consistent updates on the status of their returns and refunds. As mentioned earlier, a self-service portal is critical to offering transparency and real-time updates throughout the returns process. Additionally, ensure you have the proper customer service channels in place. During the returns process, a customer can already feel frustrated. A good customer service strategy will minimize frustrations and not exacerbate them. Provide clear and various methods to contact customer service via phone,

email, and/or online chat to resolve any questions or issues in a convenient, timely manner.

The modern commerce environment is ever-changing. While these five steps will help establish a returns process that works for you today, don’t set it and forget it. It’s important to continually track, analyze, and adapt your process in real-time, fueled by quantitative and qualitative feedback like returns data and customer feedback. By referring to these five key steps as a foundation, though, you can remove the friction from the returns process to create a strategy that will meet the needs of both your customers and your business.

Mike Bentley has worked at GEODIS for nearly 10 years and currently serves as the Director of Transportation Operations for the Americas region. GEODIS is a global third-party logistics company with expertise across the entire supply chain, including transport services, freight solutions, and warehousing. For more information, visit geodis.com.

THE 2024 CARRIER SATISFACTION SURVEY: OUR READERS RATE THE CARRIERS

By Amanda Armendariz

Our 2024 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. We’d like to extend a huge “thank you!” to all who participated in the survey!

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?

Carrier Performance

On a scale of 1-5, with 5 being the highest

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

The number of "yes" responses for FedEx are up slightly compared to last year, while the number of respondents who used the USPS and UPS went down.

A few scores were almost identical to last year’s survey, but for the most part, scores were down across the board.

Other Insights into Our Industry

Almost two-thirds of our respondents reported reaching out to their carrier reps to discuss concerns about how to handle volume growth, supply chain disruptions, etc. Proactivity is key, so this is encouraging to see!

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

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

Other

Out of those who reached out, the number who said the concerns were handled very well or somewhat well declined compared to 2023, while the number who experienced disruptions that could have been at least somewhat mitigated increased.

The number of respondents who believe there is enough competition in the parcel industry to keep prices low and service good increased substantially compared to last year’s 47%.

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

Like last year, accessorial charges took the #1 spot when respondents were asked what their biggest complaint with their primary carrier was, followed by service failures, which came in at a significantly higher number than in 2023.

Of those subscribers who answered our survey, the majority ship fewer than 100,000 packages per year, but the number who ship more than a million packages per year is a solid 25%.

Needed to achieve better pricing

Dissatisfied with service

Changed our level of service (i.e., air to ground)

Diversified to use more carriers

Reduced the number of carriers used

Re-bid transportation and a different carrier won

Needing to achieve better pricing was the overwhelmingly popular answer when asked why our readers modified their primary carriers, just as it was in last year’s survey. However, this year, no one reported reducing the number of carriers used, which was a marked decrease compared to 2023’s 16%.