Global e-commerce sales are set to top $1.65 trillion in 2015 and are expected grow at double digit rates over the next 5 years. E-commerce has now evolved into a cross-channel buying experience. The consumer has benefitted immensely from the convenience of buying, picking up, and returning across any channel, but this has posed enormous challenges for retailers. Enabling a seamless cross-channel experience with a solid fulfillment capability is a great opportunity for retailers to provide differentiated customer service. Companies have realized that an enticing online presence should be backed up by a sound fulfillment operation that provides the consumer the right product at the time they want it.
E-commerce sales have quadrupled over the last decade and you can credit Amazon.com with fueling this trend. The industry waits anxiously to see what innovative disruption Amazon introduces next in the delivery logistics space. Meanwhile, shippers and logistics service providers are scrambling to incorporate parcel freight optimization and execution into their enterprise transportation management operations.
Here are three reasons why you should consider integrating parcel into your transportation plans:
1. Multimodal optimization. In the past, transportation management systems focused on a single mode of transport such as truckload, ocean, or air, and they fell short in providing decision support and execution capabilities across modes. Parcel was typically handled by a separate system and was always considered as an afterthought. These systems usually lacked optimization capability as well.
The good news is that companies can now emulate Amazon’s success with a best of breed omni-modal TMS platform. Such platforms natively support parcel along with all other modes, thus allowing companies to incorporate this capability and achieve significant cost savings. Companies save five percent or more on annual freight spend while also consolidating their previously silo’ed, disparate systems onto a single, cloud-based platform that allows them to more effectively manage their transportation components in a 24/7, real-time environment.
2. Route and rate selection. Opportunities for parcel optimization often include a combination of other modes, such as less-than-truckload (LTL) or truckload, that can be used to transport consolidated parcels to an intermediate location before dispatching them for final delivery. An omni-modal TMS figures out the best routes and rates for such cases. Shippers and 3PLs that lack sufficient volumes to consolidate parcels can use a single TMS to maximize savings by having a company-wide freight selection process to ensure the best rates and carriers are being used to ship parcels, LTL, and truckload shipments. Therefore, a TMS designed for shipments of all sizes and modes provides a comprehensive capability for shippers and logistics providers to benefit from expanded opportunities for cost savings.
Truly omni-modal TMSs have built-in parcel capabilities and applicability way beyond the retail business-to-consumer (B2C) world. Companies in several industries across manufacturing and distribution also leverage parcel for business-to-business (B2B) shipments. An omni-modal TMS is sophisticated enough to combine products into a pallet or two and then suggest locations where they can be broken up to be sent out to different places for last mile delivery.
3. Complex shipment plans. When it comes to shipping temperature-controlled, security-sensitive, or time sensitive shipments, being able to meet all of those demands within the small parcel environment can be a big challenge. Additionally, when you get into more critical type shipments for the healthcare or pharmaceutical industries, for example, it’s about more than just shipping speed. One may have to intervene halfway through the delivery and re-ice the shipment, or perhaps the packaging itself is unique. All of these elements add more complexity to the shipment plan. Workflow-based systems that allow exception handling, prioritization of tasks, and automation of processes become critical factors beyond the pure execution of shipments.
Simple systems which just provide the capability to “print the label and put it on a truck” have been commoditized. The market has moved toward integrated transportation management systems that manage multiple parcel carriers and other modes at the same time. Sophisticated features like zone skipping and mode and service level optimization provide the key to profitability and customer satisfaction, enabling shippers to differentiate in the marketplace.
One wonders where the next chain of disruption in logistics is going to come from. Whether it is Amazon with its drones, Uber expanding to logistics, or somebody else with a completely new idea, one thing is clear: technology plays a key role in transforming great ideas into action and companies need to up the ante in adopting the latest technologies and set themselves up to take advantage of innovative solutions.
Vikram Balasubramanian has more than 18 years of experience in the supply chain space. He currently serves as Sr. Vice President, Strategic Product Development for MercuryGate International and is responsible for go to market strategy and product commercialization. Prior to MercuryGate, Vikram was VP of Product Management and R&D at E2open. Before E2open, Vikram held leadership positions in IBM, PepsiCo and i2 Technologies across various roles in product management, pre-sales and consulting.