The explosion of e-commerce and the evolution of omni-channel fulfillment has been a topic that has been widely published, written and spoken about. There is no question that Amazon has been blazing the trail in this sector with everybody keenly watching their moves and market experts claiming to predict the next big thing in digital commerce.
The parcel industry has been a direct beneficiary of this megatrend with parcel shipping taking over from people actually going to stores and buying goods. While companies are getting better at e-commerce fulfillment, providing a seamless cross channel experience is still a challenge. Retailers, manufacturers and logistics service providers are still trying to figure out the best way to incorporate parcel freight optimization and execution into their enterprise transportation management operations.
Technology plays a key role in transforming ideas into actions
A positive online experience for the consumer needs to be supported by a solid and profitable fulfillment capability. The key word is profitable, and achieving this is indeed a challenge with razor thin margins and a model that is continuously evolving. 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 setting themselves up for taking advantage of innovative solutions.
Simple systems that 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. This provides the opportunity to consolidate multiple parcel packages into a less-than-truckload (LTL) or truckload shipment and ensure the most efficient path to delivery using sophisticated strategies such as zone skipping.
Retailers and distributors demand smaller, more frequent shipments
Looking beyond B2C, within the business-to-business (B2B) world, parcel has always played an important role. The same opportunity to consolidate freight applies to the B2B market, although in a lot of cases the volumes don’t apply to parcel. There is, however, an increasing trend for retailers and distributors demanding smaller and more frequent shipments. As supply chains trend towards just-in-time methodology to reduce inventory and save on storage costs, manufacturers can leverage parcel as an enabler to differentiate themselves in the marketplace with alternate delivery models to supplement the core truckload (TL) and LTL modes. This is yet another example where co-existence of parcel within enterprise transportation management system helps organizations to respond to changing market requirements.
Service parts industry poses unique challenges for parcel shippers
In the case of the service parts industry, parcel has and will continue to be critical in ensuring rapid response to unplanned events and downtime by enabling the fastest, most reliable and economical method of delivery. The service parts industry, by nature, is very unpredictable and intermittent, making execution challenging regardless of how well distribution can be planned. In situations where shippers and 3PLs lack sufficient volumes to consolidate parcel shipments, they 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 parcel, LTL and truckload shipments.
Marriage of parcel with traditional TMS systems has usually been an afterthought
Parcel-centric systems do not typically have the capability to optimize and consolidate parcels into larger shipments. Similarly, traditional TMS systems that deal with LTL, truckload and intermodal market are unable to consolidate parcels. Identifying and executing savings across a nationwide or global network is difficult, if not impossible, by using one or both types of these TMS platforms. A TMS solution designed for all shipment sizes and modes, on the other hand, can create efficiencies and better enable businesses to profitably fulfill their customer needs. In our experience working with shippers and 3PLs with significant parcel volumes, companies can save between 30 and 50 percent with zone skipping rather than shipping items individually from origin to final destination.
How mature is your organization’s technology?
It is anybody’s guess as to when the next huge disruption is going to hit the logistics and transportation sector. However, it is a fact that new technologies and solutions continue to chip away, challenge and improve on traditional and existing distribution models. Companies are being forced to constantly innovate to stay ahead in the marketplace. Where do you see your organization in the maturity curve in terms of technology adoption and innovative solutions that differentiate you in the marketplace?
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.