Parcel - October 2008 - (Page 18)

trends IS YOUR PARCEL NETWORK OPTIMIZED? It must be to operate in world-class territory By Mike Williams I n the May issue, we discussed how having great parcel rates does not necessarily mean you have a great contract. The contractual terms of a parcel contract can provide as much value and financial return as the base rates themselves. Nevertheless, let’s say you are one of these “overachiever” types and you feel pretty confident that, through your guidance, your company is already operating in worldclass territory when it comes to your parcel contract. What is next? Ask yourself this question: “Is my parcel network optimized?” If the answer is “No” or you are not sure, then you may still have some work left to do before you can truly say you have a best-in-class parcel solution. Only an optimized parcel network can take advantage of the full value of a parcel contract. What does the word optimize mean, and how does it apply to your parcel network? Optimized has two academic definitions, but the second is the one that most accurately describes the parcel optimization process: Optimization means to modify to achieve maximum efficiency in capacity, time or cost. Companies that are not operating their parcel networks to achieve maximum efficiency can reduce costs, improve service levels and reduce transit time through optimization. Most large shippers do not have the technology or resources to perform the level of analysis required to identify optimization opportunities. For those that do, the results can be a 10% to 20% improvement in overall network efficiency. The first step towards optimization is to create, refine and communicate your parcel transportation strategy. Your carrier contract and your transportation strategy have to be coordinated, or you risk losing valuable efficiency. A shipper’s transportation strategy consists of many different elements. There are the obvious ones that come to mind, such as defining the service levels required to support each business segment and planning for future volume growth. But there are also other pieces to the puzzle that should be addressed as part of developing your parcel strategy. Here are four examples of strategic focus areas that, if overlooked, can result in an out-of-sync network. 1) Understanding the value of operating a single carrier vs. a multi-carrier model 2) Defining your order management model to determine what is the customer’s expectation of service 3) Preferred contract cycle for each business segment 4) Identifying future infrastructure plans, such as additional shipping locations Taking a fresh look at your network strategy is a key enabler to true network optimization. Any shipper operating without a clearly defined parcel strategy is treading in dangerous territory. Drive Compliance Once you have your strategy developed, the rest of the organization has to buy into it in order to make it work. As transportation managers, we can negotiate great contracts and develop comprehensive shipping strategies but we are still dependent on others within the organization to achieve our results. This is often a difficult task when it comes to parcel shipments. Unlike LTL and Truckload, everyone has shipped a personal package with a parcel carrier. This experience creates a confident usercommunity that is not compelled to ask questions or educate 18 October 2008

Table of Contents for the Digital Edition of Parcel - October 2008

Parcel - October 2008
Editor's Note
What Would Augello Say?
Best Practices Survey Results
Going with the Flow
Is Your Parcel Network Optimized?
Last (Mile), but Not Least
Moving From Manual to Automated Fulfillment
A Race for Excellence
Making Ends Meet
Is Your Job Killing You?
Software Selection Demystified
Controlling Costs
On the Mark
Product Profile
New Products & Services
Advertiser Index
Wrap Up

Parcel - October 2008