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 www.PARCELindustry.com 18 October 2008 http://www.PARCELindustry.com

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

Parcel - October 2008 Contents 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

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