The Science of Shipping

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Mailstream technology company Pitney Bowes has conducted the most extensive report yet into take-up and usage of intelligent shipping solutions. Results suggest significant room for improvement amongst eligible businesses across Europe.

Managing the shipping of parcels and pallets is an increasingly complex business function. Whether businesses are delivering their own goods to customers or providing a dedicated shipping service to clients there are significant challenges for any operation despatching items on a daily basis.

A new report from mailstream technology company Pitney Bowes reveals the extent to which businesses in the UK, Germany and Benelux are utilising shipping software to overcome these challenges. The report also spotlights the main business advantages provided by intelligent shipping solutions and the disparity between free software (typically provided by individual carriers) and paid-for specialist solutions.

 Headline findings: 

  • 45% of eligible businesses (10 or more packages per day) still operate without specialist shipping software
  • Only half of all respondents have full track and trace functionality
  • Around 70% of companies investing in specialist multi-carrier software achieve ROI within 12 months

The shipping software market

Today there are multiple delivery carriers available, providing a myriad of specialist services and cost options. Companies face the very real pressure of ensuring shipping remains a cost-efficient process whilst providing a service that affords continual customer satisfaction whether these customers are consumers or businesses.

The Pitney Bowes report details the findings of a comprehensive survey of 6000 respondents, each providing basic information about their volume of parcels and use of software. From this initial pool, over 400 were then asked for additional detail.

The survey indicated that the market falls broadly into three distinct segments relating to the average number of parcels shipped each day.

The broad categories are:

  • 86% in the low-end range (shipping between 10 and 85 parcels per day)
  • 10% mid-market (shipping 86 to 200 parcels per day)
  • 4% large user market (those shipping over 200 parcels per day)

 

Productivity, customer service and competitive advantage

Not all the companies surveyed use software to manage their shipping. For those that dont, the most common reason is that they consider their volume too low to warrant the installation.

55% of the sample had either free software or paid for software. Somewhat incredibly, businesses shipping 200 or more parcels or pallets per day were amongst the 45% of respondents without software.

Clearly, there is scope to educate much of the marketplace on the business benefits of specialist software from relatively low-volume shippers, right up to the complex high volume operations.  The benefit of intelligent shipping extends beyond saving costs since it enables companies to provide better services to customers. According to consultancy firm Capgemini, leading firms are making significant commitment to the development of end-to-end supply chain capability in order to improve productivity, customer service and competitive advantage. The obvious implication is that those businesses not making investment into sophisticated shipping solutions stand to quickly fall behind more forward-thinking competitors.

 

The cost to business of free software

Amongst those companies using software to manage their shipping function two-thirds are using free software supplied by carriers. The UK is the highest user of free software, with Germany and the Netherlands having a higher use of specialist software.

There are obvious disadvantages with free software. Companies are tied-in to the carriers services and may not take full advantage of new pricing or services from rival carriers. In turn,  free software is unlikely to interface with enterprise applications or systems, meaning the end-to-end visibility required to better serve customers is limited and cost-efficiencies remain unrealised.

Additionally, if businesses are working with one or more carrier, the footprint of the required operating portals begins to become intrusive. The survey unearthed cases of businesses using as many as 15 sets of free software, effectively barring convenient integration of data and holistic visibility of the entire order-to-cash despatch process.

 

The business benefits of specialist software

Customers were asked to rate the importance of a range of different functions or benefits and then to rate their supplier or software on its performance.

Average satisfaction increases progressively from low-end to high-end market segments. Users of paid-for software also score the performance of their software above users of free software on every factor.

The most important benefit of multi-carrier software is to reduce costs. This function topped all three market segments. The second most important benefit is the ability to handle parcel variety. This response can again be taken as a customer service initiative, with businesses looking to be as flexible as possible in the delivery services that they offer and the range of goods that they deliver.

Customer communication was also high on the list of requirements for users from all volume brackets. 

Almost half of all respondents said that they had access to information to inform customers about delivery status. One quarter provided customers with full visibility through direct access to information. However, only half of respondents have full track and trace capability rising to three in five of all firms shipping 85 or more parcels each day.

Again, there is huge scope for improvement in this area. For any customer receiving goods whether a business or a consumer query resolution plays a vital role in customer satisfaction. Knowing the precise status of a parcel within the delivery chain provides full job integrity and offers significant added value to customers.

 
The IT resource drain

Users of specialist software have a variety of sources for their application. Some 59% of respondents claim to develop their own solutions, an unnecessary drain on IT resources that seems to contradict good business sense.

One of the major benefits of off-the-shelf specialist software is access to a library of carrier interface routines, making it far easier to change carriers if required. Packaged software generally affords more and better functionality. Indeed, Capgemini suggests that manufacturers, wholesalers and retailers already using ERP systems will benefit from off-the-shelf software, with little or no customisation to specific needs.

 

Sound investment

Most companies investing in specialist multi-carrier software achieved a very rapid return on investment. Depending on the market segment, around 70% or more achieved break-even within 12 months.

Despite this finding, there are still a surprising number of companies shipping notable volumes of parcels that do not use specialist software.

The Pitney Bowes survey suggests that now is the time for laggard businesses to consider their future planning. The specialist multi-carrier software market is still relatively immature particularly in the UK.

Todays cutting edge software will support the rates, labels, manifest and all required documents of the wide gamut of carriers and will handle the EDI data transfer to the chosen supplier.

This document management benefit is augmented by obvious cost efficiencies as the above ROI figure suggests meaning businesses can deliver better value to customers. But equally, specialist software is allowing leading businesses to deliver customer-driven solutions that encourage two-way track and trace dialogue, resulting in customer satisfaction and repeat business.

Certainly, the business of distribution has never been more sophisticated. But with this complexity comes choice and the opportunity to benefit from a competitive, ever-changing carrier marketplace.

Ultimately, those businesses ignoring specialist solutions for an increasingly specialist business function face the very real risk of falling irreversibly behind more forward-thinking competitors. Arguably, free software has never come at such a price.

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