7 Key Steps to Efficient Parcel Spend Management

Ecommerce parcel cost represents a large portion of the expenses that chip away at your profits. With rising carrier rates and evolving customer demands, optimizing spending has become vital to remaining competitive.

Let’s explore seven steps you can take to implement more effective parcel spend management for your business.

Perform a parcel spend analysis

The first step in parcel spend optimization is understanding your current shipping costs. To perform a proper analysis, you need to: 

• Review historical data: Examine your past shipping patterns and expenses to identify optimization and cost reduction opportunities.
• Forecast shipping volumes: Plan your future needs using transit data, growth projections, and past seasonal fluctuations as a starting point.
• Assess carrier performance: Review the data from the carriers in your network to identify service trends and improvement areas.

For many ecommerce businesses, the key to taking control of a ballooning parcel spend uncovered in their analysis is moving away from a singular carrier strategy and adopting a multi-carrier plan. 

When developing your strategy and selecting carriers to add to your mix, consider a strategic partner like Green Mountain, the industry leader with the world's largest repository of parcel spend intelligence. When combined with a platform like Shipium, which integrates with the systems that power your supply chain, you implement plans quickly, realizing savings immediately. 

2. Negotiate carrier contracts 

Outbound shipping is often one of the top operational expenses for ecommerce shippers. Securing optimal rates and terms from carriers saves you money and boosts your competitive edge.

Negotiating favorable contracts requires you to:

• Compare carrier rates: Analyze the pricing structures from multiple nationwide and regional carriers.
• Negotiate volume discounts: Leverage your shipping volume to secure better rates, focusing on your most common shipment types and destinations.
• Establish service-level agreements (SLAs): Define clear performance expectations with carriers, including delivery times, tracking accuracy, and claims resolution.

For an ecommerce brand, navigating multiple contract structures and data asymmetry makes managing multiple carriers a challenge. However, using data-driven multi-carrier shipping and parcel spend management software can provide the intelligence to get more value from your carrier contracts. 

For example, a solution like Shipium Simulation allows you to test and analyze how changes to your carrier contracts would affect your operation. This type of insight enables you to negotiate armed with an understanding of how specific updates, such as adjusted surcharges, would benefit or increase shipping spend and future network performance.

3. Optimize parcel packaging 

Many shippers don’t realize how much packaging size can affect their parcel spend management. According to Canada Post, adjusting box sizes by just 2 cm on each side could reduce parcel shipping costs by up to 8%. 

To enhance your cartonization strategy to uncover cost-saving opportunities:

• Apply the right-sized packaging: Choose appropriate box sizes to minimize dimensional weight charges and reduce wasted space.
• Use efficient dunnage: Select light, effective packing materials to protect items without adding weight-related fees.
• Customize packaging solutions: Develop tailored packaging for frequently shipped items to optimize protection and minimize shipping costs.

Learn how Shipium’s packaging planner API can help you optimize cartonization and lower shipping costs.

4. Streamline ecommerce logistics operations 

Streamlining operations reduces processing times, minimizes errors, and optimizes resources. Optimized logistics not only enhances parcel cost management and efficiency but also enables higher volume handling, allowing you to scale your business.

Start by:

• Automating your fulfillment: Implement tools to minimize manual processes and errors, increasing efficiency in your order management.
• Enabling smart inventory placement: Strategically distribute inventory across fulfillment centers (FC) to shorten shipping distances and delivery times.
• Leveraging local carriers: Use regional carriers for specific routes to lower costs and improve delivery speed.

The right software partner can make optimization intuitive. For example, Shipium streamlines shipping operations with Fulfillment Engine, automating order routing and reducing delivery expenses by 10% on average.

5. Implement advanced shipping technology

Harmonizing logistics with your broader ecommerce supply chain using API-first software driven by machine learning can save time, money, and resources. When selecting the right technology solutions to modernize your shipping operations, look for tools that: 

• Integrate with your systems: Implement API-driven connections between platforms to enable real-time data exchange and advanced analytics capabilities.
• Implement fully loaded rate shopping: Use software to effectively manage and compare real-time carrier rates, including all fees and surcharges.
• Perform transit data analysis: Analyze transit data to make more accurate delivery promises and optimize carrier selection.

Explore the top mistakes to avoid when picking shipping technology with our industry guide. 

6. Enhance supply chain visibility 

With complete visibility into how your orders move through the supply chain and into the hands of your customers, you can see where potential cost efficiencies exist in your operations. This insight makes optimizing your time-in-transit and managing shipping expectations less challenging, improving the overall customer experience.

With robust supply chain data, you can:

• Track shipments in real time: Use systems to monitor package locations and status throughout delivery.
• Provide realistic delivery promises: Apply dynamic delivery date calculations based on real-time inventory, carrier performance, and external factors.
• Develop a customer update system: Create automated notifications to inform customers about their shipment's progress and estimated delivery date.

7. Monitor and measure shipping performance 

Parcel expense management requires continuous analysis and real-time tracking. Taking a closed-loop approach to parcel fulfillment, you can create a more responsive and adaptive process that continuously improves as your business scales and the ecommerce landscape evolves. 

To refine your process, ensure you: 

• Track key performance indicators: Regularly assess delivery rates, per-parcel rates, customer satisfaction scores, and other important metrics.
• Implement a performance dashboard: Create a visual representation of crucial shipping data to quickly identify trends and areas for improvement.
• Adjust shipping strategies: Use performance data to continually adjust your approach, optimizing routes, carrier selection, and packaging choices.

Consistent monitoring of performance and expenses catches inefficiencies or inaccuracies often unnoticed in high-volume shipping operations. This auditing approach uncovers potential cost savings and operational improvements. Case in point: Green Mountain’s parcel audit software helped a high-volume retailer (over 400 million shipments a year) uncover a carrier invoice billing error, saving over $55 million.  

Get superior parcel cost management with Green Mountain and Shipium 

Leveraging the partnership between Green Mountain and Shipium, you can get robust strategies for optimizing parcel spending and the tools to efficiently execute these plans within your supply chains.

The combination of Green Mountain and the Shipium Platform enables:

• Accelerated time-to-value through swift implementation of optimized strategies
• Significant cost reduction of up to 24% on shipments delivered in 3 days or less
• Enhanced delivery experience through improved speed and accuracy of shipments
• Informed decision-making powered by Green Mountain's vast parcel spend intelligence and Shipium's modern platform

Book a demo today and discover how Shipium and Green Mountain can provide your business with the best parcel spend management solutions.