5 Strategies for Effective Parcel Spend Management

What Is Parcel Spend Management?

Parcel spend management is the process of analyzing and optimizing your shipping costs to reduce parcel delivery expenses. It involves negotiating favorable rates and services from shippers, auditing parcel invoices, and automating shipping processes to increase efficiency without lowering service quality.

Effectively managing your parcel spend is essential for cutting shipping costs and improving efficiency. Even the smallest oversight can lead to significant overpayment or lower service quality, hurting your bottom line and customer experience.

5 Essential Strategies for Improving Your Parcel Spend Management

Parcel spend management aims to reduce shipping costs. It’s an essential practice for improving your bottom line, and with the right strategies, it can even improve your service quality.

Here are five parcel spend management best practices you can implement to save money.

Conducting Parcel Audits

Billing mistakes are common in shipping, especially for high-volume contracts. Small shipping rate miscalculations due to mismeasured parcels and unnecessary accessorial fees added to invoices can increase spending.

Fortunately, parcel invoice auditing uncovers billing errors, incorrect rates, overcharges, and unnecessary expenses, so you can avoid paying more than you need to.

Negotiating Carrier Contracts

Carrier contracts control the costs of shipping and additional services, which set the base for your total parcel spend.

You can negotiate loyalty or volume discounts to help lower shipping costs and fuel or accessorial fee surcharges to help make costs more consistent.

Optimizing Packaging

The weight and size of your parcels significantly impact your parcel spend. The more space it takes up, the fewer parcels can fit in one delivery. Additionally, heavy packages use more fuel, increasing costs.

Package optimization helps your parcels take up less space and weight overall, lowering your base shipping costs. Plus, it helps ensure product safety and regulatory compliance.

Automating Shipping Processes

Shipping itself isn’t the only cost associated with your parcel spending. There are also logistics processes like choosing the right shipping method, printing labels, and tracking packages that you can automate with transportation management software to save on labor costs and reduce errors.

Analyzing Data for Insights

There’s a lot of data involved in shipping–and with the right tools, you can gather and analyze it to uncover shipping optimizations you can make to reduce costs.

For example, finding shorter shipping routes to save time and gas on delivery and identifying which carriers are most cost-effective are a few ways to lower shipping costs using insights from parcel data.

The Importance of Carrier Contracts in Spend Management

Any effective parcel spend management strategy is built around cost-effective carrier contracts.

These agreements outline critical logistical information that sets the basis for your carrier relationships, including:

• Rates and surcharges for services
• Service levels
• Conditions for receiving refunds
• Payments specifications
• Delivery terms

You can also negotiate your carrier contracts, unlocking discounts or additional services based on your shipping volume and relationship to maximize performance and cost-efficiency.

Strategies for Negotiating Better Carrier Terms

Negotiating carrier contracts is one of the best ways to secure consistent savings that lower your shipping spend. As you build better carrier relationships, you increase the odds of negotiating better terms.

You can improve your relationships through:

• Prompt communication in resolving problems
• Establishing clear expectations and terms that you adhere to
• Consistent and high-volume shipping
• Timely payments and flexible payment methods
• Recognizing excellent service and performance
• Collaboration with carriers to identify issues and come up with proactive solutions

You should also conduct regular freight and parcel audits on carrier invoices to review performance metrics and service costs. With this parcel data, you can negotiate better terms or switch carriers as needed.

How Automation Helps Optimize Your Shipping Processes

Automation plays a major role in streamlining shipping processes to improve your supply chain efficiency and cost-effectiveness by increasing accuracy and speed. According to a 2018 McKinsey study, well-executed automation can lead to a 25-55% reduction in costs and a 10-35% increase in productivity.

Fortunately, modern shipping software and management systems allow you to achieve these improvements in a fraction of the time. Here are just a few ways a program can help:

• Automating label generation reduces errors and misdirected shipments.
• Automated systems handle complex administrative tasks to ensure compliance and minimize errors.
• Advanced transportation management systems (TMS) enhance visibility, automate processes, and identify optimization opportunities.
• Real-time tracking tools help maintain transparency and reliability in the delivery process.
• Advanced algorithms predict future shipping needs and optimize transportation modes to improve efficiency.

Parcel audit software also centralizes all shipping data, providing a comprehensive view of parcel carrier performance and shipping costs over time. With the help of data visualization, scenario planning, and predictive analysis tools, you can leverage this insight to:

• Identify fluctuations in market demand
• Plan strategies to meet market demand efficiently
• Make informed decisions
• Optimize shipping operations
• Improve efficiency
• Identify and reduce unnecessary expenses

By collecting and analyzing data, you can more effectively cut costs, negotiate with small parcel carriers, and forecast shipping spending for predictable budgeting.

The Role of Parcel Auditing in Spend Management

Parcel audits provide visibility into both individual transactions and broad trends. With the help of a comprehensive parcel auditing solution like Zero Down, you’ll have enhanced visibility that allows you to make informed decisions about your shipping process, which can lower your shipping spend by as much as 15%.

Parcel audit solutions offer several benefits, including:

• Streamlining the auditing process, reducing the time needed to match invoices with contracts from days to just hours
• Minimizing human errors and ensuring greater accuracy in detecting discrepancies in shipping invoices
• Revealing trends and cost-saving strategies through regular audits, allowing for more informed decision-making.

With comprehensive data from audit software, you can better forecast your future parcel spend by identifying trends in your transportation spend.

The Benefits of Visibility: How Zero Down Found A Client 18% More Savings

Data is the backbone of parcel spend management. If your logistics platform doesn’t look closely enough, you’ll miss improvement and savings opportunities—and that’s what happened to a Zero Down client.

After receiving a parcel optimization analysis from a competitor, this client came to Zero Down to double-check their report. With the help of the FreightOptics™ advanced logistics platform, they were able to identify specifically where the previous analysis went wrong and find 18% more savings that were missed previously.

Streamline Your Shipping with Proven Parcel Spend Management Strategies

Effective parcel spend management requires a diverse approach, including negotiating carrier contracts, optimizing packaging, leveraging automation, utilizing data analytics, and maintaining strong carrier relationships. Each strategy plays a crucial role in reducing shipping costs and enhancing overall efficiency.

By implementing these proven strategies, you can achieve significant cost savings and gain full control over your shipping operations. And it’s easy with Zero Down’s TMS and auditing solutions.

Frequently Asked Questions

How do carrier contracts impact parcel spend management?

Carrier contracts impact shipping expenses by defining specific rates, surcharges, and conditions for small parcel shipping. These values help businesses set expectations for costs and service levels to help optimize the shipping process.

What are the benefits of optimizing packaging for parcel shipping?

Optimizing packaging for parcel shipping can help minimize dimensional weight charges, reduce overall shipping costs, and ensure product safety and regulatory compliance.

How can automation reduce shipping costs?

Automation reduces shipping costs by streamlining shipping processes, minimizing manual errors, highlighting optimizations, and identifying billing errors.

Why is data analytics important in parcel spend management?

Data analytics provides insights to help optimize supply chain performance and shipping efficiency, reducing shipping costs and improving decision-making.

How does auditing improve spend visibility and control?

Auditing improves parcel spend visibility by carefully reviewing all charges, verifying them, and highlighting opportunities for refunds. You can use this information to negotiate with carriers and recoup overcharges for reduced shipping spend.