The Warehouse Rate Shopping Best Practice to Reduce Shipping Charges
This best practice we are going to discuss is called as rate shopping. The rate shopping can be done for both parcel and the (Less than Load) LTL. I mean the parcels are the small boxes that they ship mostly as Ecom orders. Sometimes they also ship retail orders as parcels from the distribution center to the final destination. In Ecom orders it will be a consumer that’s buying product, they place an order on the web or from their mobile device.
In the LTL scenario it will be a wholesale B2B customer that you will be shipping order to, which can be done with rate shopping. If you want to ship your LTL order next day or second day with regular ground, based on that service level you can configure all the rates. You can get FedEx rates or FedEx as a partial service. You can get UPS Parcel Service rates, DHL parcel service rates and the USPS service rates. You can put it in the system with origin i.e the location of your facility and your destination based on this origin. Based on the destination, based on the number of boxes which happens typically after cartonization and the waving process.
I mean we can even talk about the waving process. Eventually the cartons are created based on the number of items that need to be fit within these boxes and after choosing the best box, you can perform rate shopping for this box that is to be shipped from the origin to the destination. This can be spread across three or four parcel carriers for that service level. Let’s say that the customer chose the service level they need when they placed an order.
They would want ground or next day or second day air shipping, so whatever it is based on that service level you can get the rates with FedEx, UPS, USPS and DHL. You can compare all that and then you can choose the least expensive option. For example, if you don’t see a big difference between FedEx and UPS but sometimes it adds up if you are shipping tens of thousands of boxes per shift that still adds up. That’s a big number even if you say $1 for one day and if you’re running for 200 days that adds up that’s a big number such as $10,000.
So that’s something to think about and you can do the same thing in the LTL carrier side as well. Especially if you’re going to pay for the LTL and the customer is not paying for the transportation service you should figure out the LTL carrier which offers the best deal. You can still run rate shopping with the LTL carriers as well as similarly get the parcel carrier rates and then put it in the system and then you can run your cartonization and then palletization. Based on the number of cartons, based on the weight, based on the volume you can you can run rate shopping and then figure out what is the least expensive rate and you can take that carrier as the preferred carrier.
So these are some things you do not want to think about, but these are more on the transportation side of the business. But still need to be considered while designing your WMS implementation. I am sure this is helpful, and thanks for taking the time to watch this video and share your comments in the section below.