Unlock profits: your parcel business intelligence guide

Wrangling in parcel data

Chances are good you already have a lot of parcel data on hand. It’s often assumed that more data equals better results and service. But so many companies have spent the last decade collecting data and now don’t know what to do with it.

Parcel data can be hard to use because it is fragmented across carriers, siloed in carrier portals and unstructured in electronic data interchange (EDI) feeds. It’s nearly impossible to extract actionable insights from a messy dataset.

You need insight into your internal team and carrier performance if you’re going to scale spend and preserve margin. When you operate with cluttered data, finding these cost-savings opportunities is unlikely, if not impossible.

So, what do you do? High-quality parcel business intelligence comes from clean, centralized data. It is the foundation for setting baselines, monitoring anomalies, and identifying friction in your logistics processes.

Keep reading to learn more about how parcel business intelligence works and tips for using high-quality data to boost profitability.

What is parcel business intelligence?

Parcel business intelligence is your view into your network. With these insights, you can make data-driven decisions to reduce costs and boost performance internally and across your network.

How does parcel business intelligence work?

The first step is gathering your parcel spend data. After all, high-quality data unlocks a high-quality analysis. You want to collect applicable data points to understand what’s happening across your network. Carriers provide you with most of the data. But you’re responsible for aggregating customer data. Here’s the breakdown:

Carrier data

• Shipment data: Information about individual packages sent, such as origin, destination, weight, dimensions, tracking numbers, and delivery status.
• Geographical data: Locations involved in a shipment, such as origin and destination addresses, lanes, facilities, and carrier hubs.
• Operational data: Details about internal parcel management processes, such as packaging, packing times, loading processes, warehouse activity, and parcel spend management.
• Spend data: Costs associated with shipments, including carrier rates, fuel surcharges, accessorials, discounts, and invoice audit results.
• Contract data: Terms and conditions of carrier contracts, such as pricing structures, rates per volume, services, service levels, discounts and performance guarantee.
• Network data: Capabilities and performance of all parcel carriers in your network, such as carrier coverage, rates by volume and service types, available services, and performance.

Your data

• Customer data: Information about parcel recipients, such as demographics, purchase history, and LTV of customers.
• Cost codes: Internal codes for how you allocate costs across your business, such as cost center, company #, business unit, and general ledger (GL) code.

Intelligent software like Loop cleans up countless reference numbers and codes into a unified system to make your data set more valuable. High-quality data improves your business intelligence.

Loop improves invoice visibility so you never extract an EDI invoice incorrectly again. For example, it looks at a UPS EDI feed and matches its code ND to UPS Next Day Air so it’s usable by any person looking to analyze their UPS Next Day Air performance. It then allows you to look at UPS Next Day Air and FedEx Overnight Shipping in the same dashboard so you can understand how much you’re spending on this service-level across carriers.

Once you have standardized data, you can automate cost allocation to break down your spend in different dimensions. This reporting helps uncover anomalous and inefficient spend. You can compare your parcel network spending to your return on investment (ROI), per-unit margins, and SKU-level profitability.

Look at an example: Your carrier for a given lane only makes its on-time delivery 70% of the time for next day delivery. Use that data to negotiate for a more favorable discount on that service-level. You can also identify lanes where expedited shipping is wasteful. Are you paying for next day air when your package arrives at the same time with ground shipping? That’s an insight you gain from organized data and an opportunity to optimize your shipping decisions.

In every analysis of your parcel network, you’re dealing with a lot of moving parts. Loop simplifies the data collection and organization through:

• Flexible ingestion: Pull data from where it’s trapped in several documents and centralize it.
• Data organization: Clean and standardize messy shipping data. Manage adjustments and consolidate data duplicates so you can trust the finalized data set. Then unify data across all your carriers and facilities.
• Automatic cost allocation: Assign a cost code to each invoice and line item. Run a granular cost analysis across shipment, lane, carrier, accessorial, and product to assign a cost per category.

With an accurate data set, you’re equipped with valuable insights to make informed decisions.

5 ways to use parcel business intelligence

1. Evolve from actual costs to forecast precision

A common mistake among shippers is using only a handful of data points to inform business decisions. Most shippers gut-check invoices. They may only look at the list rate instead of the net rate or don’t thoroughly read renewal contracts to ensure discounts are honored. As a result, they’re dealing with data that doesn’t reflect an accurate landed cost.

For a comprehensive look into your network, you need true cost analysis down to the SKU level. It’s the only way you’ll gain an accurate understanding of your spending. Look at trends and identify large variances that could be eating away at your bottom line.

Loop uses logistics-AI that reliably captures all spend across your network. You can break it down to a line-item level or view it in aggregate across multiple carriers. It extracts small details in contracts, invoices, and other important documents to provide an accurate cost breakdown.

For example, you can easily spot if carriers bill us public or discounted rates. Or, you can gain network-wide insights to know if switching from FedEx to UPS could save you money. All these insights are at your fingertips when you have network cost visibility.

As you gain confidence in the information, how to leverage it to understand what decisions the business has made, identify trends and improvements your focus can shift to a forward looking network. Based on historical demand and market factors, where will your volume see increases over the next 6 months? What new promotions do we have and how will your performance stack up to meet the customer required date?

Pro tip: Aim small, miss small. All too often companies' leaders are left with guessing because facts are hard to come by. A business intelligence solution allows you to become precise and set eyes on your network goals.

2. Run a root-cause analysis

Once you’ve identified an inefficiency, how do you resolve it? First, you need to understand its origin. That’s where running a root-cause analysis fits in. Specifically, assessing your Invoice First Pass Accuracy.

Many shippers and third-party logistics providers (3PL) use Invoice First Pass Accuracy as a key performance indicator (KPI). In effect, it’s a data point on the number of invoices correctly processed the first time. Accounts payable (AP) and accounts receivable (AR) teams use it as a marker of efficiency. So, why is this important?

This data informs how often a shipper needs to request refunds from carriers. If you have to request a refund on a high percentage of payments, you should focus on improving your Invoice First Pass Accuracy.

In effect, you’re digging into the error to uncover what went wrong. It could be something like incorrect master data, wrong GL codes, or an issue at the carrier service level.

Pro Tip: Sure you’ve heard “if it was easy, it would already be done.” Issues often are compounding with discrepancies and it quickly becomes the game of telephone as you’ll often hear “this is what they told me to do.” Write down the process steps and what dependencies exist. Invite your carrier operations teams onsite to go through it in person if need be.

3. Pick the right carrier, for the right lane, for the right price

With an accurate understanding of your shipping costs, look for opportunities to optimize your routes to save money. You can also use the data to ensure you’re receiving the services that you’re paying for.

Start by using the data related to shipping speed, on-time delivery, and actual delivery versus expected delivery to find places where your spending could be more efficient. For example, would using SmartPost, FedEx’s last-mile delivery service, as the final delivery step be more effective?

Be sure to use a suitable carrier for each segment of a shipment’s journey. A setback in one place can ripple downstream, putting you at risk of accruing additional expenses.

Pro tip: Diversifying your carrier network grants you more flexibility when creating the most efficient shipping setup. It allows you to save on costs and have more leverage when negotiating carrier contracts.

4. Accurately scenario plan for future events

Accurate scenario planning for your network means looking at how you can optimize carriers, shipments, and lanes to save money.

Let’s break down three use cases for how you might use network insights to scenario plan.

• Use case 1: How will you handle supply chain disruptions or carrier strikes? Say a major disruption means the carrier for a specific leg of your parcel shipment’s route is no longer available. You need ongoing relations with other carriers to quickly adjust. Doing so will ensure your routes are cost-effective and maintain your on-time performance.
• Use case 2: How can you adjust your network to save more money? First, you need to thoroughly understand your contract’s discounted rate per volume. It’s with this information that you’ll gain insight into the total average charge per shipment. If you flex up shipment volume with a carrier, can you get to the next tier of volume that unlocks greater discounts?
• Use case 3: Adjust your facility setup to better meet your needs. If you only have one distribution center in California, then you’re subject to that state’s regulations and you’re always running long routes to service the rest of the country. Analyze your data to see where else you could build a hub to expedite longer routes and save on tariffs.

With a plan to navigate disruption, you can efficiently meet your shipping needs while keeping costs low. You have the right insight to continually assess your network. With proper scenario planning, you can adjust quickly and dramatically reduce the risk of potential financial loss.

5. Effectively manage carrier contracts

Managing carrier contracts is one of the most challenging tasks for shippers. It’s also one of the most important. There are opportunities for significant cost savings within carrier contracts if you have the data insights to find them.

To effectively manage contracts, you have many data points to track:

• Contract details
  • Minimum volume commitments
  • Guaranteed service levels (SLAs)
  • Contracts discount
    • Volume discounts
    • Accessorial fees and discounts
    • Fuel surcharges and discounts
    • Service fees and discounts
• Shipment details
  • Zone
  • Service type
  • Average cost per shipment
• Package details
  • Dimensions
  • Weight and dimensional weight

At the same time you aggregate all these data points, make sure you have an understanding of your net rate and total average rate. Your net rate is the amount the carrier charges to send a parcel from the sender to the receiver. The total average rate is the average shipping cost per parcel.

The total average rate is the most important number you’ll want to look at when gaining insight into your spend. Say you receive a discount of 25% from the carrier. If that 25% is applied to your net rate, you still need to add on accessorials and surcharges to reach your actual rate. In actuality, you’re looking at more of a 10% reduction. Make sure you verify where your percentage discount is applied: is it off your net rate and how will it impact the average spend per package? Carriers sometimes have a way off offering you a massive discount on package types you don’t often send.

Pro tip: A common mistake is overlooking the minimum contract charge, which means the “discounted rate” isn’t truly a discount. Take these base rates into consideration to ensure the discounts you’ve negotiated will actually help decrease your shipping costs.

You must ensure you accurately pay for your contracted service in these areas. Hands down the best way to accomplish this is through automated audits. The data will tell you where late deliveries or accessorials rack up. Use the data to inform when it’s time to request an additional discount or add an addendum to a contract that accounts for repeat accessorials.

When managing carrier contracts, you need to know where and how to negotiate for better discounts or lower costs. You can leverage your high-quality data set to identify your biggest costs. Then, you can focus your negotiating efforts on these areas where discounts will have the greatest impact.

Loop: Boost parcel business intelligence to unlock profit trapped in your supply chain

Loop standardizes parcel data from all of your carriers so you can analyze your spend and shipment data across your network. With premium data at your fingertips, you’re armed with network insights to make impactful parcel business decisions.

With Loop, thriving in an ever-evolving and competitive shipping landscape is achievable.

Ready to unlock profit trapped in your supply chain? Contact Loop today.