Reveel Resources

Manage Your Shipping Spend By Tracking These 5 Metrics

Manage Your Shipping Spend

Data is critical to understanding how much shipping costs and why. Knowing what your company ships, how much it weighs, where it goes and how long it takes is the first step to building your shipping profile and understanding how you can stretch your shipping dollars further.

But with so much data available, it can be difficult to discern which numbers matter most. Understanding the most common key performance indicators — also called KPIs — is a great way to get started. After all, as everyone responsible for a budget knows, you can’t manage what you can’t measure.

Related: Decoding Your Shipment Data: Surprising Information Your Analytics Reveal

Tracking the following KPIs will give you insight into your shipping cost that will empower you to take action.

1. On-time Deliveries

Between 3 and 5 percent of packages arrive late every day. If carriers miss their delivery windows, they typically agree to refund the cost of shipments within a certain window.

Many companies simply don’t have the time to audit invoices for every delivery. As long as packages arrive at a time “close enough,” they’re content. But still, nearly 9 percent of companies listed service failures as their top complaint about their carrier in Parcel’s 2017 Carrier Performance Survey.

Companies typically have 15 days to refund the cost of those late shipments, however. If you’re not auditing invoices regularly, you may be leaving money on the table. Companies that find a trusted partner to review invoices are better positioned to demand the refunds carriers have promised them.

2. Deliveries Without Damages or Errors

Customers expect packages to arrive on time. When they open them, they expect to find the products they ordered in the condition they expect them — typically new and untouched. When that doesn’t happen, customers can quickly lose faith in parcel carriers and businesses.

When products are returned to warehouses, companies must, of course, investigate whether the mistake was made in-house. If it wasn’t, carriers may refund the cost of the shipment. Examine your contract to see what your company is owed when packages arrive late or damaged. And if damaged or mixed-up packages seem to be a pattern, consider incorporating stricter penalties into your next contract negotiation — or switching carriers altogether.

3. Zone Distributions

Zone distribution is a measure of how far packages are traveling and how many of them are traveling each distance. Typically, carriers align rate structures with their zones, so parcels traveling further cost more.

Intuitively, packages traveling further take longer. But every major online retailer now markets two-day shipping, often at no additional cost. If most of your company’s packages are shipping long distances, carriers may be passing the costs of expediting shipments on to you. By tracking exactly how many packages your company ships to each zone, you can get a sense of whether your needs are well served by your current carrier, or whether it might be advantageous to consider working with a regional carrier or a differently organized national one.

4. Surcharges

Surcharges are scattered throughout most shipping contracts, so executives who budget based purely on contract rates will find their projections quite short of actual expenses. Reviewing invoices carefully can reveal how much of your company’s shipping spend goes to accessorials and value-added services rather than the rates both parties agreed to in your last negotiation. Armed with data about how much of the shipping budget is spent on surcharges, executives can strategically select which of these fees to target in upcoming negotiations.

5. Service Provider Responsiveness

More than 7 percent of vendors told Parcel in 2017 that their top complaint about their shipping service was poor customer service. If your carrier is consistently delivering packages late or in poor condition and refuses to make amends, that’s a serious problem for you and your customers.

This may seem like a qualitative metric, but in fact, it can be measured quantitatively. Companies can measure how long it takes carriers to respond to each of their requests for assistance — How long does it take to correct a missed delivery or to process a refund? What about rectifying billing errors?

As with collecting refunds on late deliveries, many companies don’t have the resources to audit every invoice and catch billing errors. Services like Reveel’s invoice auditing can take on those tasks and do the oft-tiring work of making sure carriers respond to their clients’ requests.

Putting Data into Action

Many leaders turn to business intelligence software and consulting services to help them audit invoices, study surcharges, measure on-time performance and recoup refunds. Reveel’s analytics and intelligence services are designed and supported by former shipping company executives and help companies track shipping data in real time. Also, Reveel’s consultants can lift the veil on aspects of the industry like pricing, where companies thrive on non-transparency.

Tracking these KPIs is the first step for companies seeking to reduce their shipping spend. But savings are only attainable after executives have interpreted their data, zeroed in on inefficiencies and followed up repeatedly with carriers when billing issues arise.