Creating and Managing Kits: What is Kitting?

Feb 3, 2023 | Blog, Fulfillment, Warehouse Management Software

What is Kitting?

Packing multiple products under one SKU is known as kitting. Basically, kitting is combining two or more related items into one neat package. No need for customers to browse through multiple options – kitted bundles make getting what you want effortless!

Kitting Services Meaning

Kitting services are one-way businesses can streamline their operations: outsourcing kitting to a third-party fulfillment company helps keep costs down for retailers and their customers when it comes to final product fulfillment – you get what you need with no unnecessary packages!

Kitting services also come in handy in manufacturing; instead of struggling with in-house assembly, the retailer can trust that a third party is putting everything together. Kitting services give businesses breathing room too, so they don’t have to waste precious time assembling products and can focus on selling more products instead.

Examples of Kitting

Packaged-ready-to-order sets are great for those looking to add convenience and speed of delivery to their shopping experience. Examples of kitting include buying pre-made gift baskets, 10-piece kitchenware bundles, or a 5-pack of your favorite T-shirts in assorted colors. So, rather than searching through individual items, customers can find exactly what they’re looking for.

Subscription boxes are the best of both worlds. Customers enjoy their favorite products without lifting a finger, and businesses get trustworthy customers who keep coming back for more. Examples of subscription kitting can range from sports drinks, supplements, and coffee, to beauty products–and most anything that you need on a recurring basis.

Assembled products in kitting are a powerful tool for streamlining operations in the manufacturing and wholesale world. Instead of having customers guess at the best combination or shopping for individual pieces, you can offer a build-to-order or create-to-order process that lets them start from a blank slate.

Benefits of Kitting

Here are some tried and true benefits of kitting for both retailers and customers alike.

Reduce Fulfillment Costs

Kitting and bundling product orders together reduce fulfillment costs – it’s the new way to save time and money. Instead of selling and fulfilling every item one by one, organizing them as an all-in-one package with benefits like faster shipping times and fewer materials used is a simple (and often overlooked) way to reduce overall expenses.

Provide Value

Getting people on board with your newest product can be a real challenge. A great way to convince hesitant customers and demonstrate the worth of a product? Kitting! This promotional tool helps ensure no one misses out on the greatness you’re offering while also helping prove that the product is valuable. Who wouldn’t want to try something in a cool kit – especially when it includes items they already love?

Increase AOV

It’s no surprise that customers love to get the most bang for their buck, kitting creates the perfect opportunity to take advantage of that. Stacking items together allows you to provide attractive packages that deliver a higher-order value without loss of quality – and if there is one thing everyone loves more than savings, it’s convenience. Customers won’t even blink an eye at spending more for bundles when it means they don’t have to find the right combination individually or go to the store.

Clean Up Inventory

Suppose you’re looking for an easy way to eliminate products that have taken up space in your inventory; opt for putting together a kit or bundle. Saying goodbye to those items doesn’t have to be a headache. In fact, it can quickly help you turn over your inventory when you mix and match the items with more popular complementary products. A cleverly packaged kit is a great way to move more products and free up space for new arrivals.

Holiday Shopping

Shopping doesn’t have to be a chore for your customers; kitting can make it much more enjoyable! Customers don’t need to break out their detective skills to create the perfect gift; instead, they need the simplicity of picking a tailored kit. It’s an excellent way for shoppers to simplify their shopping journey during the busy holiday season – time saved, money saved, and no decision fatigue!

Warehouse Kitting Process

Kitting products in a warehouse may seem intimidating, but with the proper planning, it doesn’t have to be. Done right, warehouse kitting is a surefire way to save costs and improve quality control.

Collect individual items: Since multiple items are combined into one SKU, the warehouse team must pick individual items before packing begins, organizing them all at a staging area.
Package all items: The individual items should be scanned and placed in the same box or as few boxes as possible.
Create a new SKU: Once the box has been packed with individual components, make it a single SKU and add it to your inventory system.
Scan and ship: Place shipping labels and any other labels necessary on the packaging and send them off. Remember to inform your customer that their order has shipped.

Warehouse management software (WMS) with kitting rules can automate this process. ShipHero not only provides kitting in our fulfillment, but we’re also an excellent resource for kitting advice.

Kitting Services From A 3PL

Many third-party logistics (3PL) companies know the ins and outs of kitting and can provide an efficient solution that ensures accurate kitting and fast delivery. With their help, you can wow customers with your speed and dependability.

ShipHero’s WMS and outsourced fulfillment solutions make kitting (and its perks) simple to access. With kitting, you’ll get all the benefits without lifting a finger. Alex Lewkowict, Founder of Black Wolf Nation and ONE23 Fulfillment, says it best: “The rate shopping alone will pay for the software. Add in the bulk shipping and kitting, and {Black Wolf Nation and ONE23 Fulfillment} are so much more efficient.”

The Future of Personalized Fulfillment

Kitting is the perfect way to skyrocket your business’s efficiency and appeal to customers, all while building bonds with them and creating unforgettable products. By utilizing kitting services, businesses can stay ahead of the competition in the ever-changing buying landscape. Kitting adds a unique, personalized touch to your products, making them stand out among the rest. Grab hold of this opportunity to make more money off of each and every sale and start providing the ultimate customer experience you always envisioned while running your business. To keep up with more innovative ways to build your business, subscribe to our blog!

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Maggie M. Barnett, Esq. COO of ShipHero – Author

About the author: Maggie M. Barnett, Esq., is the COO of ShipHero. She is responsible for planning and executing the overall operational, legal, managerial and administrative procedures, reporting structures and operational controls of the organization. Barnett’s greatest strengths are leadership, risk mitigation, change management and a passion for business transformation. She is known for her expertise in delivering operational excellence and an ability to provide guidance and mitigating risk. Her leadership of ShipHero is grounded in a servant mentality, always doing the right thing for our stakeholders. Her passion for ShipHero comes from the ability to drive operational excellence throughout the organization impacting the lives of our employees, customers, and partners.

Follow Maggie on Twitter & LinkedIn.

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Kitting FAQs

What is kitting in a warehouse?

Kitting consists of packaging items together into a single new product with its own SKU, which is then sold as a single new item.

What is a kitting process?

Grouping related items into a single product offering is the first step in the kitting process. After the items are organized in the warehouse, they can be quickly packed and shipped to customers. Kitting can also be outsourced to companies that pick, pack, and ship the items.

What does kitting mean in logistics?

Using kitting in logistics, products are bundled together and delivered as a single unit.

What is the purpose of kitting?

Kitting can boost sales and increase efficiency. Pairing it with more trendy items will help businesses move less-popular merchandise. In addition, the price per item is usually lower, which creates value for customers. So, kitting can increase revenue and profit while increasing customer satisfaction.

The Latest in White-Glove Fulfillment & Personalization

Feb 17, 2023 | 3PL Warehouse Management, Blog, Fulfillment

White glove service and personalization have become an increasingly popular way for customers to receive their goods with special attention given to each item, being thorough and not skimping on quality assurance. This article will detail what white glove services are, why they have become so prevalent in 3PLs’ offerings, and how companies like yours can provide these services efficiently and cost-effectively.

What Does White Glove Service Mean for 3PLs?

At 3PLs, white glove service is the ultimate in terms of personalized servicing. It goes beyond standard transportation and handling to provide premium care for high-value and sensitive items. These value-add services include extra attention to details like specialized packaging, inside delivery, installation, and even debris removal. Every customer has different needs, so this kind of service is tailored specifically for them – it requires additional fees, but they’re paying for quality.

Why are White Glove Services Gaining Popularity?

As the modern consumer’s demands for personalization and a high-touch experience continue to rise, along with the growth of e-commerce and the luxury market, white glove services are becoming increasingly popular for companies to respond to these changing needs.

Companies that offer white glove services can stand out from their competitors by providing enhanced value-added services such as specialized packing and delivery, something customers genuinely appreciate in this age. White glove services have become an ideal way to give customers the top-notch service they expect and add a touch of luxury every step of the way.

Companies quickly recognize that offering something extra in today’s competitive landscape is the key to luring and satisfying customers. White glove services give customers a personalized touch on orders, allowing them to customize their packages further and receive help with other added conveniences.

People always appreciate feeling like they have received special treatment. Hence, increasing the popularity of white glove services means 3PLs must embrace new levels of flexibility and creativity to meet customer expectations. As interest surges, it is clear that these extra services are here to stay.

Levels of White Glove Fulfillment

Inserts: Inserts such as thank you notes, personalized packing slips, and discount offers are a straightforward way to add something special without too much extra work required by your warehouse employees. Plus, this is a surefire method for making sure your customers have great experiences with their purchases!
Protective Packaging: Using high-end packing materials such as wood crates, packing peanuts, styrofoam, bubble wrap, and cardboard boxes, ensure every measure is taken to keep your shipment from any potential damage during transport. And don’t worry about the cost of these extra steps of protection – they can be taken care of by your client so that you don’t have to suffer any financial loss.
Inspections: White glove fulfillment ensures shipments arrive quickly and safely. Some 3PLs perform pre and post-site inspections before assembling the shipped product to ensure everything is correctly configured. Consider spending more time on particular layers of labor that can add value – but keep in mind that these costs will have to be balanced against labor rates and availability when making promises to your customers.
Product Assembly: Assembling or disassembling products is the highest level of white glove fulfillment services. Delivery professionals are responsible for unloading the shipment and setting it up safely and efficiently. Then, removing the replaced products and cleaning up debris gives your customers a pleasant experience. Providing these services might require an additional charge – but businesses want to ensure their customers get exactly what they want.

Ways to Up your Fulfillment Game

You can improve your fulfillment game by implementing white glove fulfillment or other special service levels. A white-glove touch to your logistics handling services could separate you from your competition, allowing you to win new customers and create a stronger brand in a highly competitive industry like logistics.
Professional warehouse workers employed with 3PLs are some of the most efficient labor forces in the world. With a proper training program, these workers can become even more impressive, specializing in white glove fulfillment. Not only will this help meet all your needs without fail, but it will also be an excellent investment for you over the long term. No need to spend extra time or money when you have an outstanding team already at hand! The skill and commitment of a well-trained team of warehouse workers make them worth every penny!
Finding a 3PL provider with white glove personalized fulfillment services can be difficult, but it can be worth the effort for your clients! Having few providers to choose from means businesses utilizing these services will select fewer vendors and guarantee a higher quality offering. Why not make sure that your business is the one they pick? Building off the niche industry of white glove services could give you a leg up on the competition and help to ensure that your customers are getting what they need.

Should My 3PL Utilize White Glove Delivery?

Finding those high-touch, high-value clients willing to pay more for your services is the key to greater success in the 3PL sector. This way, you can increase operational capabilities and reduce client numbers without losing profitability. Differentiating yourself from the competition is as simple as adding white glove delivery.

White glove delivery isn’t suitable for every company, but its growing popularity means it’s now an attractive option for more and more industries. This unique approach could be just what you need to secure long-term success in the 3PL arena.

In conclusion, white glove services are gaining popularity, and different levels are available to providers. Service levels, pro teams, and niche 3PLs, as well as flexible capabilities, are all ways to up your fulfillment game. So when it comes to whether or not you should utilize white glove delivery for your 3PL business, that’s entirely up to you and your customer’s expectations.

White glove service might be worth considering if you have high-touch, high-value clients willing to pay more than the standard rate for this extra attention and care. White glove services can even allow you to take on fewer clients while surpassing the break-even point and making a profit. Ultimately it is up to each provider to decide whether or not white glove delivery will benefit their individual company goals and customer needs.

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Maggie M. Barnett, Esq. COO of ShipHero – Author

About the author: Maggie M. Barnett, Esq., is the COO of ShipHero. She is responsible for planning and executing the overall operational, legal, managerial, and administrative procedures, reporting structures, and operational controls of the organization. Barnett’s greatest strengths are leadership, risk mitigation, change management, and a passion for business transformation. She is known for her expertise in delivering operational excellence and her ability to provide guidance and mitigate risk. Her leadership of ShipHero is grounded in a servant mentality, always doing the right thing for our stakeholders. Her passion for ShipHero comes from the ability to drive operational excellence throughout the organization impacting the lives of our employees, customers, and partners.

Follow Maggie on Twitter & LinkedIn.

How to Manage White Glove Fulfillment at Scale

Feb 24, 2023 | 3PL Warehouse Management, Blog, Fulfillment

Are you looking for an innovative way to increase revenue without creating excessive workloads for yourself and your team? White-glove fulfillment might be the answer! But what is it, and more importantly, how can you manage white glove fulfillment services at scale? Don’t worry – this blog has all the answers you need. From finding your niche in the industry to earning a good return on investment, this blog provides guidance on incorporating white-glove fulfillment into your current business model.

Organizational Efficiencies: Do You Have Enough Warehouse Space?

Ensuring that your orders are well taken care of is important, which is why white glove service needs extra attention. Stocking items like bubble wrap or foam inserts can take up more space in the warehouse than standard packing requirements. Consider setting up a special packing station specifically for white glove orders to avoid any mix-ups and help maintain employee efficiency. It’s all about finding the right organizational balance – with great planning, you can achieve the perfect combination of space and order accuracy.

Having the right workflow for packing is essential, and it will be important to assess the available warehouse space to ensure there is enough room for all your packing needs. The volume, type of products, and size of the packing station must be considered carefully so that you have one-touch efficiency when organizing items for shipping. Streamlining this process can help keep errors down while promoting a faster throughput, so it’s worth taking the time to get organized and find the most efficient way of packing for your white glove service. To optimize your packers’ workflows, start by considering all the factors in play and create a plan that works best with your goals and resources.

Having warehouse managers adept in their Tetris skills can be beneficial when optimizing space through reorganizing. With the right tools and dedicated stations for white glove packing needs, it will be much easier to manage it all.

Employee Efficiency: Can you Designate a White Glove Packer?

Keeping an eye on employee efficiency in white glove packing ensures your warehousing operations are profitable. Designating the right person or persons for this type of job will pay off in the long run, as white-glove packing can sometimes take a bit longer – and you don’t want to lose time! Finding out who your best packers are and giving them the responsibility of handling white glove shipments is a great way to ensure that they are efficient while keeping costs low.

As any 3PL company knows, time is money. When it comes to efficiency, wasting time on something like creating a single order kit can add up quickly. The need to repeatedly go back and forth across the warehouse over and over again takes valuable moments away from getting packages ready and out the door. Time wasters such as this are one of the many reasons why efficiency tracking should be taken into account when evaluating your operations.

The second reason why white glove fulfillment may slow you down is that, since items involved with white glove services must remain as unscathed as possible, the picking and packing process needs to be done in a way that ensures minimal touches. That’s why creating a warehouse space specifically tailored for such tasks can be incredibly beneficial.

Having an efficient packing process can make all the difference when it comes to streamlining your warehouse. Having a designated “white glove packer” could be beneficial in optimizing your workflow, as they can assess and select the proper shipping supplies for each product. Investing in packing items designed to make their job easier, like conveyor belts, can save time and make every process smoother. By getting products closer to the packer or relocating finished packages to a staging area for shipping, you can help get products out on time!

Automation Rules: Can your WMS Support White Glove Fulfillment?

Managing white glove fulfillment at scale requires more than just a strong team – you need a warehouse management system that can support it, too! When managing white glove items, your WMS should be able to separate them from your regular processes so they don’t get mixed up or slow down your workflow. To do this successfully, you’ll want to look for an automated solution that allows you to provide “special projects” like white glove fulfillment with the speed and precision it deserves. That way, you are sure your team and customers will have a seamless experience every time.

Automation and your WMS should be integral to any white glove fulfillment setup. Automated rules are a great way to streamline the logistics process, allowing you and your team to focus on providing that extra-special care associated with white glove fulfillment. Automating these processes also makes it easier for you to keep track of all the fine details that can easily get lost in manual processing, simplifying everything with one-touch ease.

Examples of White Glove Fulfillment

White glove fulfillment is becoming increasingly popular for businesses that are aiming to give their customers an unforgettable unboxing experience. It requires a lot of planning and attention to detail, but when done right, it can be a fantastic way to bring in repeat business. White glove fulfillment solutions involve custom packaging and extra touches like branded swag or personalized notes that help boost the customer’s satisfaction. In addition, this approach adds extra value that leaves a lasting impression, encouraging customers to return for more. A successful white glove service can set your business apart from your competition and maximize customer loyalty.

Delivering large or fragile items to customers can be a complicated task – it takes special packaging and attention to detail, so it’s no wonder why more and more businesses are turning to white-glove fulfillment when it comes to these projects. The extra expense is worth it for the clients because receiving their purchases in perfect condition will keep their customers happy and coming back for more.

Are you Ready to Scale your Fulfillment?

Scaling your 3PL services can be a big undertaking for businesses needing more than just regular order fulfillment. It’s important to take the time to consider the overall efficiency of your warehouse, pickers, and customers when looking at growth opportunities. Streamlining and building up specific operations that work best with your current and future clients may be the most beneficial approach toward expanding naturally. You know what works best for you and your company, so why not explore the options available? From consolidating orders professionally or finding solutions that elevate the customer experience through specialized services, there are many paths forward that can help take your business to the next level!

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Maggie M. Barnett, Esq. COO of ShipHero – Author

Follow Maggie on Twitter & LinkedIn.

A Guide to Reverse Logistics

Mar 3, 2023 | Blog, Fulfillment, Warehouse Management Software

In eCommerce and retail, reverse logistics can be a complicated concept to wrap your head around. But understanding this process isn’t just crucial for warehouse managers—it’s absolutely essential! To show you how easy it is to get into gear with reverse logistics, we’ve crafted this comprehensive guide full of helpful tips, tricks, and advice on everything from streamlining returns to optimizing inventory flow. Read on if you’re ready to make reverse logistics work in your favor!

In eCommerce, returns aren’t just about the refund – it’s also about how long it takes to process those items. With labor shortages, retailers are feeling the pinch more than ever. According to eCommerce statistics gathered by the National Retail Federation and Appriss Retail, return merchandise was worth a whopping $816 billion last year – without any change in the average rate of return of 16.5%. But don’t panic just yet! Investing in a WMS (Warehouse Management System) for reverse logistics can help warehouse managers separate physical returns from accounting while contributing to sustainability and financial health.

What is Reverse Logistics?

Reverse logistics sounds like a spaceship’s reverse engineering, but it refers to the work done after something has been sent out for consumption. So when you return that shirt you never wore, dispose of some sort of electronic device, get things repaired and shipped back, or recall products due to an issue – that’s what reverse logistics is all about. It’s what happens when something goes awry between point A (source) and point B (consumption).

Whether it’s eCommerce returns solutions or something else, reverse logistics helps companies make the most out of what they do not want – by recovering resources to maximize worth and minimizing the environmental costs associated with returned products and materials. It can also delight customers by providing satisfying exchange and return options due to its efficient nature.

How Reverse Logistics Works

Reverse logistics is vital to the success of eCommerce returns. The process includes multiple steps, with careful planning and coordination necessary to maximize efficiency and minimize costs. Despite its complexity, it offers a great opportunity for businesses to cut costs while improving customer satisfaction and brand loyalty. The general steps in reverse logistics are:

Product Returns: Getting returned products from customers or retailers is the first step in reverse logistics. Returns are then categorized by condition, the reason for return, and destination.
Inspection and Assessment: Following the return of products, they are inspected and assessed to determine whether they can be resold, refurbished, recycled, or disposed of. By identifying the value of returned products, you can choose how to handle them.
Refurbishment and Repair: Generally, if returned products need minor repairs or refurbishment, they can be repaired and made ready for resale or reuse. In this step, the products are repaired, cleaned, and repackaged to make them sellable again.
Recycling and Disposal: Recycling or disposing of returned items may be necessary if they are damaged, expired, or unsellable. During this step, the products are separated into different waste streams and disposed of responsibly.
Logistics and Transportation: Logistics providers can coordinate with repair centers, recycling facilities, or resale channels to ensure the products are delivered to the appropriate locations.

Types of Reverse Logistics

There are several types of reverse logistics, each designed to handle a specific aspect of the product lifecycle and recover value from returned products. Some common types of reverse logistics include:

Returns Management: In this process, we handle returns from customers or prevent returns from happening in the first place.
Return Policy and Procedure (RPP): RPPs are the policies about returns a company shares with its customers.
Remanufacturing or Refurbishment: Remanufacturing, refurbishing, and reconditioning involve repairing, rebuilding, and reworking products.
Unsold Goods: For unsold goods, reverse logistics handles returns from retailers to manufacturers.
End-of-Life (EOL): EOL means a product is no longer useful, doesn’t work, doesn’t meet a customer’s needs, or is replaced with a newer version.
Delivery Failure: Whenever a failed delivery occurs, drivers return the product to sorting centers, who then return it to the source.

5 Rs of Reverse Logistics

The 5 Rs are principles that help businesses maximize returned products’ value while lowering supply chain waste. By following them closely, companies can recover assets from formerly unusable goods and reduce the environmental impact on our world! Let’s dive into each one.

Returns: Managing product returns includes issuing return authorizations, receiving and inspecting returned products, and managing the reverse flow of products.
Recalls: Due to government regulations, recalls are often a more complex way to return products.
Refurbishment: Refurbishing means repairing, cleaning, and repackaging products. It extends product life, reduces waste, and recovers value.
Repackaging: What happens when customers return products because they’re unhappy with them, not because they’re defective? Usually, repackaging the product will allow it to be resold.
Recycling: A recycling process takes old products and recovers raw materials. The process involves separating and processing products into their constituent materials, which are then used to manufacture new ones.

Reverse Logistics Examples

Reverse logistics are an ever-present force in many industries, offering clever solutions to secondhand parts and products. Take retail, for instance; when products are returned, reverse logistics allow companies to resell, refurbish, and recycle them. Electronics and automotive fare similarly – the former has remanufacturing and refurbishing at the ready, while the latter’s reverse logistics often take the shape of remanufactured auto parts.

In the food sector, reverse logistics use waste to create compost and animal feed. As for healthcare, reverse logistics may take back unused or expired medications from pharmacies, and apparel companies reclaim used clothing for resale, renovation, and recycling.

Importance of Reverse Logistics to your Business

Reverse logistics are proving to be an invaluable approach in business today. By taking a mindful second look at the supply chain, companies can reduce waste while improving operations and sustainability – giving their bottom line the boost it deserves.

Cost Savings: Businesses can recover value from returned products with reverse logistics, reducing return, disposal, and replacement costs.
Environmental Sustainability: Companies can reduce and improve their carbon footprint by implementing effective recycling and refurbishment processes with reverse logistics.
Customer Satisfaction: By facilitating the efficient return and replacement of products, reverse logistics can improve customer service, satisfaction, and brand loyalty.
Competitive Advantage: A well-developed reverse logistics strategy can give your company a competitive edge.
Regulatory Compliance: Reverse logistics can help companies comply with regulations related to the disposal of hazardous materials, the handling of electronic waste, and other environmental regulations.

Returns are Costing you – Save with ShipHero.

Reverse logistics doesn’t have to be a daunting task. A comprehensive, well-integrated WMS can significantly benefit companies looking to minimize their environmental costs while maximizing the value of their returned products. Handling the physical and accounting processes separately is key as it reduces time and improves efficiency for warehouse managers and customers.

When considering a WMS explicitly designed for reverse logistics, look at ShipHero. Leveraging a powerful cloud-based system, ShipHero can simplify your reverse logistics operations and get you one step closer to success. So if you’re ready to upgrade your WMS to ShipHero, don’t hesitate – let’s make something great happen together!

Subscribe to our blog to learn more, or Click HERE to Schedule a Meeting Today!

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Aaron Rubin, Founder & CEO – ShipHero

About the author: Aaron Rubin is the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning, and a passion for progression. He is known for having his finger on the pulse of ShipHero’s significant initiatives, entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to impact the lives of employees, customers, partners, and investors.

Follow Aaron on Twitter & LinkedIn.

6 Strategies to Optimize Reverse Logistics

Mar 17, 2023 | Blog, Fulfillment, Warehouse Management Software

Are you running an eCommerce business and looking for ways to optimize reverse logistics? Look no further! We’ve got the perfect solution: 6 strategies that will help your business reduce costs, improve customer service, and create a more streamlined reverse logistics process. No matter the size of your business, these strategies can help ensure that customer returns go smoothly. Take a look at the 6 methods below to get started on optimizing your reverse logistics today!

#1 Improve Visibility

A savvy returns management team knows they can accomplish more tasks in less time when they have better visibility into their supply chain—ultimately producing fewer losses from those ever-pesky returned items. Having the right tools and procedures to improve visibility is one key to unlocking a more efficient reverse logistics system!

Seeing what’s coming back in the returns process should be a crystal clear, no-hassle event. Like smart labels on packages, understanding what arrives and from whom – can open the door to transparency.

That way, you’ll know ahead of time when to roll up your sleeves to adjust operations and better prepare for occasions when returns land on your doorstep. With a better view of the returned items, you can easily measure incoming volumes and stop the problems in their tracks!

#2 Streamline Processes

Returns can be a nightmare. But by streamlining the process and reducing the steps needed to handle them, you can make this tedious task go as smoothly as possible. After all, ensuring your customers are satisfied is always goal number one.

Streamlining returns processes is a great way to save time and money. With data-driven KPIs, businesses can quickly identify potential issues before they arise and make appropriate adjustments to reduce labor, costs, and other expenses associated with the process.

To increase efficiency even more, implementing supply chain strategies at the store level is the key to success – that way, you can see exactly what products need returning and where they need to be sent for maximum time and cost savings. Ensuring consumer triggers are noted allows companies to minimize future return instances, further reducing associated costs.

#3 Leverage Technology

Leveraging technology is critical to optimizing reverse logistics. After all, the most effectively executed processes involve communication, coordination, and automation – all of which can be facilitated via modern reverse logistics technology.

Automation and technology can help you find efficiencies that make a huge difference in how quickly your products return to your shelves. Plus, barcode scanning, RFID tracking, and automated sortation remove the guesswork while giving you immediate answers about each returned items’ where, when and why.

Connecting those processes related to forward logistics, reverse logistics, and inventory management will result in smoother transactions and a streamlined approach to eCommerce delivery. Tech helps your reverse logistics operations get smarter, so you can stay ahead of the game – and competition.

#4 Reduce Waste

Reducing waste through reverse logistics is not just good for the environment; it’s great for your business too! By implementing a waste reduction strategy, you can minimize your carbon footprint from returns and lower disposal costs.

Then, leveraging the five Rs of reverse logistics — returns, reselling, repairs, repackaging, and recycling — is an excellent way to optimize your process while cutting down on waste. Start by measuring your success in each department so you can establish goals for reducing losses. Connecting the dots between the 5 Rs and optimization is a surefire way to ensure your reverse logistics processes run smoothly.

#5 Improve Customer Experience

Everyone understands the frustrations of a poor return experience. That’s why optimizing reverse logistics ensures customers have a great experience when returning items.

Communication is vital – keeping customers in the loop throughout the process and setting manageable expectations. Simple notifications when the driver picks up the product, when their returns arrive at the service center, and when reimbursement has been paid will ensure transparency across your reverse logistics flow.

In addition, providing a convenient returns system with various options can eliminate any extra hassle and ensure they remain satisfied every step of the way. Put simply, take your returns one step further – after all, upgraded customer experiences are just one more way to keep your loyal customers coming back for more!

#6 Analyze Data

Data lets you read between the lines when it comes to reverse logistics. By closely scrutinizing what the numbers say, you can gain hints and tips on optimizing your returns process for maximum efficiency. Whether tracking volumes, timing out processing cycles or noting costs, data analysis helps you identify trends and improve your reverse logistics strategy over time.

Reverse logistics analytics can also help you do more than just manage returns – it can actively work to minimize returns and reduce fraud in the long run. By leveraging reverse logistics analytics to identify which items and reasons for return are most likely, companies can adjust their sales and forward logistics processes accordingly. Moreover, reverse logistics software helps companies verify the validity of returned items quickly; with reverse logistics analytics, fraudulent returns can become a thing of the past.

Unlock the Power of Successful Reverse Logistics

Despite the myths and misconceptions associated with reverse logistics, it is a process that has immense potential to optimize value creation. Ultimately, the strategies mentioned above allow businesses to save costs and create stronger customer relationships. From improving visibility to leveraging technology and reducing waste – companies can benefit from various advantages by investing in effective reverse logistics technologies and techniques.

With the right approach and an eye for detail, companies can use specific techniques to make the most out of their operations. So, if you are seeking to maximize your company’s bottom line while striving to achieve customer satisfaction, these 6 strategies can be beneficial in streamlining your reverse logistics processes. Subscribe to our blog for great tips on optimizing your reverse logistics today!

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Aaron Rubin, Founder & CEO – ShipHero

Follow Aaron on Twitter & LinkedIn.

Outsourcing Returns: Should You Keep Them In-House or say Good Riddance?

Mar 31, 2023 | Blog, Fulfillment, Warehouse Management Software

So, should you keep returns in-house or say good riddance? Keeping returns in-house can be costly, and thinking carefully about how best to handle this crucial part of your business is essential. Outsourcing returns can be a great option — but is it always the correct answer? Weighing the pros and cons ahead of time will help you decide if outsourcing returns is worth it for your eCommerce business. Let’s explore both sides of this debate so you can make an informed decision!

What is Outsourced Returns Management?

Navigating the world of returns management can feel like solving a complex puzzle, but when executed effectively, it can transform a potentially negative customer experience into a positive one. As an integral aspect of the supply chain and fulfillment process – returns management relies on the principles of reverse logistics to ensure that goods make their way back from customers to retailers smoothly and efficiently.

This dynamic workflow goes beyond simply receiving the returned product; it seamlessly integrates every step, from shipping and storing to updating stock levels in real time. When handled with finesse, accuracy, and a touch of tech magic, a well-coordinated returns ecosystem benefits not only the customer making the return but also potential new clients, stock managers, and payment operators.

By developing and implementing strategies to minimize the occurrence of returns, businesses can save valuable resources while ensuring maximum customer satisfaction. Remember, a well-oiled returns management machine makes the whole process more cost-effective. It fosters loyalty from customers who can trust that your business will address their concerns in a timely and friendly manner.

Advantages and Disadvantages of In-House Returns

Advantages

In-house returns can be both a blessing and a challenge for businesses, depending on the situation. One of the most significant benefits is the level of control it offers organizations over their operations, allowing them to tailor every aspect of the process to ensure the utmost customer satisfaction. This means that every returned item is handled efficiently and effectively, maintaining the trust and loyalty of the clientele.

The improved communication resulting from an in-house team’s deeper understanding of the company’s values and systems greatly benefits the organization. Since they are better equipped to represent the brand, there is a reduced risk of losing vital information due to miscommunication.

Disadvantages

Managing in-house reverse logistics programs can be challenging for businesses, particularly regarding scalability and customer expectations. Reverse logistics necessitate a diverse array of resources, which can sometimes be limited within a company. As various departments and teams compete for these resources, the efficiency and effectiveness of reverse logistics processes can be compromised.

Moreover, with giants like Amazon setting the bar high in terms of hassle-free return experiences, customers have come to expect a smooth and streamlined process when it comes to returns. Failing to meet these expectations can significantly impact customer satisfaction and brand image, making it imperative for businesses to invest in and prioritize a robust in-house reverse logistics program. Solidifying these crucial aspects of your business can help ensure long-term success and a loyal customer base.

Advantages and Disadvantages of Outsourcing Returns

Advantages

Intelligent Automation
Embracing the advantages of outsourcing to a 3PL with intelligent automation can significantly impact an eCommerce business’s growth and success. Imagine no longer having to spend countless hours logging into various seller portals like eBay, Amazon, or Walmart.com to manage each return and refund request on your own laboriously.

Instead, cutting-edge software takes the reins, seamlessly integrating with those very portals, while the market-driven logic works tirelessly to automate your returns management. This results in faster refunds for your customers and reduced freight costs for your business.
End-to-End Returns Management
By connecting their returns gateway to a reputable third-party returns management provider, sellers can benefit from comprehensive end-to-end management, ensuring a smooth and efficient process for handling returned items.

Partnering with a 3PL guarantees the highest possible recoveries, enabling sellers to resell returned goods at optimal value, thereby minimizing losses. A reliable 3PL can offer robust fraud protection measures, further safeguarding sellers from scams and fraudulent activities.
Cost-Effective Shipping and Handling
Outsourcing returns management is a favorable decision for businesses because it leads to cost-effective shipping and handling and can help boost customer confidence. Companies can reduce operational costs and manage returns more efficiently by delegating this important aspect of the supply chain process to experts who deeply understand local and international customs. They also ensure that all returns are correctly tracked, regardless of destination, which can be essential in protecting a company’s bottom line.
Access to Experience
One of the most significant benefits lies in gaining access to a wealth of experience through a 3PL. Having an expert team handling return logistics eliminates the daunting upfront costs associated with establishing an in-house returns center and ensures that seasoned professionals manage the entire process.

The knowledge and expertise of these experienced staff members can greatly enhance the efficiency and effectiveness of your return operations, fostering stronger customer relations and promoting a seamless overall experience. A close partnership with a reliable returns management provider can be an invaluable asset for businesses of all sizes.
Reporting Capabilities
Migrating this process into expert hands provides the reassurance of relying on their robust reporting capabilities and well-established protocols. This essential collaboration allows for seamless tracking of returned items and a clear understanding of the costs involved. As a result, you gain valuable insights, enabling you to make well-informed decisions and optimize your business processes for better performance.

Disadvantages

No Control of the Returns Process
One of the most prominent concerns is losing control over this aspect of the business, which might leave you uncertain about the future. Even though most logistics providers go the extra mile to adopt your brand’s identity, ensuring a seamless experience for your customers, it’s understandable that handing over this responsibility might be unsettling.

The key is to weigh the pros and cons carefully, evaluate the expertise and experience of the third-party company, and remember that building a robust and transparent partnership can help alleviate some of the challenges associated with outsourcing returns management.
Integrating Technology
One significant challenge that arises with outsourcing is integrating technology smoothly between partners. This issue becomes critical as data must flow seamlessly between systems, and all parties involved need to have profound visibility to manage and optimize their shared networks effectively.

To achieve this, customers must be prepared to adapt to new systems and technological platforms, which can sometimes be daunting. Moreover, a lack of support and commitment from a company’s internal IT department can jeopardize the partnership’s success.
Up-Front Costs
It’s important to appreciate that upfront costs, while seemingly daunting, are only part of the journey of unlocking value and potential growth for your business. When forming a partnership with a logistics provider, clients must be aware of the monetary implications and work towards establishing a shared strategic vision complemented by jointly determined KPIs. An outsourcing relationship should not be viewed as merely an expense but rather an investment in a strategic alliance that fosters innovation and contributes to a competitive advantage.

Does Outsourcing Really Save Money?

The concept of reverse outsourcing logistics might strike some as questionable when aiming to save money. It’s easy to wonder just how much reverse logistics costs can impact a company’s bottom line.

However, when we consider that approximately 15% of all goods are returned, and around 30% of those end up in landfills, it becomes evident that a staggering 4.5% of goods sold are essentially a lost cause from the get-go.

Imagine transforming this seemingly grim picture by enabling retailers to swiftly handle returns, repackage, relabel, and liquidate products. This potential twist in the narrative is precisely why many retailers are turning to third-party logistics (3PL) providers.

Through their collaborations with these providers, retailers are discovering innovative ways of making the returns process more sustainable, ultimately leading to substantial cost savings in the long run.

Make Returns Hassle-Free With ShipHero

In conclusion, the eCommerce returns process can be a complex undertaking. It may seem like a difficult decision to make when deciding between keeping returns in-house or outsourced. By understanding the advantages and disadvantages of both solutions, you are better prepared to decide for your business and customers’ needs. When staying in-house can help create more efficient processes and an enhanced customer experience.

On the other hand, outsourcing offers total peace of mind that all returns will be handled expertly and efficiently. Regardless of your business’s route, if you’re looking for easy access to a network of service specialists and solutions tailored to your fulfillment needs, consider taking advantage of what outsourced returns management offers. Are you ready to outsource? Call us today, and we’ll walk you through the process!

Subscribe to our blog to learn more, or click HERE to schedule a meeting today!

Aaron Rubin, Founder & CEO – ShipHero

Follow Aaron on Twitter & LinkedIn.

Digital Twins: The Future of Warehouse Automation?

Apr 14, 2023 | Blog, Warehouse Management Software, Warehouse Operations

In today’s competitive automation market, managers and COOs are tasked with making decisions that will enable their 3PL to stay ahead of the curve. By leveraging digital twins, warehouses can meet ever-changing customer demands and save time and money. In this blog post, we’ll explore how digital twinning works and examine if it could be the future of automated warehousing for your 3PL.

What are Digital Twins?

A digital twin is a virtual replica of a physical warehouse that can be as simple or complex as needed. For example, suppose your warehouse workers move a pallet from one area of the warehouse to another. In that case, it shows in real-time on your digital twin software by gathering real-time data from sensors within the facility.

The use of digital twin technology allows for better oversight of the performance of an asset (a warehouse in this case), identification of potential faults, and informed decision-making regarding maintenance and the asset’s lifecycle.

Essentially, digital twins are computer programs that take real-world data and produce simulations or predictions of how a physical object or system will be affected by those inputs.

That way, you can optimize your operations without experimenting in the physical space. Plus, digital twins can act as prototypes for products that don’t even exist yet. They’re a powerful tool for 3PLs who want to stay on the cutting edge of automation technology.

The Importance of Automation

Finding enough skilled workers to keep pace with demand is challenging for most warehouse operations. Fortunately, we’re in the midst of a technological evolution allowing us to automate many of these processes.

Thanks to the Internet of Things (IoT) and artificial intelligence (AI) breakthroughs, warehouses can now handle changing eCommerce demands. Warehouse automation is now mainstream, and businesses that don’t invest in it risk being left behind.

The Benefits of Digital Twins for Warehouse Automation

Digital twins connect assets with data to create a complete picture of what’s happening. They allow teams to collaborate more effectively and make better decisions by analyzing past and present conditions and predicting future issues. Using simulation and 3D visualization, companies can understand how different scenarios might play out before they even happen. Just look at some of the benefits of digital twins.

Improved efficiency: Using digital twins can identify inefficiencies in the warehouse operation and suggest improvements, such as optimizing the warehouse layout, reducing worker travel time, and reducing order picking and packing time.
Predictive maintenance: Monitoring equipment health and predicting when maintenance is required can reduce equipment downtime and extend its lifespan with digital twins.
Real-time monitoring: Digital twins allow warehouse managers to monitor inventory. Warehouse managers can use digital twins to track inventory levels in real-time and detect any errors in real-time, improving visibility and reducing errors.
Risk reduction: A digital twin can identify risks and hazards in a warehouse, such as collision risks, allowing managers to mitigate them.
Cost reduction: Using digital twins, warehouses can improve profitability by optimizing processes and workflows.

Challenges of Digital Twins in Warehouse Automation

One big hurdle is how disruptive the adoption process can be for an organization. Digital twins can transform the way warehouses operate, but getting there involves change that touches many areas of a company. It’s like going through a renovation — the result can be amazing, but the construction process can be pretty disruptive.

Data quality: To be effective, digital twins require accurate and current data. Simulated results can be inaccurate when the data is incorrect or incomplete.
Complexity: Developing and maintaining digital twins can take significant time and resources, requiring specialized skills and knowledge.
Integration: Integrating digital twins can be challenging, requiring careful planning and execution.
Cost: Implementing digital twins requires the use of hardware, software, and trained staff, all of which can be costly.

The Future of Digital Twins and Warehouse Automation

As eCommerce continues to increase, companies are scrambling to find ways to stay ahead of the competition in the fulfillment game. And that’s where digital twins and warehouse automation come in. They have the potential to revolutionize the way warehouses operate, making them faster and more efficient than ever before.

But the impact of digital twins doesn’t stop there. The technology has already proven itself in industries ranging from healthcare to manufacturing, and even entire cities are starting to leverage it for more intelligent infrastructure. It’s safe to say that the future of digital twins is something to keep an eye on, as it will continue transforming how we live and work.

As we move into this digital age, these virtual counterparts of people, products, equipment, buildings, and cities become increasingly prevalent. From facility management to vehicle customization, digital twins provide a revolutionary path to streamline and optimize warehouse operations. The eagerness for cutting-edge technologies will only propel digital twins’ capabilities further in such endeavors.

Leveraging Digital Twins

Digital twins are a powerful technology that can revolutionize warehouse automation, and it’s no surprise, given all of the advantages they offer. Utilizing digital twins enables warehouses to streamline all aspects of tracking inventory, which, in turn, virtually eliminates human error from the equation. Ultimately, digital twins have the potential to become an industry standard for warehouse automation capabilities quickly.

ShipHero’s WMS is a comprehensive solution that helps retailers leverage comprehensive inventory and order management to reach peak efficiency channel-wide. With its user-friendly interface, deep integrations, and customizations, ShipHero can help you free up your warehouse team’s valuable time so they can work on high-value tasks instead of manual data entry. Click now to learn how to integrate ShipHero’s WMS in your warehouse!

About ShipHero: We make it simple for you to deliver your eCommerce. Our software helps you run your warehouse, and our outsourced shipping solutions eliminate the hassle of getting your products to your customers. With thousands of brands and 3PLs relying on us daily, we’re here to help with all your logistics needs.

Let us know how we can help you today by scheduling a call HERE.

Understanding the Components of Carrier Costs | Understanding the Economics of 3PL

Jun 9, 2023 | 3PL Warehouse Management, Blog, Economics of 3PL, Fulfillment

Understanding the Components of Carrier Costs | Understanding the Economics of 3PL

Surcharges are the bane of every 3PL operator’s existence. They not only drive up costs but can prove to be an unpredictable factor when calculating expenditures. Shipping rates are constantly in flux, and this complexity can make predicting costs a daunting proposition. 3PLs must be able to manage these costs effectively to ensure they don’t adversely affect their bottom line. The good news is that there are multiple strategies that your 3PL can employ to contain these costs and protect your profits.

Base Rate vs. Accessorial Charges

Understanding the actual cost of shipping can be challenging. Although base rates provide a starting point, they are not enough to give a complete picture. Additional charges, known as accessorial charges, can accumulate quickly, making it vital to comprehend what you are paying for. To manage your outbound shipping expenses, it is essential to understand the additional charges and address them whenever feasible.

What is a Base Rate?

Base rates refer to the basic cost of transporting products from point A to point B, and they are typically negotiated between you and your carrier.

Accessorial charges, on the other hand, are additional charges that may be tacked on for specialized services like lift gates or residential delivery.

Additional charges may be temporary and contextual, but your base rate will remain the same depending on your contract agreements.

How Do You Choose the Best Base Rate?

When it comes to selecting the best base rate for shipping, it’s important to consider all options. While it’s true that carriers’ base rates tend to be similar, package specifications can make all the difference in choosing the most cost-effective option.

Take into account package size, weight, and distance, as these will all affect the rate. But don’t forget about accessorials and additional fees, which can significantly increase the overall cost of shipping.

Tools like ShipHero rate shopping will compare base rates from different carriers in real-time, so you will always find the best available shipping rate per order.

What Are Accessorial Charges?

Accessorial charges are described as supplementary fees or surcharges imposed by a carrier for services not included in the basic delivery of a shipment. These services may include loading, unloading, packing, or unpacking. The carrier may also charge fees for waiting time or delays at the loading dock.

Accessorial fees have become a contentious issue in the transportation industry over the last few years, with carriers increasingly relying on surcharges to boost their revenue. According to a recent survey, over three-quarters of carriers view accessorial surcharges as crucial to their financial well-being.

With this knowledge, you’ll be better equipped to develop shipping cost strategies that work for your 3PL. You’ll also have more information to use when negotiating rates with carriers and shipping partners.

How General Rate Increases (GRI) Affect Base Rate

General Rate Increases are a reality of the shipping industry and have the ability to impact all players involved, including 3PLs. These increases are a direct result of rising costs across the supply chain, such as fuel, insurance, wages, raw materials, and other operational expenses.

Carriers can pass on these costs to shippers through an increase in rates. These GRIs are typically announced in October-November, providing carriers with time to adjust their base rates accordingly. While these increases may seem small, hovering around 4-6%, they can significantly hike carrier base rates for 3PLs.

Here are the current increases for the top three carriers:

UPS General Rate Increase 2023

Average GRI increase at UPS: 6.9%

Effective from: December 27, 2022.

FedEx General Rate Increase 2023

Average GRI increase at FedEx: 6.7%

Effective from: January 2nd, 2023

USPS General Rate Increases 2023

Average GRI increase: 5.5%

Effective from: January 22, 2023

Know What You’re Paying For

As the logistics industry continues to evolve, so do the complexities of managing accessorial charges and other fees. Accessorials can be a significant expense for 3PLs, but there is one advantage to these fees: they are usually negotiable, and the key to successful negotiation is understanding your surcharges.

You can leverage this information by knowing the percentage of these fees in relation to your total volumes. Carriers are more likely to be receptive to your proposal if you have done your homework and can present a clear case for why the fees should be adjusted. Regularly auditing shipping bills and disputing errors or overcharges can help recover unnecessary costs and improve carrier accountability.

How to Estimate Your Shipping Cost

Our Invoice Analysis tool provides a comprehensive overview of your UPS expenses. By importing your data and using our template, you can quickly identify where your money is being spent. Our tool breaks down charges into a clear and concise format, highlighting the fees that are most impactful to your bottom line. Say goodbye to hidden fees that drain your wallet – click the link above to make more informed decisions.

Common Surcharges By Carrier

Carriers use surcharges to ensure that their volume remains manageable. Although robots and software have automated certain processes, some aspects of shipping still require manual labor. For example, when carriers must handle large packages that won’t fit into an automated sortation process, they implement oversize charges to offset the additional labor costs.

During peak shipping seasons, carriers also take on seasonal labor to sustain their service standards and manage their increased workload. By understanding the common surcharges shipping carriers impose, you can take proactive measures to minimize your shipping costs. Some common surcharges by carriers are:

USPS Shipping Surcharges:

Non-Machinable Surcharge: An additional charge will be applied for packages that require manual sorting beyond the normal automated process.

Fuel Surcharge: Similar to other delivery services, a fuel surcharge is incorporated to account for the fluctuations in fuel expenses. This surcharge is calculated as a percentage of the standard shipping fee.

FedEx Shipping Surcharges:

International Fuel Surcharges: FedEx fuel surcharge percentage is subject to weekly fluctuations, depending on jet fuel prices.

Delivery/Pick-Up Surcharge: It is important to know that shipments that require delivery or pick-up in remote areas will incur an additional fee known as an out-of-pick-up or out-of-delivery area surcharge.

Handling Surcharge: FedEx applies additional handling surcharges to packages measuring more than 48 x 29 inches.

Oversize Charge: This applies to packages over 96 inches long or 129 inches in combined length and width.

UPS Shipping Surcharges:

Fuel Surcharge: UPS utilizes index-based pricing derived from jet fuel costs in the US Gulf Coast.

Address Correction: Billed to the shipper for failed delivery due to an incorrect address.

Over Maximum Limits Fee: Billed on packages weighing more than 154 pounds or more than 108 inches in length.

ShipHero WMS offers live rate shopping, so you won’t have to spend time figuring out which carrier is the most cost-effective for each shipment. Comparing and selecting carriers based on their rates, transit times, service levels, and surcharges can help reduce your shipping costs. Access to real-time rates will give you the information you need to make the smartest possible shipping decisions every time.

Additional Surcharges

DIM Weight

Dimensional weight, or DIM weight, is the formula carriers use to determine shipping costs by factoring in the size of a package. Lightweight and compact packaging can save on dimensional weight charges and transportation costs. But those who ship relatively light items in large boxes may end up paying more than expected due to this pricing model.

Peak or Demand Surcharge

Peak season and demand surcharges are additional fees carriers add to their base shipping rates to cover the increased operating costs. Typically, these surcharges come in the form of flat fees per package and may last for a fixed period or until further notice.

These peak season surcharges can hit your P&L twice; once when receiving inventory for the season and two when shipping parcels to customers. One way to avoid extra peak season costs is to use accurate demand planning. Demand planning will help you determine which products you need and where to send them to maximize your distribution strategy and optimize shipping costs. You can avoid peak season charges by ordering your inventory well before the typical peak season time frame (typically October-January).

Demand forecasting can also help you determine areas in the country where your products are most likely to be shipped – by moving products closer to these destinations, you’ll be able to cut down on transit times, fuel costs, and other transportation expenses, which includes surcharges.

Shipping Cost Strategies

Investigating accessorial charges is crucial to forecast your total shipping expenses accurately. 3PLs should take the following strategies into account:

Negotiate fees with your carriers based on the volume of your shipments and their characteristics.
Consolidate shipments to minimize the number of individual deliveries.
Optimize packaging to reduce dimensional size and weight.
Analyze and optimize shipping routes to lower fuel surcharges.
Leverage technology to streamline the shipping process and reduce the chances of incurring fees.

By thoroughly understanding and addressing these surcharges, you can better manage your overall shipping expenses and utilize shipping cost strategies to maximize your budget.

Lessons in Outbound Shipping

As we close our discussion on outbound shipping, it’s vital to understand that it’s not just the base rates determining the overall shipping costs. Here are the key takeaways when you’re estimating your outbound shipping costs.

#1 – Know All Your Costs, Even the Hidden Ones.

When you begin negotiations, carriers will present any initial rate card with base shipping rates. However, those rates don’t tell the whole story. Ask about accessorial fees and how you can best avoid paying extra.

#2 – Analyze Your Shipping Invoices on a Regular Basis.

Pull reports that outline all the shipping costs for a set time frame (a quarter or six months) and take a closer look. Analyze these charges and ask your carriers for itemized bills if anything looks off. While this is time-consuming, understanding what you’re paying and why is the only way to ensure you’re not being overcharged. This data can also help you when your shipping contracts come up for renewal.

#3 – Plan Ahead to Avoid Peak Season Surcharges.

It’s important to order your inventory for peak season early. This is the best way to avoid paying peak surcharges twice, once when receiving inventory and again when sending individual orders to customers.

Outbound Shipping Cost Takeaways

Knowing the common surcharges by carrier and utilizing shipping cost strategies can help you save money in the long run. By taking the time to analyze your shipping costs and strategizing ways to reduce expenses, you can ensure that your business is operating as efficiently as possible.

ShipHero provides a plethora of tools and information to help you find the carrier that is right for you. With the use of our analytics and customized dashboard, you can shop real-time shipping rates to help you comprehend the total summation of your shipping fees, helping you stay informed and maintain complete control over the economics of your 3PL.

*Stats provided by Coyote Logistics*

Common Mistakes that Increase Carrier Costs | Economics of 3PL

Jul 28, 2023 | 3PL Warehouse Management, Blog, Economics of 3PL, Fulfillment

Shipping costs can quickly add up and devour your budget, but it doesn’t have to be this way. The trick is to avoid common pitfalls that lead to inefficient processes and additional charges. In this post, we’ll explore some common mistakes that should be avoided at all costs to save money on fulfillment – equipping you with the know-how needed for sound business decisions moving forward.

Invoice Errors

Did you know that 5% of invoices contain errors and inaccuracies? The root causes of these mistakes are often common shipping issues like accessorials and late fees. When rate errors go undetected, a shipper may be overcharged an average of 3%-5% of the total invoice.

For example, if you look at the FedEx Invoice below, the total charges are $1,831.17. If 5% of those charges are riddled with inaccuracy, then you’d be paying $92 in unnecessary overages – which adds up.

Accessorial Charges

These costs are not always clear-cut and can fluctuate depending on the carrier. Our in-depth article on accessorial charges outlined three key lessons businesses can use to minimize mistakes and unexpected fees.

Know all your costs, even the hidden ones, and ask about accessorial fees upfront.
Analyze your shipping invoices regularly to catch any billing mistakes early.
Plan ahead for peak surcharges to save your business significant money on shipping costs.

See more details in our guide to managing accessorial charges.

Late Fees

Inefficient systems can often delay the clearing of invoices, which results in unnecessary late fees. For example, both UPS and FedEx have instituted late payment fees. To avoid incurring these fees, make sure that payment is received by UPS within 14 days of the invoice due date and for FedEx, within 15 days of the invoice date. If payment is not received by the due date, both carriers charge a late payment fee of 6% of the total past-due balance. FedEx places delinquent accounts on cash-only status, which could cause delays in your shipments and the loss of applicable discounts.

Shipping companies are responsible for ensuring an effective system to avoid late charges and penalties. Failure to meet the terms of the agreement can also result in carriers charging additional interest fees.

Know Where Your Charges Are Coming From

When a shipper hires a transportation company to move their goods, an invoice or bill is created for each job. These documents contain important information about the shipment, the services provided, and any additional services rendered. For carriers, it compiles all charges from every Bill of Lading associated with the shipment.

Your Bill of Lading Should Include the Following:

Purchase order or account number
Shipment date
Shipper’s name and address
Recipient’s name and address
Number of units being shipped
Description of what’s being shipped
Declared value of goods being shipped
Shipment packaging – cartons, crates, pallets, etc.
A notation if the product in the shipment is hazardous
Exact shipment weight
Pickup or delivery specifications

Common Shipping Errors

Shipping errors are an unfortunate reality in the fulfillment industry. Every 3PL wants to ensure a seamless pick, pack, and ship process, but mistakes can and do happen. It’s important to be vigilant and watch for common errors.

Incorrect Measurements, Dimensions, and Packaging

Small mistakes in measurements, dimensions, and packaging can lead to expensive surcharges for shipping. Even slight errors can cause significant charges to accumulate. It’s important to remember that shipping fees are calculated based on the greater value of weight or size, which means DIM weight can also affect shipping fees. Measuring and weighing packages accurately is crucial to avoid these unnecessary expenses.

Measurements and Dimensions

UPS, for example, if your package dimensions don’t match your labels, the mislabeled packages will be subject to a shipping correction fee. If you get charged with a shipping charge correction audit fee, you’ll have to pay the greater of the following:

$1.00 per mislabelled package during the applicable invoice period; or
6% of the total shipping charge corrections during that invoice period

So, invest in a reliable scale and WMS to avoid incorrect estimates and unnecessary fees. This will ensure your measurements match your carrier’s, reducing the risk of unexpected charges. Giving incorrect delivery details might seem insignificant, but it can quickly snowball into a logistical nightmare.

Packaging

Rather than trying to save money by using cheap materials or skimping on protective measures, investing in better packaging will ultimately save you money in the long run by reducing re-shipping fees caused by transit damage.

Keep packages as small as possible and minimize inserts to minimize your costs further. Standardizing packaging is also important in reducing costs, helping you to streamline the process and minimize materials. Following these tips can significantly reduce your packaging costs without compromising quality. With so much at stake, taking shipping accuracy seriously is essential.

You Don’t Have a Diverse Carrier Mix

To avoid high shipping costs, diversify your carrier mix. Relying solely on one carrier may leave you vulnerable if they face capacity issues, raise prices, or go out of business. Without other options, you may have to pay expensive fees to ship your goods.

Why You Need a Multi-Carrier Platform

Cost Effective: To save on shipping costs, choose carriers that fit your budget and take advantage of available deals and discounts. Comparing rates on a single platform is easy and helps you make informed decisions. Let the software do the work for you.

Saves Time: Input package details into your WMS and let technology compare rates from various carriers. You’ll have diverse shipping options to select the most affordable and efficient.

Reduces Disruptions: Using a multi-carrier platform can prevent shipping delays by seamlessly switching to another carrier if one experiences trouble.

Handling Unique Scenarios: When you use multiple carriers, it’s possible to choose a more affordable option for free shipping and give customers the choice to upgrade for faster delivery times.

Not Using a WMS

When managing logistics operations, using a warehouse management system is not just a nice-to-have; it’s a must. Manually determining the cheapest rate based on address, weight/dimensions, and shipping speed is tedious and complex. Not to mention the risk of shipping errors and lost time.

With ShipHero’s Rate Shopping, you can access the most up-to-the-minute shipping rates from major carriers. Buy the label at the cheapest price. It’s time to take advantage of a WMS.

Utilize Technology and Automation

A WMS is not just about the convenience of having everything in one place – but the benefits of automation. By reducing the need for personnel in the shipping process, companies can save money, reduce processing time, and improve accuracy. With fewer jobs for staff, there’s also less risk of data entry errors and lower costs because you need less help to run your 3PL.

By utilizing warehouse management software, you can accomplish the following:

Combine and streamline shipments to improve shipping efficiency.
Reduce mistakes to cut shipping costs significantly.
Access to numerous carriers and compare prices to find the most affordable option.
A single dashboard provides complete visibility of all your shipments.
Ensure real-time updates on shipment status for your customers.
Improve service levels and reduce customer churn to achieve customer satisfaction.

From Errors to Accuracy

To manage carrier costs accurately, it’s essential to take the time to verify that invoices are correct and up-to-date and ensure that your fulfillment systems are processing payments promptly. It’s also important to consider the non-monetary shipping costs, including accurate measurements, dimensions, and packaging. This can help you avoid costly surcharges and ensure your deliveries are successful. Finally, implementing a warehouse management system can save you time, prevent shipping delays, compare prices, and reduce errors.

Key Takeaways:

Inaccurate invoices can result in overcharges of 3%-5% of total invoice values.
Auditing invoices thoroughly and double-checking for accuracy is important to avoid invoice errors.
In-depth knowledge of accessorial charges can minimize mistakes and unexpected fees.
Efficient fulfillment systems are necessary to avoid late fees and interest charges.
Avoid costly overcharges by ensuring accurate and timely payment of carrier bills.
Accurate measurements, dimensions, and packaging are crucial to avoid expensive surcharges.
Diversifying carrier mix can prevent shipping delays and expensive fees.
Using a warehouse management system can save time, reduce errors, and compare prices.

What ShipHero does to prepare for Peak Season

Jul 10, 2023 | 3PL Warehouse Management, Blog

If you’re lucky enough to build out a successful and enduring SaaS product, chances are you’ll have to deal with technical scaling issues.

An advantage of being in the eCommerce fulfillment space is that large spikes in usage are usually predictable and can be planned for (with a notable exception: pandemics!), so while there are a few spikes throughout the year, there’s one everyone in the space is well aware of: Black Friday & Cyber Monday (Peak Season). From late November up until a day or two before Christmas, usage of our systems spikes by 2-5x.

For ShipHero’s use case, the real-time pressure on our systems is applied from people working at the warehouses and not end-users shopping from their homes (we get hit with that as well, but it comes in at different times so that we can control the flow). We have an advantage over most systems: physical space limits how much can be done simultaneously. You can only fit so many more people in the same warehouse during peak season.

So, how do we avoid having your systems break when they get several times more than their regular traffic? Well, there are a few things we do:

We Break it Ourselves Ahead of Time

We look at spikes in usage throughout the year, use our peakiest days as a reference, and target to comfortably do 2-3x that amount of traffic comfortably. We do that by artificially sending traffic to a non-production set of services, applying pressure to them, and tracking key performance metrics for the service (primarily, ensuring the servers remain healthy and response times don’t suffer).

If something breaks, we know where we have some work to do, and if it works, we go back and apply more pressure until it fails. We want to know when it’s likely to break and how. This is a relatively common practice known as “load testing.”

We also do something often overlooked but have caught issues more than load testing: we scale up our existing production infrastructure beyond what we think we’ll need. So, for example, if we’re usually running 100 AWS EC2 instances for a service at peak hours of the day, we slowly spin up more until we get 500 EC2 instances, all of which process real production customer requests.

If it goes well, customers get a slight performance improvement that day, and we burn through some money. However, when you add capacity, you start to hit service limits that aren’t related to load, the most common ones being the number of concurrent connections to databases and AWS default limits. So what we’d sometimes find is we need to request more IP addresses or a higher quota of elastic load balancer, both specific things to do ahead of time but very stressful and disruptive when in the middle of heavy usage.

We’ve also found that we can continue adding servers, but there are too many concurrent connections to a database at some point, and adding more just flat-out breaks everything.

No Big Changes leading up to Peak Season

What use is stress-testing a system if you make significant changes afterward? Because most of the stress during the busy system is with the humans at the warehouses, we ensure we don’t make any substantial changes to our system after we try to break it. This means no database version upgrades, performance improvements, or new features. With complex systems, it gets tough to predict how even small changes might affect other parts, so we carefully consider any changes in the 6-8 weeks ahead of Black Friday.

We change as little as possible during Peak Season

We make very few meaningful changes ahead of the busy season. We make fewer changes during the most active month. We froze our codebase for a few years and didn’t allow deployments to production. It was a great way to ensure no unexpected changes, but it had the side-effect of accumulating bug fixes and minor improvements for a month or two, which isn’t ideal.

So in 2022 and again this year, we’ve switched to setting an exceptionally high bar to land and roll out any code, but not a complete freeze. That means we expect every single code being produced to have an exhaustive amount of automated tests, manual QA, and a code review by at least two people where one of them is the domain expert, and make all the people involved in the process co-responsible for how it affects production. In practice, it can take a week to roll out something that usually takes hours, but we’re ok with that for a month out of the year. Productivity goes down by a ridiculous amount, but in return, we get productive customers at a time of the year when everyone’s heads down trying to get packages out the door.

We do other things at the organizational level, like having engineers on-call 24/7 to respond to incidents within minutes and hopefully get ahead of any issues before anyone notices.

It’s something we’re constantly improving, we’ve had years of exceptional reliability during peak season, and the only way to keep it that way is to keep making internal processes better all the time.

Martin Albisetti, ShipHero Vice President of Engineering

CAREERS

What is Kitting?

Kitting Services Meaning

Examples of Kitting

Benefits of Kitting

Reduce Fulfillment Costs

Provide Value

Increase AOV

Clean Up Inventory

Holiday Shopping

Warehouse Kitting Process

Kitting Services From A 3PL

The Future of Personalized Fulfillment

Kitting FAQs

What is kitting in a warehouse?

What is a kitting process?

What does kitting mean in logistics?

What is the purpose of kitting?

What Does White Glove Service Mean for 3PLs?

Why are White Glove Services Gaining Popularity?

Levels of White Glove Fulfillment

Ways to Up your Fulfillment Game

Should My 3PL Utilize White Glove Delivery?

Organizational Efficiencies: Do You Have Enough Warehouse Space?

Employee Efficiency: Can you Designate a White Glove Packer?

Automation Rules: Can your WMS Support White Glove Fulfillment?

Examples of White Glove Fulfillment

Are you Ready to Scale your Fulfillment?

What is Reverse Logistics?

How Reverse Logistics Works

Types of Reverse Logistics

5 Rs of Reverse Logistics

Reverse Logistics Examples

Importance of Reverse Logistics to your Business

Returns are Costing you – Save with ShipHero.

#1 Improve Visibility

#2 Streamline Processes

#3 Leverage Technology

#4 Reduce Waste

#5 Improve Customer Experience

#6 Analyze Data

Unlock the Power of Successful Reverse Logistics

What is Outsourced Returns Management?

Advantages and Disadvantages of In-House Returns

Advantages

Disadvantages

Advantages and Disadvantages of Outsourcing Returns

Advantages

Disadvantages

Does Outsourcing Really Save Money?

Make Returns Hassle-Free With ShipHero

What are Digital Twins?

The Importance of Automation

The Benefits of Digital Twins for Warehouse Automation

Challenges of Digital Twins in Warehouse Automation

The Future of Digital Twins and Warehouse Automation

Leveraging Digital Twins

Understanding the Components of Carrier Costs | Understanding the Economics of 3PL

Base Rate vs. Accessorial Charges

What is a Base Rate?

How Do You Choose the Best Base Rate?

What Are Accessorial Charges?

How General Rate Increases (GRI) Affect Base Rate

Know What You’re Paying For

How to Estimate Your Shipping Cost

Common Surcharges By Carrier

Additional Surcharges

DIM Weight

Peak or Demand Surcharge

Shipping Cost Strategies

Lessons in Outbound Shipping

#1 – Know All Your Costs, Even the Hidden Ones.

#2 – Analyze Your Shipping Invoices on a Regular Basis.

#3 – Plan Ahead to Avoid Peak Season Surcharges.

Outbound Shipping Cost Takeaways

Invoice Errors

Accessorial Charges

Late Fees

Know Where Your Charges Are Coming From

Your Bill of Lading Should Include the Following: