Until recently, the return on investment (ROI) gained from a Warehouse Management System (WMS) was calculated based on cost reductions in inventory management, improvements in workforce productivity, lowered error rates in picking and shipping, more efficient use of space, and lower wear and tear on equipment. Now, however, as more freight carriers make a shift to charging distributors and warehouse operators based on the dimensional size of individual packages, the cost of shipping is becoming another area where a WMS with an integrated manifesting system is able to deliver valuable cost savings. Some WMS vendors also have standalone manifest and shipping systems to help provide additional savings.
Any company undertaking a typical WMS deployment could invest up to $300,000 (and sometimes more) for the system, followed by average monthly software and hardware maintenance costs. This investment can be expected to generate cost savings throughout the warehouse or distribution center in the first year, often in the hundreds of thousands of dollars. These reductions come from lower labor costs, improved shipping accuracy, and less need to tie up capital in ‘fear’ stock.
While the core functionality of a WMS includes automating and directing the receiving, put away and picking processes, WMS solutions today have expanded to handle inbound transportation scheduling and manifesting small parcel and less than load (LTL ) for outbound shipments. These new logistics tools help achieve significant shipping cost savings for the company and its customers, adding to the overall ROI of the system.
Integration is key to cost savings
Manifesting systems generally integrate with shipping systems in the background to simplify tasks such as warehouse shipping, package tracking, and route management. These systems contain information about all of the relevant carriers, automatically selecting the lowest available shipping rate (or the fastest option for rush orders).
Other advantages of a manifesting system include the automated printing of hazmat or e-commerce labels, bills of lading, and third-party shipping papers. These systems can be used to provide multi-carrier compliance with major international and regional carriers, LTL shipments. Even billing can be simplified when the relevant data gets automatically transmitted to the appropriate carrier for processing.
Recent changes implemented by FedEx, UPS and other carriers are accelerating the need for the adoption of a manifesting and shipping system in today’s warehouse. These carriers are now utilizing a complex, dimension-based pricing model that increases shipping costs and makes them more difficult to calculate. This isn’t just a problem for the shipper. It’s also an issue for customers since they are now unable to calculate standard shipping costs through retailers’ online tools. In many cases, retailers are absorbing shipping cost overages in order to maintain clarity for consumers, but this isn’t a long-term solution.
An extra dimension
Whatever products or parts a company is shipping, the shipping problems are familiar. California-based Cascade Orthopedic Supply and Fisheries Supply in Seattle had similar shipping problems, both solved by a flexible manifest system integrated within a WMS. For Cascade, it had become nearly impossible to accurately quote shipping costs to its customers – particularly for items with irregular shapes. This lack of visibility into shipping costs also made it extremely difficult for the company to audit its expenses to ensure that it wasn’t being overcharged. Cascade needed tools that would help it measure and manage the dimensional data of each item.
“The ability to quote freight costs to customers using our website had become a struggle, given the variety of items that we sell,” reported Jeff Collins, president of Cascade Orthopedic Supply. “Since the carriers now use dimensional weights, just knowing the weight of individual products isn’t enough. We need to know the total dimensional size of every outgoing package to give customers a lot more transparency into total cost. We also saw this as an opportunity to differentiate ourselves from our competitors.”
The answer was a WMS with manifesting, plus Postea’s QubeVu DimStation for dimensioning. Cascade found the system to be competitively priced, fast, accurate, and able to calculate the dimensions of irregular shaped items easily.
“We found a need to dimension our items for a number of reasons, and we landed on this solution as a cost-effective and highly functional unit for our needs,” continued Collins. “A huge benefit of a dimensioning system is that it’s not only incredibly quick, it also easily handles irregularly-shaped items and things that come to us from our suppliers either loose or in polybags. For us, integrating everything into a streamlined, well-structured process was important.”
Kyle Sutter, vice president of operations at Fisheries Supply, had similar needs. While it did not yet need a dimensioning system, the company did want to give online customers accurate and automatic shipping cost estimates through its WMS. This was ultimately achieved through an integrated manifest module so that today, shipping estimates can be created within the WMS. These estimates even include variables such as hazardous material charges and shipping requirements for chemicals, explosives and flares. “Having the ability to quote shipping prices to customers upfront through our online store was game-changing for us,” Sutter said.
Now that most large carriers calculate shipping costs based on size and weight, companies like Cascade have benefited enormously by utilizing dimensioning data find the most economical shipping method for each parcel. Another competitive advantage for Cascade is its ability to accurately quote shipping costs to online customers. These costs have been reduced significantly now that the company is able to eliminate unnecessary payments for ‘void’ space.
There were different advantages for Fisheries Supply. The company’s WMS system was integrated with a manifesting module that brought considerable enhancement to post-picking operations. For example, by prioritizing Will-Calls for customers needing urgent pick-ups, the WMS is able to expedite picking and packaging, allowing the item(s) to be ready in as little as 15 minutes. As soon as pickers have caught up on Will-Call orders, the WMS then switches to external shipments that can be staged and ready for USPS, UPS, FedEx and any other carrier, based on the delivery cost and timing requested by the customer.
Shipping costs have always been a large expense for warehouses. This isn’t likely to change any time soon, but with the adoption of manifesting tools and other innovations such as package dimensioning equipment (where necessary), distributors and operators can gain better visibility into operations and take back control of shipping costs.