Can high-volume parcel shippers survive with business rules in 2021?
Supply chain in the last 24 months has been nothing but insane. Canal blockages, driver shortages, port congestion — so many variables that are wreaking havoc on global supply chains. It almost feels like peak season never stopped. And for high volume parcel shippers it might feel like things have stabilized. After all, we made it through last year’s surge with only minimal disruption.
However, 2021’s peak season is going to put 2020’s to shame because restocking is a real challenge.
Constantly changing peak surcharges, even a changing definition of what a peak surcharge season is, shortages and caps on what can be shipped per day…there just seems to be a lot of volatility coming this year in small parcel shipping.
The question is: what can you do to maintain agility in your small parcel shipping strategy?
Should you continue to develop business rules (essentially a table lookup) that govern your supply chain practices? Or should you move to a dynamic model which considers real-time factors influencing the supply chain at the moment you make shipments to make the optimal decision? The choice is clear: the strategies of yesteryear are impossible to apply to today’s supply chain.
But why? For starters, parcel volumes grew 4 years worth of projected growth within a short six-month window in 2020 and will continue to grow, reaching 8,000 parcels per second by 2026. The simple set-it-and-forget-it methodologies that companies have used to govern supply chain execution in fulfillment for Ecommerce are out the window. Carriers are changing service requirements and the definitions of packages that meet certain requirements on a monthly basis. Even DHL limited their maximum package weight for packages originating in the United States to 30 kilograms. So what happened to those companies that had DHL as a preferred carrier for packages weighing 30, 40, or 50 kg from the United States to Europe?
“The way that most companies and large leading e-commerce companies govern and execute small parcel is that they have assigned business rules to determine if it’s this state, or this destination, it’s this much weight, then ship it this method.” explains Brad Hollister, CEO of SwanLeap. “You can’t possibly keep up with hundreds and hundreds of business rules to manage those decisions. You need to make that decision with technology dynamically and on the fly. Not doing so puts you at a tremendous disadvantage, not only from a cost but from a service [perspective].”
What happens if you kick a 40 kg package to DHL and now they won’t take it? What happens with that disruption? When do you find out about that?
What if, instead of relying on static routing guides, you could select from every available carrier, looking for consolidation opportunities in order to book the best possible option for that package? With such a rapidly changing supply chain landscape, how else can you stay agile and nimble in the Ecommerce fulfillment space? A dynamic supply chain enables you to meet and ultimately exceed your customer’s expectations on delivery when your competitors can possibly do that in table based routing logic. And the fact of the matter is 2021 is not the year to be stuck in a static routing. Utilizing routing guides of the past severely limits your ability to access new carrier options when capacity is tight and carriers are limiting service. Committing to set rules prevents you from introducing new carriers that can take that small portion of shipments your core carriers or incumbents can’t possibly take because they’ve capped you at a certain volume for 2020.
2020 taught us that supply chain technology is no longer a ‘nice to have’.
Not only do you need automation and consistency to help you navigate these volatile times, you need to reduce and eliminate the impact of these changes for your customers’ order processing (if you want them to keep doing business with you). Your customers can’t feel what you’re feeling in these uncertain times. They need to know that they’re going to place their order and receive their product on a timely basis. How you get it there — whether it’s faster, or more expensive or less expensive — can’t be the business of your customer. Putting best practices in place in your supply chain with regards to technology and visibility keeps you from being caught off guard when you have a tremendous tidal wave of new orders.
You can’t wait until you get bombarded with a 200% order volume increase before you start thinking about a technology change. You need to do this now.