Parcel Simulators: An Essential Tool for 3PLs to Prove Cost Savings

The solution lies in embracing a strategic shift towards customer-focused service delivery. For 3PLs, this requires a clear demonstration of ROI to shorten the sales cycle. To achieve this, 3PLs must begin leveraging intelligent parcel orchestration platforms, use parcel simulators to substantiate their value proposition objectively, and then implement optimization planning to realize those benefits. By doing so, they can stand out from the crowd, driving sales and growth in an otherwise challenging market landscape.

This article will explore the value of parcel simulators as an essential tool for 3PLs to prove the value of their services and reduce their sales cycles.

Configurable Shipping Optimization Instructions: the Key to Parcel Simulations

Omni-channel fulfillment and carrier diversification have added operational complexity. Automation multi-carrier label printing is not enough. To demonstrate their logistics expertise effectively, 3PLs must pair automation with advanced decision-making capabilities using configurable instructions, a key feature of modern parcel orchestration platforms.

Configurable instructions replace the rigid, hard-coded scripting, common to legacy shipping systems. No-code instructions wizards cut through complexity by equipping 3PLs with the ability to automate decisions around how, when, and where to use carrier services, and then change those rules as business conditions require.

In addition to configurable instructions, running and comparing iterative “what-if” simulations requires something other than slow and unreliable carrier rating API. That’s why an onboard rating and routing engine capable of 20k calculations per second is essential to simulation performance. Import shipper contract rates and compare them against.

Using configurable instructions and high speed rating, 3PLs can change fulfillment assumptions and run simulations against shipping history to measure the impact on cost, capacity and delivery performance.

What kind of “what if” assumptions can parcel simulators measure?

• Alternate Carrier Services: Some 3PLs make money reselling carrier services. Using simulators, 3PLs can demonstrate what shippers would have paid had they used more competitive 3PL carrier service rates instead of the shipper’s contract rates. 3PLs can change instructions to alter rate markups, regional carrier coverages, and zip code or lane coverages.
  • What if I had used 3PL rates or a regional carrier to service a specific zip code range last November? What would the impact have been with carrier pickup limits?
• GRI Impact: When carriers publish their annual General Rate Increases (GRIs), there is no reason for shippers to believe that the “general” impact will apply to them, especially when the myriad of surcharges and accessorial fees are applied. A simulator can look at historical data and use the new rates to measure the effective rate increase for a particular client and find ways to minimize impact.
  • What had I anticipated transportation costs to be when accounting for annual GRIs? What was the actual impact?
• Surcharge Avoidance: The proliferation of surcharges and accessorial fees has widened the gap between what a shipper expects to pay and what the carrier invoice charges. 3PLs can use a simulator to demonstrate how thoughtful application of instructions can identify and avoid unexpected surcharges. And then use those same instructions to optimize carrier routing plans during fulfillment.
  • What if I had rerouted shipments over a specific weight limit? What would the impact have been on reducing oversize charges?
• Cube Utilization: 3PLs can fine-tune cartonization decisions, demonstrating how automating cost-effective packing can eliminate unexpected dimensional weight adjustments and waste reduction while optimizing available capacity and customer sustainability experiences.
  • What if I had used a different carton type in my order fulfillment process last month? How would that have affected my cube utilization and DIM fees?
• Fulfillment Origins: Configurable instructions can be used to simulate how fulfilling orders from various locations can save money and improve delivery times.
  • Which fulfillment centers should I use for tomorrow’s orders based on carrier rates, transit time, inventory availability, and labor?
• Zone Skipping: Unlike legacy parcel shipping systems that process one order at a time, parcel orchestration platforms can look across orders or historical shipping data and identify opportunities for consolidations and zone skipping. A recent simulation demonstrated how using a Zone Skipping service could save a shipper 30% on their shipping costs while improving delivery times by consolidating parcel loads for final mile delivery.
  • What if I consolidate and drop ship today’s orders into Las Vegas for final mile delivery? What would the impact be on cost and delivery times?