Parcel Simulators: An Essential Tool for 3PLs to Prove Cost Savings
Third-party logistics companies (3PLs) are in an intriguing and complicated position today. As post-pandemic parcel shipping conditions stabilize, the previous frenzy of heightened demand, capacity crunches, and skyrocketing rates has leveled off. Volumes are lower and capacity is now more readily available, yet shipping costs continue to rise. The pressing question for 3PLs is: How can we prove cost savings in a highly competitive outsourced parcel shipping marketplace?
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?
- Cross-Order and Cross-Client Cost Optimization: By applying configurable instructions across orders and clients, 3PLs can simulate further cost savings, contributing to better financial performance and increased customer satisfaction.
The application of configurable simulation instructions provides a strategic edge for 3PLs, enabling them to navigate the intricacies of parcel shipping while delivering superior service to their clients.
Gaining an Edge: Simulator Benefits for 3PLs
Parcel simulators help 3PLs substantiate cost savings and strengthen their market positioning. By leveraging these powerful tools, 3PLs can unlock benefits that contribute to shippers’ operational efficiency, customer satisfaction, and long-term growth.
Shorten the Sales Cycle
Proving cost savings and performance enhancements is critical for 3PLs attempting to demonstrate their value to shippers. Parcel simulators provide the data-driven evidence needed to substantiate otherwise generalized claims and promises, effectively shortening the sales cycle by reducing the time spent on follow-ups and negotiations.
With parcel simulators, 3PLs can easily identify opportunities to optimize carrier selection, capacity, and customer delivery experiences. By running multiple scenarios, 3PLs can determine the most efficient carrier options, maximize capacity usage, and ensure optimal delivery times. This drives efficiency, reduces operational costs, and enhances overall service delivery.
One size doesn't fit all in 3PL services – every client has unique order to delivery requirements. A parcel orchestration platform provides 3PLs with the ability to manage a multi-tenant cloud environment, with each tenant adapted to each client’s requirements, rates and process flows to suit their unique preferences. Simulators then enable 3PLs to demonstrate tailor-made solutions for each client. These configurations, geared toward individual needs and demands, streamline operations, and ensure services are aligned with client expectations, accelerating time to benefit, and fostering long-term business relationships.
Reduced Development Costs
Configurable instructions replace traditional hard-coded scripting, reducing the time and cost associated with system development. This allows 3PLs to redirect resources towards enhancing their core service offerings and focusing on client needs.
Speed in Processing
Simulators with onboard rating and routing engines outpace the processing speeds of legacy systems that rely on carrier APIs. An onboard engine can calculate rates, transit times, and routing instructions at speeds exceeding 20,000 calculations per second, thereby providing rapid and reliable results for complex simulations. Faster processing speeds improve operational efficiency and enhance the reliability of simulation outcomes.
By leveraging parcel simulators, 3PLs can effectively prove cost savings, reduce their sales cycles, and deliver superior, customized services to their clients. These benefits not only set them apart in a highly competitive market but also pave the way for sustained business growth.
Securing 3PL Success with Sendflex Simulations
Parcel simulators are quickly becoming a necessity for 3PLs looking to stand out in today’s highly competitive logistics market. Wary shippers need risk-free environments to test new strategies, evaluate alternatives, and fine-tune operations – simulators do just that. They are a tangible, data-driven solution to demonstrate a 3PL’s ROI and speed up sales cycles, making the case for their services with unassailable certainty.
Sendflex is leading the charge in simulations, with a robust parcel orchestration platform designed to meet the most complex logistics needs. With Sendflex, 3PLs can simulate, plan, and execute shipments to optimize capacity, enhance customer delivery experiences, and reduce costs. In transforming data into actionable insights, Sendflex provides the tools for 3PLs to confidently prove ROI and accelerate their sales cycles.
For a deep dive into simulations, optimization, and data-driven logistics that drive 3PL sales, schedule a consultation with a Sendflex expert today.
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