Sorted fact file: Cutting costs with smart allocation
What's the challenge?
As costs rise across the board, retailers are honing in on carriage costs to save money in the final mile.
Parcel allocation is one area in which many retailers are looking to ensure budget efficiency.
How does that impact costs?
When retailers are paying for each consignment they ship, every penny shaved off the cost per label counts.
When is allocation not 'smart'?
If a retailer doesn’t have smart allocation capabilities, then allocation is often done in a more rudimentary way. This is likely to be direct carrier integration; meaning the retailer has done extensive technical development work to build a one-to-one link into the carrier's system. Here, a consignment or shipment is automatically allocated directly to one specific carrier, regardless of size, weights, dimensions, destination or cost.
What is smart allocation?
When some carrier management systems use basic logic to put consignment A with carrier B, some systems (using more advanced algorithms) are smarter about allocation. This logic could be in layers, like this:
Availability
Which carriers can actually commit to delivering against promise?
Blocking logic
Are there any rules in place that need to be taken into account? For example, 'don't deliver via CarrierX on weekends' or 'give next day traffic to CarrierZ'.
Cost
That's the bottom line. What service is most cost-efficient?
The mission objective is to find the carrier that can deliver to promise, within the retailer preferences, and for the very best price possible.
The results?
- Failed delivery attempts are reduced
- Trailers are filled efficiently
- Carriage costs go down
What metrics can retailers monitor when they're looking to optimise carriage costs?
Trailer fill or % utilisation
Claims, damages and losses
Consignment profile - weights & dimensions (utilisation against standard agreement)
‘On time, in full’ (OTIF) delivery success rate
Right first time delivery
How do retailers set up carrier management that can accommodate smart allocation?
With multiple carrier management providers in the market, it’s good to review the one that best suits your needs. Some, like Sorted, have built a full Delivery Experience Platform that puts smart allocation at the centre of the offering.
When a supplier is sourced, there is naturally a lot of due diligence that goes into signing a contract with a tech provider, especially when the tech powers a mission-critical operation like warehouse and delivery. That said, the right supplier will work in partnership and will ensure you’re supported throughout the process.
Which retailers are taking action over parcel postage costs and carrier management?
3PL saw a 200% increase in productivity, as well as a 1.2 point NPS rise when carrier management improved.
Read the story
Party Delights saved costs and mitigated risk in their warehouse and carrier operations.
Find out more
Wincanton say that their retail customers, regardless of maturity, see a big difference in the efficiency of their delivery management.
See how
Some stats on costs relating to carrier management.
- A Session on driving down carriage costs, Sorted Retail Sessions Podcast.
- Third party resource to be sourced.
- The CMS Playbook, Sorted.com.
- Third party resource to be sourced.
- Customer stories, Sorted.com.
Helpful resources for smart allocation and reducing carriage costs.
- A Session on driving down carriage costs, Sorted Retail Sessions Podcast.
- Third party resource to be sourced.
- The CMS Playbook, Sorted.com.
- Third party resource to be sourced.
- Customer stories, Sorted.com.
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Get in touch to discuss your buget effeciency goals, or to hear about how smart allocation might work for you.