As logistics solution providers look to expand their footprint to grow market share, they often migrate into areas beyond their core expertise. In recent years this has meant companies specializing in transportation management systems [TMS] attempting to add parcel shipping capabilities of one sort or another into the mix.
Sometimes it works, but often it doesn’t.
Supporting parcel is not easy. It’s actually downright complex thanks to the highly specialized compliance rules each carrier has. As a result, some TMS providers try to dip a toe into the parcel pond by “supporting parcel” – emphasis on the finger quotes there – without really supporting parcel. Rather, they handle the basic services like ground and 2-day air while also supporting a limited number of add-on services like insurance or cash on delivery. This parcel module might even rely on the carriers’ bare-bones web services behind the scenes, which adds another layer of concern. But here’s the kicker: this might be fine for some businesses. If you have a single carrier, only ship with the mainstream services and don’t really care about tenths of seconds with faster application response time, then this type of set-up could work just fine.
For many shippers who are in the parcel market or looking to expand their capabilities, however, this isn’t enough. At minimum, most shippers today are looking to use multiple carriers and last mile services, with the ability to easily add regional carriers and ship internationally. The goal for all shippers should be to have a versatile supply chain strategy that provides various transportation options and sets virtually no limits.
The biggest and most overlooked challenge for TMS providers trying to support parcel shipping is compliance. Each carrier has its own rulebook that it requires shippers to abide by, and these rulebooks change constantly – at least once a year, but sometimes more. So it’s not just a matter of getting compliant, it’s a matter of staying compliant. Even TMS providers that rely on parcel web services think it’s a one-and-done effort, but those web services also need to be kept up to date.
This is vastly different than the freight shipping world TMS providers are accustomed to. Yes, there are rules to follow, but they’re generally pretty consistent among carriers – and much more static. The result is that TMS providers – who often go years without having to make upgrades to their software – often struggle with the heavy compliance load they encounter when getting into parcel.
Without question, staying compliant is the most difficult part of supporting parcel carriers, and the certification process for each carrier can be quite involved and time consuming. Keep in mind that this is for every parcel carrier every year, times the number of parcel carriers that are supported. It’s easy to grasp the commitment it takes to support parcel.
So compliance is a big factor in the parcel world, but the rate of general change also has a large impact.
Take for instance last mile services. Often this means a tag team effort from two carriers, creating double the fun for compliance. There is also the introduction of added services like alternative delivery addresses where the consumer can pick up the package at an alternative location. Parcel carriers are consistently trying to keep ahead of each other and the marketplace, which makes the business of supporting them that much more difficult.
So if you’re looking at a TMS vendor and they say “we support parcel,” you should ask the following questions to ensure you really understand their solution:
- How did the TMS provider start supporting parcel compliance? Did they purchase a best-of-breed parcel system? Did they create it themselves? Are they partnering with another vendor?
- If the carrier requires a compliance change for labels or uploads, what is the process to get these? Will you have to update your entire TMS?
- If the carrier requires new data fields to accommodate a new service or add-on, how will the TMS capture this new value? Are simple add-on fields available in the TMS workflow? How flexible is the TMS to this type of change?
- How many people does the vendor have dedicated to maintaining carrier compliance? What about development and quality assurance? If they don’t have 10+, then this can be a red flag that parcel isn’t considered a core part of their solution.
- What is the process to on-board a new carrier that the vendor doesn’t currently support? Can you do this yourself or does the vendor need to get involved? How long does it take – days, weeks, or maybe even months?
- How deep and broad are the carriers they support? It’s important to make sure you’re covered not only for what you need today, but also for the future and what it might hold – things like international shipping, hazardous materials, last mile, high performance, etc.
As you can see, there are a lot of things to think about when it comes to TMS and parcel. But asking the hard, deep questions now will save you many headaches down the road and set you up with a solution that meets your needs today and tomorrow.
Steve Williamson has spent 19 years at Kewill working with enterprise shippers, manufacturers and logistics service providers. He has hands-on experience with everything from complex, multi-carrier parcel solutions to full truckload shipping operations. His extensive experience working directly with customers has given Steve an intuitive feel for what makes an effective real-world supply chain – and how to troubleshoot one that is lacking.
[…] VIEWPOINTS | THURSDAY, MARCH 3, 2016 Six Key Questions to Ask a TMS Provider About Its Parcel SolutionAs logistics solution providers look to expand their footprint to grow market share, they often […]