According to a recent 2023 industry survey, businesses that prioritize order-level management and utilize cost-to-serve analysis in their freight shipping operations have reported significant improvements in efficiency and overall performance. The benefits of each component are highlighted below.
Order-level Management:
The tracking of orders from inception to fulfillment, and the management of the people, processes and data connected to the order as it moves through its lifecycle.
Cost to Serve:
The measurement of cost factors that go into the servicing of a customer, or the production of a product.
For companies involved in shipping freight, the combination of order-level management and cost to serve analysis can be a game-changer. Let’s explore why this dynamic duo is crucial for businesses looking to optimize their operations and stay ahead of the competition.
#1. Precision in Fulfillment – Possible 28% Reduction in Fulfillment Errors
Order-level management allows businesses to streamline their fulfillment processes. By focusing on individual orders, companies can ensure that each shipment is processed with precision. As a result, this not only enhances customer satisfaction, but minimizes errors in picking, packing, and shipping. Accurate order fulfillment is the foundation of a successful logistics strategy, and it forms the basis for reliable cost to serve calculations.
#2. Cost Transparency at Every Level – Potential 20% Decrease in Shipping Costs
Cost to serve is a comprehensive metric that considers all the costs associated with fulfilling customer orders. This includes transportation costs, handling fees, packaging expenses, and any other relevant expenditures. By combining order-level management with cost to serve analysis, businesses gain unparalleled transparency into their operational costs. This insight allows for informed decision-making, enabling companies to identify areas of inefficiency and implement cost-saving measures.
#3. Optimization of Shipping Strategies –Achieve a 35% Increase in On-Time Deliveries
Understanding cost to serve at the order-level empowers businesses to optimize their shipping strategies. By analyzing detailed cost breakdowns, companies can identify and trim unnecessary freight costs. Selecting the most cost-effective shipping mode and carrier, along with planning ship dates based on client delivery requirements, allows for effective cost control while enhancing service. This level of granularity ensures efficient resource allocation and minimizes unnecessary expenses.
#4. Improved Customer Experience – 25% Boost in Customer Retention Rates
Efficient order-level management and cost to serve analysis directly enhance the customer experience. Timely and accurate order fulfillment not only satisfies customers but also fosters brand loyalty. By optimizing shipping strategies using cost to serve data, businesses can offer competitive shipping rates without compromising their bottom line, providing added value that incentivizes repeat business. In addition, this approach helps build a reliable and competitive shipping reputation with carriers in the market.
#5. Proactive Problem Resolution – Achieve a 30% Faster Resolution of Logistical Challenges
For businesses that ship, problems are inevitable. However, businesses armed with order-level management and cost to serve insights can proactively identify and address issues. Whether it is a bottleneck in the fulfillment process or unexpected spikes in shipping costs, having a granular understanding of the entire logistics chain allows for swift problem resolution. This agility proves crucial in maintaining operational continuity, minimizing disruptions to the supply chain, and mitigating potential financial losses.
#6. Strategic Planning for Growth – Target a 22% Increase in Profit Margins
Order-level management and cost to serve analysis are not just tools for immediate efficiency gains; they are critical for long-term strategic planning. Businesses can use this data to identify trends, forecast future demand, and make informed decisions about expansion or diversification. This strategic foresight positions companies to adapt to changing market conditions and stay ahead of competitors.
The combination of order-level management and cost to serve is a powerhouse for businesses engaged in freight shipping. It offers a holistic view of operational efficiency, cost structures, and customer satisfaction. Businesses that embrace these practices not only achieve immediate cost savings but also position themselves for sustained growth, customer satisfaction, and a competitive advantage in today’s ever-evolving freight and transportation industry.
