How ELDs Could Give You a Competitive Advantage
Today, the most visible impact of e-commerce has been the need for efficient delivery of more packages in increasingly varied shapes, sizes and weights. This trend has been one of the key drivers behind the industry’s almost universal adoption of dimensional (DIM) weight-based pricing in recent years. The impact of this fundamental transformation has been felt across the supply chain and especially at the ‘first mile’, where speed and accuracy have become the industry’s mantras. As more parcel companies and warehouses are looking toward space optimization and more economies of scale, this is where automatic dimensioning technology can be a game changer.
Traditionally, the freight cost of a parcel has been determined solely on actual weight, however DIM weight means that the cubic size of the parcel becomes part of the equation. This approach has been the norm in air freight for many years, but it wasn’t until 2013 that – with more and lighter packages in circulation than ever before – it started penetrating the ground transport space. Since then, virtually all major parcel carriers worldwide have adopted DIM weight, seizing the opportunity to improve their profitability. In fact, the global parcels market grew from just over US$310bn in 2016 to almost US$350bn in 2017 [1].
At the first mile of the supply chain, however, many shippers and warehouses have found themselves carrying the cost of this exponential growth. Over the past five years, the price of postage has increased by an estimated 33 percent [2] while warehousing operations have become more complex and costly.
One obvious reason for this trend is that not only do shipping companies and warehouses need to process growing numbers of parcels of different sizes and shapes; they also need to measure them, generally relying on tape measures. Bearing in mind that, on average, 10–15 seconds are needed to measure each package manually, the consequences can be far reaching and impact supply chain productivity and accuracy.
As shoppers turn to e-commerce and omnichannel offerings, the lines between online and ‘brick and mortar’ retailers and logistics are blurring, with shops operating as mini distribution centers and shipping companies delivering directly to customers. Clearly, slower operations – which ultimately mean slower deliveries – can negatively affect the customer experience, which is now seen as a business priority by the vast majority (67 percent) of supply chain professionals [3]. A retailer’s reputation and revenues could suffer as a result.
Another challenge that comes with manual measurement is ensuring accuracy. Inaccurate volume measurements mean that shipping companies and warehouses may pay carriers more than necessary, potentially loosing revenue. They can also have a negative impact on customer experience, as customers are not charged the correct amount.
Manual processes can also be detrimental to operational efficiency as, without proper measurements in place, it is virtually impossible to accurately plan for how many and what size vehicles are needed to move packages from parcel locations to hubs. In addition, with the huge increase in parcels and cartons shipped, carriers realize that they are exceeding their space constraints first before exceeding weight constraints. As today it iscostlier to buy or rent warehouse space, companies are forced to maximize their current space.
This is where automatic dimensioning comes in.
Today, there are solutions available on the market that deploy 3D depth-sensing technology to measure the three dimensions of parcels of any shape and size instantly and with extreme precision. Some of these solutions are so advanced, that they can calculate the overall dimensions of a package in less than a second and to within 5 mm (0.2 in) accuracy.
One of the clear benefits of such auto-dimensioning technology is that, with the correct length, width and height information on hand, shippers and warehouses are able to pay carriers and charge customers the correct amount. It also helps reduce the time and costs carriers incur when having to retroactively charge shippers for incorrect measurements. This avoids revenue losses, while strengthening the relationship between shippers, carriers and customers.
Automatic dimensioning can also have a significant impact on productivity. With immediate measurement calculations, around 15 seconds per package can be saved, which can greatly increase the overall worker productivity at a distribution center. Potentially, a shipping company could save enough time to handle 5,700 more parcels over 24 hours.
These dimensioning solutions, when used in warehouses,parcel shops and shipping drop points, can result in higher customer satisfaction for shoppers. Queue times can be shortened as the store clerk or shopper doesn’t have to spend extra time manually measuring a parcel. As an added benefit, the automatic dimensioning system can capture an image of the parcel before it is shipped in order to verify the condition in case of a damage claim.
Finally, with automatically-calculated parcel dimensions on hand, shippers and warehouses can accurately estimate the correct number of vehicles and space per vehicle that is needed to transport packages from drop off locations to hubs. This improves the distribution center’s overall efficiency, helps to cut costs and reduces the environmental impact of inefficient shipments.
These are just some examples of how automatic dimensioning can transform the parcel shipping industry and have a positive impact in distribution centers and warehouses. With e-commerce continuing to grow [4], it is clear that this technology is here to stay. Expected to grow at a compound annual growth rate (CAGR) of 15 percent, automatic dimensioning is already one of the key drivers behind higher levels of productivity and accuracy across the entire supply chain.
By Justine Clark, Transportation & Logistics Marketing Manager, Europe, Honeywell Safety and Productivity Solutions. Source GCCA News.
