Reducing costs

MetaPack is a leading provider of delivery management solutions for retailers wanting to improve fulfilment services while reducing delivery costs. MetaPack’s customers include Boots.com, Camelot, Comet, Mothercare, and Screwfix.

MetaPack’s delivery management system enables retailers and fulfilment providers to significantly streamline their delivery operations by connecting them with a range of carriers via a single point. The system selects the appropriate carrier for each parcel according to pre-specified criteria. The retailer is then given complete visibility of the parcel, from dispatch to delivery.

The delivery management system has three main components:

CarrierLink: Plays to individual carrier strengths to deliver each parcel effectively to increase efficiency, reduce costs of failure and improve customer satisfaction. Crucially, it gives the shipper greater control over its processes.

InfoLink: Generates parcel status and performance information for both the shipper and the carrier. This reporting tool means that customer queries are dealt with accurately and efficiently, and the partnership between the carrier and shipper is enhanced.

ServiceLink: Enables the customer to select from a range of delivery options and prices. Retailers are able to offer customers choice, and also increase revenue through differential delivery prices.

As a result of implementing MetaPack’s delivery management system, some of the UK’s leading retailers have significantly reduced their carrier costs, while also improving customer satisfaction levels. So how have Mothercare and Boots used the system to their advantage?

Faced with rising carrier charges, Mothercare had to find a way to reduce the cost of its home delivery operation. UK mother and baby multi-channel retailer, Mothercare had used a ‘standard parcels’ carrier and ‘heavy-outsized parcels’ carrier to deliver nearly 600,000 parcels a year to its Internet and catalogue customers. Due to changing market conditions in 2002, its ‘standard parcels’ carrier offered an ultimatum – accept price increases, or it would withdraw its services.

In order to keep the home delivery channel operating, the price increase was accepted, although the retailer initiated an internal review to look at ways to reduce the overall cost. Mothercare strongly believed that combining carriers to get the best prices and carrier capabilities was the correct approach, but that there were issues to resolve including:

Complexity of more than one carrier. Each carrier had its own operational processes, different labels, different manifests, and different ways of interacting with their customers. This slowed the packing process as parcels for each carrier needed to be processed separately.

Manual carrier allocation process. During packing, the warehouse operative had to manually choose which carrier should deliver the order. However, this relied on the warehouse staff’s judgement during packing, and often resulted in incorrect and expensive choices being made.

Integrating new carriers. Integration of new carriers to Mailbrain, the existing enterprise system, was time consuming and expensive due to the nature of the changes. This made it difficult for Mothercare to react quickly in a changing business environment.

As a result of the strategic review, Mothercare selected MetaPack’s Delivery Management System (DMS) to manage their multi-carrier environment. DMS allows Mothercare to effectively use a range of carriers to positively impact delivery costs and to reduce overall business risk.

DMS offered Mothercare the following features in the management and control of its carrier environment:

Automated carrier allocation. A carrier is assigned to each order according to delivery postcode; parcels requirements (such as POD, fragile, two- man lift); weight and dimension constraints; cost; and retailer preference.

One point of integration to Mothercare systems: DMS CarrierLink is linked via a single interface to Mailbrain. DMS receives new orders from Mailbrain for carrier allocation. DMS then responds to Mailbrain with the specified carrier and service. This information allows the warehouse the option to manage their picking rounds by carrier. lSingle point of access to all partner carriers. DMS manages all interactions with carriers, including updates of all carrier data, carrier labels, despatch processes and paper and electronic manifests.

Generic labels. Parcels labels for all carriers conform to a standard size (6x4in). This allows DMS to print labels for all carriers to a single printer on standard stationery.

As each order is packed at the despatch bench, DMS prints the relevant carrier label(s). Thus the despatch process does not need to be carrier specific, allowing greater productivity and operational flexibility.

Standard carrier interface: Through the DMS carrier interface, additional carriers can be integrated without the need for expensive changes to Mothercare’s Mailbrain system.

In mid 2003, the DMS module CarrierLink was implemented during a 12-week project and the team included both MetaPack and Mothercare staff. Implementation involved three areas within the business: technical, operational and carriers. However, the key to successful project delivery was the selection and implementation of the carriers.

Before DMS could go live, five activities need to be completed for each carrier:

Identification of the appropriate carrier selection model to achieve cost savings.

Agreement of business rules.

Carrier contractual process.

Design of customer specific labels.

Test and sign-off of new customer interfaces.

Mothercare chose to go live with its existing carriers, plus one other: Royal Mail, Parcelforce and Translink. Business rules specified how each parcel would be allocated to carriers in order to maximise savings and service.

By using a cost-effective combination of carriers, Mothercare started accruing significant savings from the outset. It was quickly recognised that adding a fourth carrier would bring further savings and with the help of MetaPack, Parcelnet was implemented before Christmas 2003. Since implementation, four key benefits have been realised: Mothercare has made an immediate 15% reduction on carrier spend; parcels are automatically allocated to a carrier, taking into account the retailer’s service and cost priorities; Mothercare can manage all their carriers by a uniform process; activities such as label print, parcel despatch and manifesting are the same regardless of the carrier; Mothercare has a single point of integration to a range of carriers.

Further, when one of the carriers required a major integration change, MetaPack managed the change within DMS, without impacting Mothercare systems or processes.

Through the carrier savings, Mothercare has achieved a 100% return on investment within six months. Mothercare has recently implemented InfoLink, the second DMS module.

With InfoLink, Mothercare has ease of access to detailed carrier and parcels tracking information while delivering greater customer service and delivery performance.

When UK health and beauty retailer Boots set-up its online store, it wanted to offer customers choice, excellent service, and a successful delivery to promise. MetaPack’s DMS provided the delivery management capability to achieve this.

From the start, it was clear that Boots would need at least four carriers to provide home delivery to customers ? the retailer’s diverse product range and choice of delivery options meant that no individual carrier could meet Boots’ high service level requirement.

MetaPack’s DMS enabled Boots to access both multiple carriers and competitive carrier rates to provide a high quality service and service contingency for all delivery options. DMS simplifies the use of multiple carriers because it can:

Provide a single point of integration between Boots and a number of parcel carriers.

Intelligently stream parcels consignments to carriers according to each specific service requirement, product attributes and destination postcode.

Manage the efficient execution of multi-carrier despatch with a single printer for all carrier labels and automatic manifests.

Provide track and trace, and comprehensive reporting across all carriers from one browser screen.

Offer a flexible and effective multi-carrier platform for growth into the future.

Resolving issues

Using a blend of carriers had the potential to significantly increase the cost and complexity of Boots’ operations. With MetaPack DMS, Boots overcame the four key challenges of operating a multi-carrier environment.

Although each carrier normally used a “unique” label, manifest and status format, DMS provided a standardised method of communicating with carriers, with all carrier documentation generated to a common standard and all carrier labels printed on the same size label from a single printer.

On time delivery success is the key indicator of carrier performance, and DMS enabled Boots to accurately measure this by tracking every parcel through to delivery completion. Delivery success is measured against the delivery promise. Each carrier’s performance is regularly analysed down to route and depot detail level. In areas with poor performance, the carriers can be switched out, or the customer promise adjusted, to maximise overall delivery success. When unexpected problems occur, such as a carrier strike or natural disaster, Boots uses DMS to manage the services to affected areas, in order to maintain customer service, and avoid unexpected costs.

MetaPack’s DMS can automatically alert Boots’ or the carrier’s Customer Service teams to any failed or delayed deliveries, in order to proactively resolve issues.

Success in PointThe first test of MetaPack DMS at Boots was the unofficial Royal Mail strikes in 2001. As soon as affected postcode areas were identified, Boots “switched off” Royal Mail as a carrier of small parcels to those delivery postcodes and “switched on” another carrier to deliver them instead. The switch did not impact Boots’ operations in any way, as all carrier labels, and manifests are generated to a common standard on the same stationery as all other carriers. Although the strikes only occurred over four days, affected areas in London, Liverpool, Manchester and surrounding areas experienced backlogs for weeks. Boots only switched Royal Mail back “on” as a carrier option, when each Royal Mail depot confirmed it was back to normal operations. n