Managing the supply chain for high-value, time-critical packages



Companies often worry if they are shipping items that far exceed the carriers $100 standard value, and rightly so. For example, take the pharmaceuticals industry, where the retail value of prescription drugs can exceed thousands of dollars in one parcel. If one of these packages is lost, it becomes more than a lost parcel; it is a source of lost (or delayed) revenue and customer dissatisfaction. It also introduces the headaches that accompany filing a claim on the wayward item. But, in industries such as the pharmaceutical sector, filing a claim as tedious as that can be is really the least of your worries. In these instances, even if a lost package is recovered, it cannot be just sent on to the original recipient. In many cases, if these shipments are not delivered at the exact time they were expected, the contents worth many thousands of dollars are useless. For example, certain prescription drugs may be tendered in chemical ice packs, which keep the medications chilled, but only for a certain amount of time. If the package is not delivered within 24 hours, the temperature drops, and the medication is ruined. In this case, the cost of the package being late destroys the entire contents of the package.


In this case, what is the cost of that package not getting to the customer? The package delivery cost of a $60 overnight package is trivial compared to the $3,500 content, not to mention customer dissatisfaction. Whatever the industry or need, you should be more concerned about the item getting to the recipient than the ability to file an insurance claim. The handling of delivery delays can be a strategic and money-saving opportunity.


What can you do to improve the visibility of the supply chain and reduce re-shipping costs? The answer starts with creating a system to do just that. The following groups of data must be identified and integrated into a central portal in order to create a successful shipment visibility solution.


Information about the package contents: Knowing the value of the package content is vital. The package value provides a means to make several critical decisions in the tracking process. For example, you might decide to re-ship packages with a value of less than $300 or arrange for intervention of packages whose value exceeds $1,500. Other types of package information are also important. For example, is the package ice-packed? Security and privacy policies might dictate special handling. Be sure to consider any information that is pertinent to the situation and who has permission to view it.


Information about the recipient: Be sure you have all the relevant information about the consumer, such as his or her name, address, email and phone number. If you will be

handling the communication of package transit issues or arranging for additional delivery services, do you need additional contact information? An inclusion of night-time and daytime phone numbers or a cell phone number might be helpful if the recipient needs to be informed of a transit problem.


Information about the order: The customer number and order number should be easily accessible. Having this information may not be needed on an operators screen, but it may be the data that links the package manifest information into your CRM system.


Information about the parcel: Know the tracking number, carrier, service type, ship date, destination shipping address, weight and estimated delivery date and time.


Parcel tracking information: An updated and timely notice of the latest transit activity plays a vital role in the monitoring and handling of the shipment.


Information System Design Issues

Once you have gathered the static data items, you must now consider the active aspects of the system, such as:

   Integration of the carriers available tracking tools and data into your system.

   The system must be able to intelligently winnow the small percentage of packages with problems from the general population of parcels that are on schedule. Like many other types of information systems, this process is focused on exception handling.

   Develop a means by which to distinguish between packages that are on schedule and those that are not. For example, will bad weather cause a delay?

   Timely status updates stale package tracking information is useless.

   A dispatching service and business process to intervene and provide alternate pickup and delivery service.

   If the package ends up being handled by an additional carrier, devise a means to link the new transit information with the original data.


Packages that experience a transit problem must be easily and visibly identified. Shipping administrators need to keep a close eye on these packages and re-track them frequently, contact the intended recipient and, if necessary, start making contingency plans. This may involve coordination of the parcel carrier, the customer and a local same-day expedited carrier. Having the package dollar value and contents available helps to make intelligent decisions. If a package is worth $150, the business rule might be to reship the product. If the package is worth $10,000, a rescue would be launched.


The purpose of the integrated system is to save re-shipping the high-value products as well as to maintain high levels of customer satisfaction. This creates significant bottom-line savings in several ways.


Mike Prascak is Director of IT at ShipMatrix, Inc., which is

located in Pittsburgh, PA. Visit them on the web at or call 724-934-1400.