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July 24 2006 03:23 PM

In the October issue, we unveiled Part 1 of the annual Parcel Shipping & Distribution Best Practice Survey results. We delved into what impact the economy was having on the relationship between parcel carriers and shippers. In this issue, we look inside operations to determine industry standards and trends in all aspects of parcel operations from order entry to packaging. We would like to thank those of our readers who took the time to fill out and return the survey. Without your input, we could not bring you these results, which help all of our readers gauge their operations. We also extend a special thanks to Morgan Stanley, a global financial services firm and a market leader in securities, investment management and credit services, which helped us conduct the survey this year. On with the results.


As shipping managers, you work hard to produce an error-free parcel shipping operation, and implementing incentive programs seems to help. While only 22% of companies have an employee incentive program, those that do have error rates that are 33% lower than those that do not have incentive programs. Most managers (37%) base incentives on productivity, followed by general performance (22% of managers), accuracy/quality (16%), errors/returns (12%) and revenue/costs (12%).


Upper management is changing the way it evaluates the parcel shipping operation. While most companies look at financial measurements to assess performance, the biggest change from last year to this year is in on-time ship measurements (8% in 2002, 14% in 2003), the only measurement to have increased in popularity. There are also shifts in which departments parcel operations report to. Nine percent are now reporting directly to C-level executives presidents, CEOs, CFOs, etc. and 1% more than last year are reporting to the sales division. All other departments (operations, · purchasing, manufacturing) had a decrease in the number of shippers reporting to them.


Increasing efficiencies is another concern of shipping managers. And their hard work has paid off, as cycle times have dropped, fill rates have improved and error rates and package returns have decreased this year. Third-party logistics (3PL) firms have the best fill rate at 96.3% of orders placed, followed by wholesalers (96.1%), manufacturers (95.4%) and finally retailers (90.3%). Conversely, retailers have the best total orders filled per hour rate at 279 followed by wholesalers at 252.


Managing the cost of consumables is always a concern to shippers, especially when they most often get evaluated based on fiscal measurements. For shippers who consider speed or cost to be the most important factor in determining which void fill to use, most used bubble wrap. If customer preference or functionality was the determining factor, then shippers were most likely to use paper for void fill. For exterior packaging, corrugated boxes were the most used regardless of the determining factors. However, shippers chose unpadded paper envelopes if speed was the determining factor; bubble-lined envelopes for functionality; and padded envelopes if cost or customer preference was the determining factor.


Stay informed throughout the year as we continue to release more results in our FASTfive column featured in each issue. And watch for the next Best Practice Survey, which will be attached to the cover of your issue of Parcel Shipping & Distribution next spring or delivered via email. If you would like to see additional information included in the analysis, please let us know by giving your comments online at on the Talk to Us page, email our editor at or call Dan at 800-536-1992.