Staggering Parcel Shipping Statistics
Posted by Rachel Rodenborg on Wed, Nov 09, 2011 @ 03:44 AM
Today I stumbled upon an article from Internet Retailer that literally floored me with its statistics about shipping automation and so I had to share it with you.
- 40% of shipping departments spend one minute or more per parcel to manually enter order data into a shipping management system.
- 70% of shippers enter at least some of their parcel-shipping data manually into their shipping management system.
- 21% of shippers manually enter all of their parcel shipping information.
- Only 10% of shippers use a completely automated shipping management system.
Why do these statistics shock me? Because the companies that are still employing manual data entry practices are leaving money on the table and opening themselves up to a whole host of errors and fees.
Think of it this way. If a company spends 60 seconds per order entering data into its shipping platform and they ship 500 packages per day, that’s the equivalent of a full time employee every day. If that same company leveraged the power of integrated shipping—with its ERP, ecommerce, accounting and other back-end systems—that full time employee’s efforts could be focused on another task entirely.
Aside from wasting valuable employee efforts, manual data entry is riddled with errors. We’re human, after all. The Department of Defense estimates that the average error rate in manual data entry is one in every 300 key strokes.
Using my business address as the example with appropriate abbreviations and omitting the bits that the shipping computer would input automatically, I estimate that the average address is about 111 keystrokes if completely entered manually. That means that one out of three orders is likely to have an error in it.
What’s more, ten years ago the average cost of correcting a shipping error was ~$100 per instance. With fuel costs and inflation, I’d bet we could safely say that that amount has increased to $125 per shipment, if not more.
Remember the company above who ships 500 orders per day? Let’s say our shipping clerk is especially accurate and only inputs an incorrect key stroke one out of every 400 key strokes. Each order is 111 keystrokes.
500 orders per day X 111 keystrokes per order = 55,500 keystrokes per day
Error rate is one per 400 keystrokes
55,500 keystrokes / 400 keystrokes = 138.75 errors per day
Now, not all data entry errors are going to result in a shipment that must be reshipped—if the error is minor, the parcel shipper will figure it out and ship the package anyway. Let’s assume that only 50% of the data entry errors are “fatal,” resulting in an unshipped package.
139 errors per day / 2 = 39 fatal errors per day
Now we calculate the cost of fixing the fatal shipping errors.
39 fatal errors per day X $125 cost to per error = $4,875 in error cost per day
If the shipper works every business day for a year, the result is well over $1 million dollars in potential and fairly likely shipping errors!
260 business days per year X $4,875 total error cost per day = $1,267,500
Can your business afford to risk that kind of money? Tell me again why your shipping function isn’t automated and integrated with the rest of your business systems?
To learn more about how to cut costs from your enterprise shipping function, download the white paper, Nine Ways to Cut Enterprise Shipping Costs.
