1 Introduction
Customers placing stock orders below $500 currently have to call or email CE to obtain the cost of freight, or include this request with their purchase orders processed via the queue. We estimate each CE operator gets up to 5 requests per day. Providing freight estimates in real time will cut down on some of the calls and emails, and make PO processing more efficient.
Goals
- Provide freight quotes during the checkout process.
Background and strategic fit
Providing freight estimates is an inefficient, manual process. Also, it's inconvenient for customers to have to request freight costs; it's normal to expect real time freight charges on most e-commerce sites today.
Current process, when the customer requests we provide a freight estimate:
99.9% of the time, UPS is used to determine freight charges.
They need to know:
• Shipping from zip code
• Shipping to zip code
• Number of cases
• ETA preference (Ground, Air, etc.)
• Case weight
• Total weight
Case dimensions should be included in this list as well. UPS will charge us a fee if the case dimensions exceed a certain size. Any freight charges CE gives do NOT include additional fees. Shipping is the one who figures out if this charge should be applied, and the customer will only know about it once they look at their invoice.
Most of the time, CE can go to the UPS website and plug in the variables above - most are apparent right on the order, though some may require digging in Avante - and get a fairly reliable freight estimate in real time. However, on many orders, they may have reason to doubt the reliability of a UPS estimate, and often have to put the request on hold, route it to shipping, wait for an answer, get the answer, and get back to the customer.
Solution and scope
Scope
Provide freight quotes for stock bundles that do not qualify for free freight, and which are shipping "prepay and add" (Laddawn prepays carrier for freight and we add freight to the customer's invoice).
We are not attempting to estimate freight for third party or collect shipping (customer pays carrier for freight), nor are we attempting to calculate freight for MOD, freight-not-included orders.
Solution
Develop a model that predicts the values for each unknown variable which determines freight, and feed the known and unknown/estimated variables to UPS via web service to return a real time freight estimate, which will serve as the final freight quote/cost for the customer. <Q: do we still mark these up?>
Display freight costs with each bundle and in order summary. Include with order acknowledgments. Base invoices on these freight estimates (v. today's actual freight costs + standard markup).
Q: Will there be special circumstances where we need to reserve the right to bill for additonal because actual freight exceeded our estimate by a wide margin?
2 Definitions
Masterpack - Minimizing the number of boxes being picked up keeps costs down for both Laddawn and our customers. So if smaller cases will fit into a larger case (up to a point), we'll "masterpack" them into a larger case. As a general rule, if all the units fit into a large box and its total weight is under 70 pounds – then it should be masterpacked.
Shipping weight is a key determinant of freight costs. Billable weight is the higher of these two types of weight (source: UPS):
- Actual weight - the total weight of all of the products and their additional shipment packaging - masterpacks, strapping, pallets, etc. - rounded up to the next whole pound.
- Dimensional weight - package density, which is the amount of space a package occupies in relation to its actual weight.
Example
Item # 2735 – Auto Bag – 10X15X004 – 250/rl (Weight: 11.2)
Box Dimension: 12” L x 10.38” W x 10.38” H
(12” x 10” x 10” = 1,200 Total Cubic Inches)
Under 1,728 Cubic Inches
<Total Cubic Inches> / 166 = <Dimensional Weight>
Over 1,728 Cubic Inches
<Total Cubic Inches> / 139 = <Dimensional Weight>
Actual Weight: 12 LBS
Dimensional Weight: 1,200 Total Cubic Inches / 166 = 8 LBS
Billable Weight = 12 LBS Actual Weight (because this was greater than Dimensional Weight)
Note: Although we're supposed to base billable weight on the higher of the two - in practice, we think Shipping may only be entering actual weights. The carriers don't seem to call us out on failure to use dimensional weights. <This is just a theory. Jay researching this.>
3 Assumptions
We mark up freight by X <Jay researching this.>
Customers don't want freight estimates, they want quotes. Today we call them estimates because of all of the uknown variables at the time of the requests. The freight amount we provide during checkout will be the amount that we invoice the customer for <question for discovery process: do we need exceptions to this?>. The proposition on the table is that we can develop a reliable model, using historical data, for predicting freight costs on the basis of what we know during checkout, and/or possibly correlating post-checkout variables to bundle characteristics.
We know which variables determine final freight costs. But today, we don't know many of them until after the item has shipped. And this is not likley to change:
<What about FedEx????>
| What we know during checkout | What we don't know till after order has shipped |
| Individual item package weights. (A box of item 500 weighs x.x lbs) | Whether and how items will be masterpacked. |
| Item quantities. (The order contains 4 cases of item 500.) | Shipping package dimensions (the size of the box the UPS driver picsk up). |
| Point of origin and destination. (Sterling, MA to Hartford, CT.) | Shipping package weight** |
| Item package dimensions* | The amount we will becharged by UPS/FedEx for freight. |
| Type of shipping - regular ground, air, etc. | The amount we will invoice the customer for freight. |
| Unusual package dimensions incurring a surcharge (e.g. rolls over 48") | Unusual package dimensions incurring extra charge? |
*This includes purchased stock items and Laddawn-made stock items. For Laddawn-made, note that we have the box item number in the bill of material, but shipping sometimes cuts the box to fit the goods. When Production is manufacturing an item, Avante tells the user what box dimensions they should use for any given job. On rare occasions (maybe a few times a year), the recommended box size is not available, and the user will improvise and use something else. The user can update Avante with the alternative box dimensions, but upon further investigating it sounds like this rarely done. When a Third-Party manufactures an item (Laddawn stock only), case dimensions (including Masterpack dimensions if applicable) get recorded in a spreadsheet that is maintained by Purchasing. It is important to note; we use many Third-Party vendors – often for the same item. As a result, we may receive the item with alternate box dimensions (and that information does not get recorded). Z:\Product Information\Laddawn Stock Item Spreadsheet.xlsx (see Diana Cormier if there are questions) | **In theory this can be either actual weight, or "dimensional weight"; anecdotally it's nearly always actual weight. |
We investigated whether we could know all of the variables in the right column above during checkout by being more prescriptive with Shipping, but determined that it is not feasible to do so - the same conclusion that has been reached in the past.
- There are infinite variations in the makeup of an order, which determine variables such as masterpacking.
- In spite of our general rule (masterpack if all the units fit into a large box and its total weight is under 70 pounds), we rely heavily on the job experience of the shipper to evaluate which bundles would be a good candidates masterpacking.
Basing a quote on an estimate may be acceptable, provided we get freight costs mostly right - if we overcharge too much, we could lose sales; if don't charge enough, it could cut into profits.
4 User Interaction and Design
TBD
Not Doing
5 Use Cases
6 Testing
7 Change management and rollout planning
<< Which departments are affected by these changes? What are the possible negative perceptions of these changes, and how do we manage them? Articulate "what's in it for me?" for all internal and external stakeholders. Are call scripts necessary? Is advance customer outreach/communication necessary? What lead time is needed for training and other advance preparations? >>