Factors contributing to building a compelling business case for implementing the SAP shipping solution include: (1) fully considering all departments within the business which will benefit from the solution, (2) quantifying the benefits in terms of dollars, and (3) properly communicating this value proposition in your business case.
Normally a business will have many initiatives which are competing for a finite budget, resources and time. Here are a few things to include in your ROI assessment that should bump your project to the top of the priority list…
Use the employee’s “fully loaded” compensation in your calculations
Salary.com reports that the average base salary of a warehouse worker is $17/hour in the US; but if you include benefits, bonuses, disability, retirement, healthcare, etc., the total compensation jumps to $27.44/hour! See this link for the components which constitute a total compensation package:
So make sure you use the fully loaded compensation figure in your ROI calculation worksheet!
List International/LTL shipment assessments separately from domestic small parcel shipping
In your ROI calculation worksheet, international and LTL shipments should be calculated separately from domestic small parcel shipping since much more effort is involved in shipping international/LTL. Not only is international/LTL processing more cumbersome, but more documentation is required: in addition to the basic shipping label, it may be necessary to produce commercial invoices, customs documentation, air waybills, bill of ladings, etc.
Expenses Attributed to Returns Processing
According to a 2010 Aberdeen Group study, the average manufacturer will spend 9% to 15% of total revenue on returns. If you are interested in reading more information about this, UPS published a white paper about this topic, which is available for download here: http://grevedavis.com/2012/03/19/ups-white-paper-on-reverse-logistics/.
While customer returns / reverse logistics will never entirely go away, implementing the Express Shipping solution mitigates returns in several key areas:
- Picking errors: SAP provides a packing station (HUPAST) which also performs a double-check step. Incorporating double-checking into the packing step adds a systematic process for detecting miss-picks.
- Data necessary for shipping is contained entirely within SAP: all shipping information, including address information, weight details, requirements for international and LTL shipping, is gathered directly in SAP. This reduces opportunities for key-in errors.
- Automated support for Reverse Logics: If it is necessary to process a return, the express ship solution provides three options for automating returns: printing a return label directly after the outbound shipping label; scheduling UPS/FedEx to pick up return from customer; and emailing a return label directly to the customer.
So make sure you account for the costs attributed to shipping errors and picking errors in your ROI calculation worksheet.
For more information, see www.blueharbors.com/xsi.