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The Implications of Dimensional Shipping Pricing

The secret is out. FedEx and UPS are making a paradigm shift in the way they price small parcels, and it will have a significant impact on all companies that rely on them for their services. However, this change in how these companies are calculating freight pricing is not an entirely new practice. Today, all large package shipments above 3 cubic feet are subject to this more rigid pricing structure that integrates both parcel weight and dimension to calculate shipping price.

FedEx and UPS are now expanding this pricing methodology to the smaller parcel market. The reasoning behind it is quite simple. They are feeling pressure to find ways to increase revenues and streamline costs to drive profitability. Both FedEx and UPS built their small parcel business on the weight of a package and until now, it didn’t matter how big a box was as long as its volume was less than 3 cubic feet. As a result, companies have been able to choose a shipping box without much thought, as cost wasn't a factor. The result, however, is wasted space in every UPS and FedEx plant, plane and delivery truck. It makes perfect sense. Both companies are looking to lean out their process, drive costs lower and increase revenue--and   this is a very straightforward way of doing so.

Click to download the document to learn more about the implications of dimensional shipping pricing.

The Implications of Dimensional Shipping Pricing.pdf

Success Story

It takes a progressive manager to push the organization to look at indirect spend and managing it in a different way - but once you see it, then you realize the opportunity.

SDI at Work

In the third post in this series on MRO As-a-Service by Spend Matters, Pierre Mitchell and Michael Lamoureux talk about how managing MRO as a process delivers benefits from efficiency to effectiveness and beyond to an evolutionary phase. The next generation of value, MRO-as-a-Service, helps organizations build intelligent, agile, scalable and integrated supply chains (direct and indirect).

The project team has worked its way through Define, Measure, Analyze, and Improve. It’s time to begin the Control phase. The key stakeholders gather to evaluate the solution as implemented and create a plan to sustain the improvements. The goal is to standardize the improved processes, establish an audit schedule and schedule periodic follow-up to identify additional opportunities for improvement.