Consolidating multiple packages into a single shipment has many
advantages. In this QAD Precision Report we look at the benefits of
consolidation, as well as the different types of consolidation available.
Shipment consolidation is a logistics strategy that combines two or
more orders, packages or shipments. As a result, the shipper
dispatches a larger quantity of packages to the same vehicle.
Shipment consolidation is nothing new. It has been around for quite a
long time. However it’s a topic that has enjoyed heightened awareness
lately. This is partly due to geopolitical issues like Brexit.
Cross-border shipping into and out of the United Kingdom has become
more cumbersome due to customs clearance formalities. Shippers are
looking to streamline their UK cross border shipments. By combining
multiple packages into one simplified movement, shippers only need a
single customs declaration.
Despite it being around for a while it is an area that is open to
interpretation. Many shippers have different experiences or
expectations with regard to consolidations.
There are 3 key reasons why implementing consolidations would be of
interest to many shippers. They are:
FREIGHT COST REDUCTION
Shipping cost reduction is perhaps the biggest driver for shippers to
implement consolidations. Shippers can achieve substantial savings by
co-shipping multiple orders or parcels to the same customer or
ship-to combination. Shipping parcels individually increases
shipping costs significantly.
Furthermore, if you induct all of your parcel shipments into a
carriers’ main hub — even if that hub is in a different country/world
region — as opposed to them picking it up at your location means that
you can avail of preferential freight rates.
SIMPLIFIED CUSTOMS CLEARANCE
International hub induction is the process of dropping all of your
shipments to a carrier’s main facility in that country. For example,
if you are shipping multiple packages from the United States to France.
International hub induction helps to streamline customs clearance.
You only need a single customs clearance for the consolidated
shipment. If you had shipped each package separately, then you would
have needed an individual customs clearance for each one.
For international shipments, providing one set of export
documentation for a multi-part shipment to the customer (e.g. packing
lists, invoices) means that a shipper can simplify their customs
clearance processes in a streamlined manner.
Furthermore, a number of the global parcel integrators offer embedded
customs clearance services to streamline this cross-border trade activity.
ENHANCED CUSTOMER EXPERIENCE
Once a package leaves your warehouse, you have outsourced the
customer experience to your carrier. The customer will blame you, not
the carrier, for a poor delivery experience.
Therefore, you should let your customer know when their order has
been dispatched. In addition, you should tell them when they can
expect to receive it. This is certainly true when your customer has
placed multiple orders/packages which they expect to receive at the
For many customers — indeed for most of us — it is annoying to
receive shipments multiple times from the same shipper. With
consolidation one shipment will contain all the orders regardless of
the time the customer placed these orders. Customers, ideally, want
their packages to arrive at the same time.
It is not only less efficient to send orders separately, it also
creates more C02 emissions. Co-shipping orders together means a single
carrier delivery instead of multiple deliveries.
Five Consolidation Options
There are many forms of consolidation to choose from. Some shippers
consolidate within their WMS or ERP system. They then transmit the
data to their transportation execution system leveraging a
consolidated web-services API message.
QAD Precision offers five additional types of consolidation. We
examine these different options below.
END-OF-DAY (EOD) CONSOLIDATION WITH MASTER SHIPMENTS
Let's start with Consolidation with Master Shipments. This is also
known as a virtual consolidation that allows the warehouse operator to
touch the package only once.
A package is processed at 9am within the ERP/WMS application. QAD
Precision generates the shipment (estimated costs, prints the carrier
label and generates the license plate). QAD Precision creates the
Master shipment and assigns waybill number 001.
Throughout the day as orders come in. The warehouse processes two
more packages going to the same ship-to address so the first
package. These are added to Master shipment with waybill number 001.
At 4:30pm, the shipper runs the End of day Manifest. At this point we
see that waybill 001 has 3 packages.
EOD CONSOLIDATION THAT WILL VIRTUALLY CONSOLIDATE ALL PACKAGES
This second scenario is also a form of virtual consolidation. The
warehouse operator only handles the package once and does not need to
rehandle it at any stage.
An order comes in from Customer A at 9am. The package is processed
within the ERP/WMS solution. QAD Precision generates the shipment
transaction with estimated costs and prints the carrier label and
shipping documentation. The shipment remains open until the warehouse
runs the EOD manifest.
A second order comes in from Customer A at 10 am. QAD Precision
generates a new shipment transaction, a new tracking and a carrier
label for this package.
Throughout the day, the warehouse processes packages going to a
number of different customers. At 4pm Customer A places a third order.
Again, QAD Precision generates a new shipment transaction, a new
tracking and a carrier label for this package.
At 4:30pm we run the End of day Manifest
EOD manifest will virtually consolidate all packages going to the
same ship-to location. All associated shipments are closed.
The shipment details — freight costs, tracking number, carrier
services — are sent back to the ERP/WMS application.
ZONE SKIPPING CONSOLIDATION
This scenario looks at multi-leg international shipping. Imagine a
shipper in Belgium that is inducting packages into a carrier hub in Germany.
A package is processed at 9am for Customer A in Germany within the
ERP/WMS solution. The routing guide identifies this as a zone skipping transaction.
Therefore, QAD Precision generates a shipment with an inducted
location in Germany. It then rates, prints the carrier label and
generates shipping documentation. All labels and transportation
documents have a ship-from location as Germany.
At 10am Customer B in Germany places an order.
QAD Precision generates a new shipment transaction for the carrier
and creates a new tracking number and label.
At 1pm Customer C in Germany places an order. Again, QAD Precision
identifies this as a zone skip transaction. The solution generates a
new shipment transaction for the carrier, along with a new tracking
number and prints the label.
At 4pm a package is processed for Customer D, also based in Germany.
QAD Precision generates a new shipment transaction for the carrier and
creates a new tracking number and label.
At the same time a second package is processed for Customer A.
Later in the day, the shipper runs the EOD for the carrier with
origin “Germany”. The EOD process will manifest all associated
shipments from origin “Germany” to customer locations A, B, C, D and A again.
It will then generate the EOD batch file and submit it to the
carrier. QAD Precision will create a master shipment for the EOD
batch. This consolidates all packages bound for Germany, allows rating
and generates transport documents for this leg.
Shippers can use zone skipping consolidation no matter where they
ship from or ship to. This can significantly reduce shipping fees for
cross-border and international shipments.
From a manual consolidation perspective, packages are processed
during the day within the ERP/WMS system. QAD Precision generates
shipments with estimated costs, and prints the carrier label and
Later on during the day the warehouse may see three packages they
want to bundle into a single outer box.
We start by filtering by ship-to then select transactions to
consolidate. A new shipment is then created. We can over pack the
consolidated shipment and rate it to generate new shipping labels
At this point the shipper runs the EOD for the carrier. QAD Precision
closes all associated shipments. The system also sends the freight
costs, tracking number, and carrier services information back to the ERP/WMS.
There are a number of carrier package consolidation services
available. These include UPS WorldEase, FedEx International Priority
Direct Distribution (IPD) and DHL Break Bulk Express (BBX). In this
example, we will look at FedEx IPD.
Packages are processed during the day within the ERP/WMS system. QAD
Precision generates shipments based on the carrier service requested.
QAD Precision generates the estimated costs, prints child carrier
labels and generates transport documents.
When QAD Precision processes the first IPD child shipment, it creates
a master shipment in the background (invisible to the user). The
master shipment is effectively “package 1” of the overall shipment.
As QAD Precision processes the child shipments, it prints a normal
thermal label per package. These labels are attached to the child
boxes, and contain the address of the final destination of the package.
QAD Precision continues processing child shipments until the EOD
batch is created for that packing location.
The EOD batch results in the printing of the two documents:
The Master Airway Bill — the document that contains the customs
clearance information for the whole master shipment
The FedEx invoice and manifests
All these documents print as per the normal EOD process.
As you can see, there are a number of different consolidation options
available. Shippers do not have to choose between them. Rather, it is
possible to “mix and match” consolidation strategies depending on the
shipper’s needs. However, all forms of consolidation help reduce
If you would like to speak to a QAD Precision expert to discuss how
consolidation could work for your organization, please contact us here.
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