What a Shipment Consolidation Facility Does For Suppliers and Brokers:
Wholesale suppliers and parts brokers are crucial operational and supply chain partners for companies around the world. These companies rely on their Purchasers and Buyers to have a broad network of suppliers and brokers that can access any given product promptly when it is requested. Purchasers are responsible for buying and procuring all the products, parts, indirect materials, raw materials, and anything else the Operations Team needs to keep their company going.
Suppliers and vendors are the primary points of contact, for the Purchaser, who may benefit from shipment consolidation.
If your business supplies parts or products to international or domestic clients, who place large orders or who could cut you out of future deals, then freight and shipment consolidation may add value to your business model with a reliable third-party warehouse partner.
What is freight consolidation?
In the modern supply chain, freight consolidation is a phrase with multiple definitions depending on your industry and the supply chain needs of your business. Generally speaking, freight consolidation is a logistics service that bundles multiple shipments going to the same destination into one shipment. You receive shipments from multiple vendors at a single warehouse. Then, the warehouse combines the multiple incoming shipments into a single outgoing shipment. This consolidates all products into a denser, less expensive shipment that is sent to the end destination.
The specifics of freight consolidation services vary a lot, depending on your products and several other factors that make consolidation services unique to every business.
Factors that determine what kind of freight consolidation is needed
Big variables in how businesses use freight consolidation to improve operations are the shipment sizes of the orders that are sent to customers and the required turn-around time of the inventory items.
Other factors to consider when deciding to use a freight consolidator include:
- Do your customers order pallets of products or parcels of products?
- Are the orders sent to international customers?
- Do the goods need additional handling or processing before sending to your final customer, such as repacking or removing the vendor paperwork?
- How many separate shipments are sent to your customers within a short period of time?
- How much empty space you are shipping in cartons? A lot of empty space in cartons means you are shipping a lot of “air” and means you are likely overpaying for outbound shipping charges. In this scenario, you could benefit with the use of freight consolidation
Larger, international projects benefit from freight consolidation services by combining multiple inbound pallets into one dense outbound shipment.
There are several less obvious driving factors that encourage the use of freight consolidation apart from the cost to ship outbound orders. The biggest example is if you are losing customers because you are not using a package consolidator to remove branded labeling from your suppliers. Once your customer receives a package from your vendor with the vendor’s branding then they no longer need to come back to you to reorder. When this happens, your customers often cut you out of the deal in all future deals. A lost customer is extremely costly and dissatisfying, to say the least.
How do you consolidate shipments?
Shipment consolidation involves coordinating a lot of moving parts to turn multiple incoming Vendor shipments into a single outbound shipment going to the final destination. Typically, the inbound shipments are orders you place with your vendors for parts that the final destination has ordered. The outbound order sent to the final destination is often sent to a customer who is upgrading machinery or who needs help in an emergency situation. The customer may need a new, fully operational industrial machine or a replacement unit; spare parts to fix a manufacturing breakdown at their plant, or a wide range of parts to help complete a big project that is underway.
In any case, it is important you get the final destination everything they need in one shipment, rather than the final destination receiving a bunch of unrelated boxes that makes up their entire order. Additionally, without a freight consolidator you are at risk of losing your customer to your Vendors if you ship direct to the customer from your Vendor.
Usually, the final destination requires a larger quantity or a wide variety of parts. After you find all the required parts at your Suppliers, the first step is to order everything your customer needs from your vendor(s) on multiple Purchase Orders (POs). The summation of all these Vendor shipments will, ultimately, create the solution that your customer needs. Our goal is to ship the Customer everything they need in one shipment, with one invoice, with one customs clearance, and one happy customer at the final destination.
Once the warehouse receives all inbound shipments and the outbound order details, from you, the warehouse prepares the outbound shipment per your specifications. Our warehouse removes supplier paperwork, repackages products into blank boxes, and sends you photos when requested to verify the parts will fit the customer’s needs. Using product pictures can avoid shipping incorrect product halfway around the world to an unhappy customer. At any rate, once all parts arrive the warehouse picks and ships products for the consolidation order. You can provide the shipping label or let the warehouse handle that piece too.
Steps to Consolidate a Shipment from Many Packages into One:
- Find vendors for all the required goods, products, and/or parts required by the end destination.
- Submit multiple Purchase Orders (POs) at each Vendor for items they have in stock.
- Ship all of these orders to your office or a third-party consolidation warehouse.
- DO NOT SHIP packages to the customer or end destination, yet.
- If using a third-party warehouse for shipment consolidation, send the POs to the warehouse so they know what to receive against when the items arrive.
- Once all the shipments arrive from multiple Vendors, create a final Order for the outbound shipment to the final destination.
- The final order includes a packing slip with all goods sent to the final destination.
- International shipments also include the final amount paid for the items by the customer, so customs fees and duties can be properly paid by your customer.
- Harmonization Codes of product classification and country of origin for customs forms are also required for International shipments that are consolidated before going to the customer.
- Pack all items in a densely packaged shipping carton. Larger shipments are palletized on heat-treated pallets that are ready for international transit.
- Ship the goods with a reliable Global carrier.
It is surprisingly easy to consolidate shipments and reap the benefits for you and your customers.
What are the benefits of freight consolidation?
The benefits of freight consolidation are tailored to each business’s unique needs and business models. Most importantly, shipment consolidations can and should be customized to the needs of the end destination and how they will consume the products.
In many cases, it is clear freight and package consolidation must be incorporated to scale certain business models, such as removing Vendor paperwork from packages before it reaches the Customer or when you ship many projects Internationally. International projects almost always benefit from package consolidation before they leave the United States. By consolidating the outbound international shipments, the shipping costs are drastically reduced by sending fewer parcels. Additionally, when the warehouse removes Vendor paperwork, you are less likely to be cut out of future purchase orders by your customer. This is because once your customer knows where you procure parts they may reach out directly, without your help.
As always, there are other reasons to consider when evaluating the value of freight consolidation. We elaborate on the details of a few other benefits of 3PL shipment consolidation services.
Leverage the Shipping and Operations Capability of a Full Warehouse
Providing your customers with 5-star warehousing and operations services requires an investment in knowledge, warehouse materials, and space. Often, it is not worth the investment for businesses to run their own world-class warehouse services and their customers, unfortunately, deal with these shortcomings. Great quality warehouses can be expensive to run and require skilled, experienced Staff. Luckily, you can offer customers stellar warehouse services when you partner with a third-party logistics (3PL) company that specializes in shipment consolidation solutions. Warehouses that specialize in freight consolidation offer reliable, great Operations services, without building your own.
Third-party logistics (3PL) companies are flexible. They provide custom warehouse services as needed to get any job done. They can ship international shipments for you and your customer.
Alternatively, you or your customer can create the shipping labels and schedule the pickup service. When you generate the shipping label, the warehouse will prepare the outbound order per your Invoice. After everything is packed in the final cartons, the warehouse team will send you the shipment carton dimensions and weights so shipping labels can be created.
3PLs that specialize in freight consolidation offer a wide range of additional warehouse services to make sure the customer gets exactly what they need from your business at the final destination.
International Freight Shipments of All Sizes Win With Consolidation Services
When US suppliers ship customer orders internationally, the shipping costs can add up quickly on multiple shipments. Shipping costs are higher than ever, so it’s obvious that folks do not want to waste their order’s profit margins on overpriced international shipping charges.
Many of the advantages of freight consolidation for international shipments directly benefit the final, international customer. The customer, usually, wants a streamlined purchasing experience for their international order. No surprises and keep it simple. When evaluating consolidation opportunities, always keep the customer experience top-of-mind.
How does the International Customer Benefit?
When consolidating international shipments, our Team ensures the correct items are shipped. They fill our customs paperwork out with harmonization codes and proper customs details to ensure everything goes smoothly at the border. By sending your customer a single outbound shipment, the customer benefits by:
- Receiving everything they ordered in one shipment.
- Paying customs and duties once.
- Spend less on shipping and freight charges.
- Opportunity to customize the order to provide a branded experience or simply confirm that the right items are in the order.
3PL warehouse providers who specialize in consolidation projects ship packages and pallets all over the world with trusted worldwide carriers. We help clients ship to places in Africa like Morrocco, Nigeria, and other remote regions in the northwest. We regularly ship to Asia, with orders to Thailand, Dubai, Japan, and more. Warehousing Etc also ships to Eastern Europe, Europe, and pretty much anywhere else in the world as our customers get orders from new customers.
Flexibility and simplicity are our priorities when helping you.
When looking to improve your business, it is common to look at only the price of shipping as the main factor. We’ll look at this “lower” price factor now.
Shipment consolidation services ship parcels worldwide.
We ship everywhere your clients need you.
Is consolidating packages cheaper?
The short answer is sometimes consolidating packages is cheaper. When shipping internationally, the answer is almost always “Yes, consolidating freight is cheaper”. Factors to consider include direct business costs, wait time, and any other factors that impact the profit margin and customer expectation. It is often found that the significant savings on carriers’ shipping fees is enough justification to begin using a consolidator for international shipments.
Determining if a package consolidation is cheaper for Domestic shipments is a little more complicated. Overall, it is generally cheaper to send 1 standard outbound parcel or pallet to a customer than to send 10 partial cartons or pallets to a customer. Unfortunately with domestic projects, once you start weighing shipping and consolidator fees it might actually be monetarily cheaper to ship everything to the customer directly from Vendors and save on consolidator fees. In some cases, shipping directly from the vendor to the destination is a great idea and you should move forward without considering other options.
However if you work with or are a third-party supplier in this deal, it may not be a good idea to ship Purchase Orders directly to your customers since they will see your Vendor’s contact details. This means the customer may order directly from your Vendor next time and not use your services. This is not ideal for most product vendors.
On a similar note, it is important to consider the cost of future business with this customer and evaluate how the workload impacts your Staff. Third-party package consolidation is often done for reasons that are not purely monetary, like removing your Staff from the equation and reducing materials and in-office jobs that the Staff doesn’t enjoy.
What is Parcel Consolidation?
Parcel consolidation is a subset of freight consolidation focused on consolidating smaller handling units that ship in corrugated cartons. The details of parcel consolidation work just like all other types of consolidation. Multiple packages are headed to the same destination, so they are eventually bundled together into one parcel.
Usually, when parcel consolidation is used, multiple Vendors send Purchase Orders of goods to a warehouse. At the warehouse, the POs are received at an itemized level and stored. Photos are taken when requested. Then outbound shipments are picked and packed once all of the units are received from the Vendors. By shipping the multiple incoming parcels out as a single package, the end customer has a streamlined experience and the wholesaler is able to maintain their Brand.
Consider doing parcel consolidation in your office or with a 3PL warehouse so your customer receives a single shipment containing everything they need to complete their project.
How Does Package Consolidation Work?
Wholesale suppliers and other business models use parcel consolidation to send their customers’ products from multiple Vendors in a single, branded parcel shipment. This shows the customer that the order of parts ships directly from your business, rather than them receiving x-cartons from y-Vendors. The customer would likely use these Vendors without you in the future so finding a reliable package consolidation partner is crucial to having recurring clients.
The five basic steps to package consolidation are:
- You order products from multiple Vendors.
- Multiple shipments are sent to the consolidation warehouse.
- Consolidation warehouse picks, packs, and preps the outbound order.
- 3PL warehouse ships the goods to the customer’s end destination.
- The customer receives their order as 1 unit from your business.
Additional Services for Consolidation Clients
Fully staffed warehouses are ready with the equipment, materials, and know-how to take care of any additional jobs you and your customers need. We offer an array of standard value-added services to fulfillment & distribution clients, as well as, custom services for unique jobs that are done to specification.
Photos of products, paperwork, and other details are available upon request for package consolidation clients.
Our Warehouse Services include:
- Itemized receiving of all packages
- Take photos of items
- Customized cartons
- Remove paperwork
- Create customs forms
- Pack and ship services
- Custom labeling
- Sending photos of items & paperwork
- Amazon FBA prep services
- Short-term storage
- Long-term storage
- Distribution warehouse services
- Pallet restacking solutions for distressed truckloads
- & more
How long does package consolidation take?
In general, package consolidation is a quick process that can deliver same-day turnaround of parcels. The key to quick package consolidation is ensuring all expected inbound shipments are delivered on the same day. When inbound shipments come from multiple Vendors, they usually arrive over a scattered period of a week or two. The speed of Vendor shipments depends on product availability, warehouse staffing, and general service-level agreements (SLAs) of each Vendor.
Once all packages arrive at the consolidation facility, the outbound parcel consolidation process normally takes less than two hours. When the outbound packing list includes all items, the warehouse quickly picks every unit, removes branded paperwork and prepares the outbound shipment for final delivery to the customer. The most time-consuming part of outbound consolidation shipping is entering all the international export information and communicating with all parties involved in the shipment.
What problems can occur when consolidating freight?
In the life of Operations professionals, it is inevitable that a problem may pop up. Freight consolidation problems are no different; eventually, an issue will occur so it’s important to consider how they will be handled. Whether your Team is handling the entire package consolidation process, or if you use a third-party logistics partner, it’s important to keep these potential issues in mind.
Here is a short list of potential shipment consolidation issues that can occur.
- The customer is sent paperwork from the Vendor and cuts you out of the deal.
- In terms of Revenue, this is the biggest issue to avoid in project freight consolidation for wholesalers and brokers.
- Ensure the warehouse always removes all paperwork and repackages products in branded cartons.
- It helps if the warehouse understands your business model and the importance of this.
- You have a hard to manage inventory and cannot track your inventory well.
- Inventory management is crucial to know what is in stock and getting Outbounds correct the first time. Whether you use Excel or software, we’ll work with you.
- You can also use our warehouse’s inventory management system with collaboration on inbounds.
- When outbound orders don’t match real-life inventory the warehouse will let you know about the discrepancy to resolve it together.
- The wrong items were sent to the warehouse.
- The warehouse informs you of all items that arrive. When an unknown item arrives, they will inform you with a picture or two and await your feedback.
- When items are excluded from orders, we’ll note the omissions and any other exceptions.
- You order something from a less reputable supplier, like eBay, that is not the right item. How is it handled at the warehouse?
- When incorrect items arrive at the warehouse, we look to you for guidance and help you ship the items where they need to go.
- Third-party warehouses help return items to the sender, as well as, dispose of incorrect items as instructed.
- We ship it back to the vendor or dispose or we can store it for a monthly fee until you find a buyer.
- The wrong items were sent to the customer.
- Items are tracked at a detailed level, so when errors happen it is important we track down the root cause and fix it.
- Our priority is getting the right products to your customer ASAP.
- We work with you to understand what items were received, where, and when. Once all the details are tracked down, we honestly evaluate the error with you and your Team to avoid future issues. If an item was excluded, the warehouse ships the item(s) to its final destination immediately.
- Missing items in an order that the customer received at the final destination.
- If an item was excluded, the warehouse ships the item(s) to its final destination immediately.
- Items were received at the warehouse that are not expected.
- You will be informed of unknown items within 12 hours.
- When unknown items or overages arrive at the warehouse, you receive an email with the inbound shipment details. These emails include the part numbers, carrier shipment tracking number, and photos of the product that was received.
- My customer wants to place a low-profit order but the warehouse usually charges too much, is this order have reduced warehouse charges?
- We understand not all projects are unicorns. We work with our customers to ensure the customer lifetime value (CLTV) of your customers is maximized. We’re a flexible business that understands unique business needs.
- If you are a repeat customer, we work with you on warehouse fees that are fair for everyone on low-profit projects.
- Mistakes happen. Finger-pointing and lack of ownership helps no one in a 3PL <–> Client relationship, so we always aim to help.
- In life and business challenges are inevitable. Everything will not, unfortuantely, go perfectly but we’ll do our best to aim for perfection.
- When surprises pop up, we rely on communication, data, standard processes, and order history to help us resolve issues ASAP.
- We are reasonable people looking for long-term partners. We are not short-sighted and help our customers anytime we are able.
While these are all valid concerns and scenarios that may happen in real life, they rarely happen with the right partner. It is possible to mitigate issues and reduce the likelihood of dealing with consolidation problems with good processes.
The best way to reduce your risk is by working with experienced package and project consolidation professionals.
Experts like Warehousing Etc’s consolidation warehouse team have processes in place to ensure the right items are sent to your customers, with same-day outbound order fulfillment.