Case Study: How Creativity, Inc. Slashed Its Parcel Spend

Close up view of delivery man organizing packages before handing package to customers

Photo: iStock.com/BongkarnThanyakij

The high cost of parcel shipping presents a host of challenges for companies looking to cut down on overall supply chain expense. And Creativity, Inc., a mid-sized provider of a wide range of materials and supplies for quilt makers, is no exception.

“What we had at the time were [parcel] expenses that were a little out of line,” recalls Keith Washington, chief operating officer of Creativity, Inc., which is based just north of Kansas City, Missouri. But the task of bringing down its parcel-shipping costs proved more complicated than it at first seemed.

“Parcel companies do a good job of making it as confusing as possible,” says Washington, echoing a common lament among shippers. For its part, Creativity, Inc. was going to need a partner with sufficient industry knowledge to help it navigate the complexities of merely assessing current parcel costs — let alone discovering where it might obtain the savings necessary to cause a notable reduction in its bottom line.

To uncover opportunities for savings, Creativity, Inc. turned to Reveel, a software and services provider specializing in parcel spend management. Reveel’s platform employs advanced analytics, modeling, simulation, statistical analysis and real-time insights to distill complex shipping data into actionable conclusions.

Reveel was well positioned to guide Creativity, Inc. through the discovery process, according to Alec Greene, the vendor’s director of client experience. “We bring a very robust technology solution and a team full of experts that have a lot of experience within the industry,” he says.

The Journey Toward a Solution

Actual implementation of the analytical platform was a relatively simple exercise, says Washington. It started with Reveel using Creativity, Inc.’s current parcel spend as a baseline. Just inputting the customer’s shipping data equipped the shipper with immediate insights into where its money was going, and where costs could be cut.

Many parcel contracts are negotiated on an annual basis, limiting the opportunities for revisiting previously agreed-upon rates. Fortunately for Creativity, Inc., it happened to be in a negotiating period when it brought Reveel into the picture. As a result, the shipper was able to sign a new agreement for parcel service and see savings within the next month.

“It was really, really quick,” says Washington. “It brought a value almost immediately to our bottom line from an operational standpoint.”

The Second Time Around

Creativity, Inc. subsequently underwent a second round of contract optimization with its parcel carriers, during which it saw even better results than the first time around, he notes. Between the two rounds, from March of 2022 to the summer of 2023, the shipper realized 300% ROI on contract savings.

Of course, there’s no guarantee that a shipper will extract fresh discounts every time it sits down with a parcel carrier to renegotiate terms. On the contrary, if there’s anything in the world of parcel shipping that can be considered a certainty, it’s that rates will rise every year. They can take the form of a higher base rate, as well as any number of tacked-on surcharges tied to seasonal peaks, package size or other vagaries of the business. That being the case, every round of negotiations presents a fresh challenge for a shipper like Creativity, Inc., and an adviser like Reveel, to suss out savings.

“The landscape changes dramatically,” says Greene. “Generally speaking, there have been enough changes in the market to take a fresh look every 12 to 18 months, and find opportunities to, maybe, fine-tune this part of your agreement a little bit. Perhaps it’s an area that we might not have touched the last time and needs a little bit of love this time around.”

Parcel shipping, of course, is just one element that goes into the total cost of transporting product. Washington says shippers must understand the entire business cycle, “and all the different pieces that are impacting it.” They must also treat the objective as an ever-moving target, based not only on what carriers are charging, but the needs of the customer.

“You’re evolving your business over time,” he says. “In our case, for the last couple of years, we’ve really adjusted the way that we’ve looked at value on the customer side of things [in terms of] what we’re selling.”

Getting the most out of parcel service doesn’t end with managing the contract. Washington says Creativity, Inc. is making full use of the Reveel software for service monitoring and weekly updates, in particular keeping a close eye on when rate agreements are due to expire. That, too, lays the groundwork for working with carriers on extending discounts.

Also critical is smooth integration of the parcel-shipping piece with that of the shipper’s warehouse and order-management systems. All must operate together to create the high level of service that customers — especially those shopping online — are increasingly demanding. Creativity, Inc. relies on WMS and OMS software from supply chain fulfillment specialist Deposco to enhance order-matching and SKU profitability.

As parcel costs continue to rise, there are plenty of creative ways to mitigate their impact. Washington says Creativity, Inc. might, for instance, discover opportunities to bundle individual packages into fewer shipments. “That’s where you connect those pieces to the intelligence you have within your organization about how the business is running.” he says. “And it’s where Alec and Reveel come in to tell you how your spend is coming into play, so that you’re adjusting appropriately based on where you see expenses going up and down.”

Washington sees an opportunity for making even greater use of Reveel’s deep industry expertise, helping Creativity, Inc. to find new answers to some eternal questions: “How can we further understand how the data connects, so that we know exactly what we’re expecting in the future? And what’s the best way to ship in the long term?”

It’s all part of a constant effort to untangle a service that remains “as confusing as possible,” in Washington’s words. Adds Greene: “We’re looking to arm all of our customers with true parcel intelligence — helping to make sense of things that are very complicated.”