Use of predictive and prescriptive analytics is fast becoming a necessity for sellers and shippers looking to maintain service levels while lowering expenses.
The parcel shipping industry has reached a tipping point. As e-commerce soars and customer expectations climb, companies are under immense pressure to control costs while still delivering seamless service. The answer? Data – and lots of it. Predictive analytics, which turns historical shipping data into future forecasts, has helped companies navigate the complexities of shipping for years. But the real game-changer is what’s next: prescriptive analytics, a technology that doesn’t just predict but prescribes actionable solutions. Where predictive analytics stops at forecasting, prescriptive analytics takes it a step further, providing actionable recommendations to address future challenges head-on.
This evolution can be referred to as Parcel Spend Management 2.0 (PSM 2.0), where predictive analytics strengthens decision-making, driving smarter shipping strategies, real-time agility, and transformative savings. Shipping is no longer just about moving goods from point A to point B; it’s about doing so with precision, cost-efficiency, and adaptability – and with an eye on how the bottom line is impacted.
What Sets Predictive and Prescriptive Analytics Apart?
Understanding the difference between predictive and prescriptive analytics is key to appreciating how PSM 2.0 works:
- Predictive Analytics answers, “What is likely to happen?” Think of it as your crystal ball. Using historical data, algorithms, and machine learning, it forecasts future events. For example, predictive analytics can estimate the next quarter’s shipping costs based on past trends or identify periods of high parcel volume.
- Prescriptive Analytics asks, “What should we do about it?” Now, imagine pairing that crystal ball with a trusted advisor. Prescriptive analytics builds on predictive insights by recommending actions. It can suggest adjusting shipping routes or negotiating with carriers. It doesn’t just predict increased costs; it tells you how to minimize them.
This evolution marks a turning point for parcel spend management, where the focus shifts from understanding the future to using advanced data analytics to shape it.
See also: Predictive Analytics, ML, AI – Do I Have to Choose?
How PSM 2.0 Revolutionizes Parcel Spend Management
PSM 2.0 takes analytics beyond charts and forecasts, integrating predictive and prescriptive capabilities into a single, cohesive system. It turns parcel shipping management into a more strategic and proactive process. Here’s what makes it so powerful:
- Advanced Data Collection and Analysis – PSM 2.0 aggregates data from diverse sources, including shipping invoices, ERP systems, carrier contracts, and real-time market data. This wealth of information is processed using sophisticated algorithms to identify patterns and predict future costs, delivery times, and potential surcharges, giving businesses a detailed map of what lies ahead.
- Actionable Recommendations – Why stop at predicting the future when you can also prepare for it? PSM 2.0 leverages prescriptive analytics to help companies with the following:
- Carrier Selection: Based on predicted costs and service levels, identify the most cost-effective and reliable carriers for each route.
- Contract Negotiation: Pinpoint opportunities to renegotiate and secure better terms with carriers, translating data into dollars.
- Strategy Optimization: Recommend smarter shipping approaches, such as consolidating shipments or tweaking delivery schedules, helping to cut costs and boost efficiency.
- Real-Time Agility – Market conditions, carrier rates, and regulatory environments are in constant flux. With real-time analytics, PSM 2.0 adapts dynamically, updating predictions and prescriptions as market conditions shift. Whether carrier rates spike or demand fluctuates, businesses stay nimble because they’re always working with the latest data.
- Scenario Planning – What if fuel prices rise? What if a carrier changes its rates? “What if” scenarios like these don’t have to be a guessing game. PSM 2.0 enables businesses to simulate scenarios such as changes in shipping volumes or regulatory shifts. The system prescribes optimal responses, giving leaders the confidence to plan for contingencies and seize opportunities.
- Seamless Integration – PSM 2.0 isn’t just a standalone tool. When integrated with ERP, Multi-Carrier Management Systems (MCMS), and Transportation Management Systems (TMS), it ensures recommendations fit seamlessly into existing workflows, driving actionable insights directly where they’re needed.
Why Prescriptive Analytics Matter More Than Ever
Prescriptive analytics aren’t just an upgrade; they’re fast becoming a necessity for sellers and shippers looking to maintain service levels while lowering expenses. The transformative benefits are impossible to ignore:
- Cost Control: By recommending cost-effective carriers and strategies, businesses can significantly cut shipping expenses.
- Streamlined Operations: Prescriptive insights streamline operations, reducing delays and maximizing resource utilization. From fewer bottlenecks to faster deliveries, efficiency becomes second nature.
- Smarter Decisions: With clear, actionable insights, companies can avoid guesswork and make smarter strategic choices. Leaders gain clarity and confidence backed by data-driven recommendations.
- Adaptability: Real-time adaptability ensures businesses can respond to market shifts and disruptions effectively.
The Future of Parcel Shipping
The parcel shipping industry is evolving rapidly, with increasing pressure to balance speed, cost, and reliability. Parcel Spend Management 2.0 represents a fundamental shift in how businesses approach their shipping operations as a whole. Businesses need more than just forecasts; they need an updated playbook. It’s not just about knowing what lies ahead; it’s about navigating it smarter, faster, and more efficiently. Predictive analytics may have shown you what’s coming, but prescriptive analytics will ensure your organization is ready to meet it head-on.
