The shift to online retailing over the last five years finally caught up and overran nationwide delivery capacity during last year’s holiday season. And online retail sales are only set to grow further. This kind of sea change has stretched the ability of physical networks to keep up and the shortage of drivers had further exacerbated this situation. Instead, technology has become more important to meeting retailers’ holiday delivery challenges by helping to improve the productivity of existing resources and offer a greater array of delivery services being demanded by consumers.
One of the unique challenges of holiday shopping is the large spike in volume of business for most retailers. Peak season can represent a significant percentage of a retailer’s annual revenue. This puts tremendous pressure on retailers’ delivery operations. The same can be said for the third-party logistics providers offering delivery services for retailers. While minimising costs is important in delivery operations, at this time of year maximising productivity is more important as the inability to serve consumers when they demand it can result in lost and non-recoverable sales.
One solution to these challenges is route optimisation technology. Route optimisation technology can provide up to a 15% increase in delivery operations productivity by creating the best combination of routes and deliveries that minimise the miles per delivery and total miles driven. Instead of adding to a delivery fleet, which can represent a significant investment commitment that is only used during a limited time of year, route optimisation technology finds the combination of orders and routes that are not possible for a planner or dispatcher to manually plan. If a delivery operation has 20 trucks in their fleet, for example, route optimisation technology can add to the capacity of up to an additional 3 vehicles.
Maximising delivery productivity during the holiday season also requires flawless execution. Optimised plans provide a great start but, without some way of managing driver performance in route, the results do not always manifest themselves when drivers vary from those plans. This is especially true if temporary drivers are hired during the holiday season and do not have all of the training and experience of the day-to-day operators. Workflow based mobile logistics applications and turn-by-turn navigation improve delivery consistency and consumer satisfaction.
An important by product of capturing execution information is the ability to compare plan-versus-actual performance to see how route optimisation and execution productivity can be further improved. In addition, critical proof-of-delivery (POD) information can be electronically captured to reduce paperwork and, more importantly, reduce billing cycle time and accelerate revenue recognition. The finance organisation can be a direct beneficiary of delivery operations using POD technology as they are equally stretched during the holiday season.
The explosion of low-cost, GPS-enabled smart phone technology is allowing delivery operations to gain a better handle on their delivery performance in real-time and provides additional benefits to their consumers. GPS-enabled tracking allows delivery operations managers to know what their drivers are doing in-route. When combined with smart dispatching capability, delivery estimated-time-of-arrival (ETA) can be constantly calculated and, when a driver deviates from the plan, delivery operations management can be immediately notified. Giving that same real-time delivery status information to consumers can improve service and reduce call centre volumes.
Another productivity killing event is a failed delivery because the consumer is not at home. By combining automated notifications technology with real-time delivery status, consumers can be better reminded that a delivery is going to take place and get ongoing updates of delivery progress to limit the number of failed deliveries.
The increasing trend of consumers demanding greater choice of delivery options and value-added services with the products is more apparent during the holiday season. One way technology is helping to address this challenge is by making delivery appointment booking and value-added services attachment part of the buying process. By making delivery operations ‘consumer facing’, retailers can provide differentiated services, improve revenue and minimise costs.
One positive effect of the holiday season buying spike is that the increased delivery volume can help improve delivery density, lowering the number of miles driven to serve each consumer. However, retailers can do more to improve delivery density using delivery appointment scheduling technology that provides options during the buying process that help increase delivery density, improving productivity and reducing costs.
Increasing consumer delivery expectations, increased pressure on minimising delivery costs and rising holiday delivery volumes as consumers buy more online are making technology more critical to success of retailer delivery operations. Technology is helping to drive the productivity that is paramount during the holiday season as home delivery demand continues to out-strip the available delivery resources. In addition, technology is helping delivery operations become more reliable and streamline the cash-to-cash cycle. However, retailers can look to technology to not only help them deliver more with less, but also to grow sales and provide services that differentiate themselves from their competition. Delivery technology is helping to transition delivery from a back office operation to one that is consumer facing and highly valued by consumers and retail management.
By Chris Jones, Executive Vice President, Marketing and Services, Descartes