Your business needs cost-effective strategies to survive the COVID-19 crisis and prepare for the future. While manufacturing is one area severely impacted by the pandemic, your firm must maintain a highly-efficient delivery service without increasing delivery costs.
As already proven by the 2008/2009 recession crisis, companies that can successfully deploy sustainable cost reduction programs, while sustaining customer experience, will outperform their competition and emerge winners.
This is because efficient and on-time deliveries can boost customer experience. It, in turn, promotes retention and helps businesses enjoy greater exposure. In sharp contrast, poor delivery experience (other factors being equal) will result in a bad reputation, lower retention, plummeting profits, and a shrinking customer base.
So, yes, delivery is highly important, but it is equally important to keep your delivery costs down. Further, Walker Consulting predicted that experience would be a key differentiator in 2020. At the time, there was no pandemic in sight. Looking at the pandemic’s ripple effects on consumer behavior, it is evident that high customer experience is one of the critical factors for survival.
For instance, the COVID-19 has significantly increased not just demand for particular products but transformed expectations. More people today demand same-day deliveries, even with their awareness of the turmoil in international delivery networks. Furthermore, some brands such as GoPuff are already gaining the advantage of a carefully planned delivery service, amidst the COVID-19. Therefore, it is vital to pay close attention to your delivery systems to ensure quality while optimizing costs.
HOW TO MEASURE DELIVERY COSTS
Efficiency begins with accurate measurements. It is impossible to optimize your delivery service without understanding your correct position. While there are other measurements to consider, assessing your TDC is a crucial step.
TDC (Total Delivered Cost) is the measurement of all components of:
- Total manufacturing costs – cost incurred during the manufacturing of the finished and wrapped unit loads to be introduced into the distribution and warehousing chain
- Product Supply Non-manufacturing Experience – Developmental and administrative costs related to material sourcing, design, engineering, and development.
- Finished product logistics – Cost incurred from unit loads transferred to warehousing and distribution chain, right to the last mile delivery.
In simpler terms, Kosansky & Schaefer (2014) defines TDC as “the total delivery cost is the amount of money it takes a company to manufacture and deliver a product.” Therefore, it is about the complete outlook towards the cost of sourcing, producing, and delivering products to customers.
TDC is vital not only to your delivery service but the entire supply chain planning. When computed effectively, it can help eliminate errors and oversights. However, some companies use historical TDC metrics instead of making calculations based on the present and the future.
In times of the COVID-19, which is about the present and future, such erroneous calculations can prove disastrous as they provide room for oversimplified assumptions. Therefore, these brands may accidentally ignore critical TDC components and use average accounting allocations instead of product-specific operational data, further resulting in more issues.
Accurate TDC measurements will ensure that your company identifies and hits its profitability targets. Although there are other KPIs for maximizing profits, TDC can help your company implement accurate pricing strategies to gain a competitive edge.
STRATEGIES TO OPTIMIZE DELIVERY COSTS WHILE MAINTAINING HIGH QUALITY.
Accurate measurement of your company’s delivery costs is a vital step. The next step is to identify the right measures that can reduce costs while ensuring high-quality delivery service. Therefore efficient delivery management is crucial to speed up logistics and transportation operations right up to the last minute delivery.
When the right delivery management solutions are used, it reduces human errors and improves profit margins and customer service. Here are some strategies to ensure efficiency:
1. INTEGRATE ERP AND E-COMMERCE BACK-END SYSTEMS INTO YOUR DELIVERY MANAGEMENT SYSTEM
By substituting manual re-entry of order information for automatic shipping labels production, your company eliminates errors and speeds up handling deliveries. These integrations should also support dangerous goods documents, freight letters, and other sensitive freight documents to increase accuracy.
2. AUTOMATE SHIPPING RULES
Automation can help your warehouse staff manage your shipping according to your shipping policy. Manual methods, on the other hand, place these critical processes in your staff’s hands, and as humans, errors and negligence may abound. By automating shipping rules, you can effectively lower freight costs. This will further help you leverage the carriers’ strengths to select the best shipping methods for your shipments every time.
3. OPTIMIZED DELIVERY ROUTES
In times like this, with an unprecedented logistics slowdown, optimizing delivery routes can help your business maintain its delivery reputation. By optimizing your delivery routes, you are implementing methods to ensure that all deliveries are made using the shortest possible time. However, routine optimization depends on factors such as location, time, driver capacity, distance, and traffic. Therefore, your business must implement the right advanced logistics delivery solutions to pay attention to these factors to solve route challenges and further reduce your delivery costs.
4. REAL-TIME UPDATES
You can also offer a much higher customer experience by providing solutions to track their items in real-time. In today’s age, your customers want to know what’s happening at all times. Real-time awareness of their items’ location will also enhance transparency while directly impacting your last-mile delivery costs. This is because if your customer knows when and where her package will arrive, she will be there to receive it. Therefore, this strategy helps you reduce failed deliveries significantly.
5. DEVELOP A PEOPLE-CENTRIC DELIVERY APPROACH
Besides implementing advanced logistics and delivery solutions, you must also ensure that your delivery experience is optimum. The right way to have a clear view is by taking on the people-centric approach. In this case, you can use Big data, AI, and ML algorithms to help understand customer’s pain points. However, it would help if you also carried out real-time surveys or ask for feedback to identify other challenges and further improve your delivery experience.
6. OUTSOURCING
Using a custom delivery solution for a significant part of your logistics and delivery operations will also help your company enjoy lower shipping costs, increased efficiency, and the convenience of entrusting these critical aspects of your business operations to efficient and skilled professionals. Nevertheless, bear in mind that it is essential to accurately analyze your total delivery cost for the present and the future to achieve the full perks. This ensures that you implement the right delivery solutions that serve your best interests. Fortunately, working with proven brands like DeliverOL allows your brand to harness the benefits of a truly customized and unbeatable delivery service.
Concluding Thoughts
Building a highly efficient delivery solution that meets your customers’ demands in the present while preparing for the future is crucial. However, do bear in mind that short-term responses are not enough. You need to develop delivery solutions for the future carefully. With the right delivery system solution, you can transform optimize costs over the long run. This will, in turn, help your business gain an advantage over your competition, long after the present crisis is history.