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One of the unique challenges of holiday shopping is the large spike in volume of business for most retailers. Peak season, as it is often called, 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 minimizing costs is important in delivery operations, at this time of year maximizing 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 optimization technology. It can provide up to a 15 percent increase in delivery operations productivity by creating the best combination of routes and deliveries that minimize 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 optimization 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 its fleet, for example, route optimization technology can add to the capacity of up to an additional three vehicles.
Maximizing delivery productivity during the holiday season also requires flawless execution. Optimized 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 at-the-stop consumer satisfaction. An important byproduct of capturing execution information is the ability to compare plan versus actual performance to see how route optimization 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 organization 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 dong in-route. When combined with smart dispatching capability, delivery estimated-time-of-arrival 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 center volumes.
Woolworths, the leading grocer in Australia, added a simple ETA button to its consumer mobile app and reduced calls to its call center by 50 percent even though its sales volume was doubling at the same time. 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 minimize costs. Retailers such as John Lewis in the UK offer their consumers multiple delivery widow options (e.g., 7-hour, 4-hour and 2-hour) at the same time and price them accordingly. In addition, installations for items such as large-screen TVs are “one click” options that consumers can easily choose before they check out. The result is that John Lewis has added millions of dollars to its top line as consumers select premium delivery windows and incremental services. Same- and next-day deliveries require close integration between the delivery appointment booking system and GPS tracking of the delivery vehicles. In the case of same-day delivery, real-time communications and tracking of delivery vehicles are critical as they are in constant motion, delivering to consumer homes and picking up goods at retail distribution centers and stores.
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 appointment scheduling technology that provides options during the buying process that help improve productivity and reduce costs. Ocado, a grocer in the UK, highlights delivery times during the ordering process for consumers that have already have deliveries planned in that area. These times are positioned as ecologically friendly since they are close to other deliveries and consume less fuel. A significant number of customers choose them to help the environment, but they are also helping to lower Ocado’s delivery costs.
Increasing consumer delivery expectations, increased pressure on minimizing 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 outstrip 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 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.
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