On-demand Logistics Tops Holiday Wish Lists

Managing the last mile in your company's logistics processes can enable your supply chain to keep pace with the Christmas rush without having to deal with excessive delivery costs that can eat into profit margins.


One simple way to reduce costs and maximize driver routes is to ensure that all addresses are geo-coded and verified prior to the route plan being set. Typically, 10 percent of all orders have bad addresses and, if not dealt with immediately, can result in a driver wasting time trying to find the correct address. Address verification and geo-coding go a long way toward eliminating the problem.

Customer service costs can escalate quickly during the rush season if not managed accordingly. As volumes grow, it becomes increasingly difficult to establish reliable delivery windows a problem that often leads to a person not being at home when drivers arrive at their destination.

With real-time visibility provided by managed logistics, managers and customer service representatives can more accurately pinpoint a driver's location, their delivery schedule and any unexpected changes to provide as narrow a delivery window as possible. This can be supplemented through automated callouts that inform the customer of the delivery window and allow them to change or cancel the order if required. Not only does this reduce the percentage of no shows, it also reduces customer calls to the customer service center. This increased accuracy has proven to reduce no shows from an average of 10 to 2 percent or less, and callout costs to drivers by as much as 85 percent. In addition, customers can look up the delivery status of their order themselves online.

While last-minute changes are a common occurrence during any time of the year, they are even more prevalent during the holiday season. With on-demand logistics services, dispatchers are empowered to access and modify planned routes in real-time. Drivers, in turn, can stay up-to-date through their cell phone or other Web-enabled device. This type of system ensures that dynamic events, such as order status changes, weather delays, vehicle breakdowns or cancellations have a minimal impact on operations. The visibility provided through real-time global positioning systems (GPS) or Web-enabled phones not only helps provide drivers with visibility into scheduling changes, it also provides operations managers with a means to determine who is on schedule, who is ahead, who is delayed and why. It also enables an operator to proactively manage a delivery issue before it even happens. For example, the operator can now deal with a projected late delivery hours before it occurs.

The ROI Factor

Since managed services are offered on a pay-as-you-go subscription basis, organizations of any size can realize a number of financial benefits. Since the service requires no capital cost investment, integration, maintenance fees or hardware, return on investment can be realized within a matter of months. In addition, since set-up requirements are minimal, users can realize immediate gains.

Delivery operations that have transitioned to managed logistics services have reported a 20 percent reduction in delivery costs through improved scheduling. More reliable and accurate delivery scheduling also results in an average 25 percent reduction in redeliveries.

Since geo-coding allows for more efficient and accurate deployment of vehicles, fuel consumption is reduced. Optimized scheduling minimizes wasted trips, reduces time and distance between drops, and eliminates idling time at destinations.

Additional savings can be achieved through reduction in workload for call center personnel. Improved visibility, more accurate scheduled deliveries and up-to-date order status notification can significantly reduce the time spent calling drivers and calling customers back. Customer service resolution time, in fact, can be reduced by at least 50 percent.

Many have also reported up to 15 percent productivity gains through reduction in errors, improved management of service times, maximization of cube utilization and improved routing.

While last mile delivery has long been a challenge in logistics circles, technology has played an instrumental role in bringing affordable solutions to operations of any size. Real-time visibility is no longer exclusive to large-scale operators with substantial IT budgets. Now anyone can keep pace with the Christmas rush without having to deal with excessive delivery costs that can quickly eat into profit margins.

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