The Hidden Cost of Late Delivery—And How to Avoid It

According to more than 60% of consumers, the best thing about a great delivery experience is arriving on time. In business-to-business use cases, that number is probably even higher. And yet, at least as of a few years ago, nearly half of big and bulky deliveries didn’t arrive on time. Even as the industry has improved its track record, that’s still a lot of late deliveries to account for.

Everyone knows what a hassle it can be to deal with deliveries that run late. But in many cases the cost of late delivery can be hard to quantify—and even harder to address. After all, it’s not just the possibility of damaged merchandise, or the likelihood of a costly redelivery attempt, or even the one-time frustration of a customer. It’s the cumulative effect of chaotic deliveries across the board impacting every aspect of your logistics operations.

Thankfully, as last mile delivery technology continues to improve, there are more and more opportunities for delivery organizations to decrease late deliveries and improve the delivery service they offer to customers. 

Why Late Deliveries Are So Common

Before we sketch out the hidden cost of late delivery and some crucial strategies for avoiding them, we need to dig into why this is such a problem in the first place. 

Part of the reason that late deliveries have drawn so much focus is that customer expectations—to no one’s surprise at this point—have become more stringent. Delivering on time within an 8-hour time window is, on balance, pretty easy. But delivering within a 2-hour time window can be significantly harder. The smaller the expected time windows get, the more statistically likely a delivery is to be late. 

At the same time, not all of the blame falls on the customers demanding greater and greater precision. Delivering on time is challenging now for the same reasons it’s always been challenging: predicting travel and service times can be extremely difficult, especially without the right tools. 

Not only do you have to correctly estimate how long it will take your driver to get to the delivery site (which can be highly variable based on traffic), you also have to estimate how long it will take them to park, unload, perform any onsite services, and capture proof of delivery. This can also be highly variable—a HVAC installation is going to require a lot more time on site than a parcel dropoff. 

Accounting for these variables at the stop level when you’re planning routes can be a huge challenge, and if you don’t get it right then your routes only go further off-course throughout the day. 

What’s the Real Cost of Late Delivery?

In a sense, the real cost of late delivery is more late delivery. If the second stop on the route is 30 minutes late because traffic was worse than you expected and the delivery itself was more time consuming, then the next stop is going to be at least 30 minutes late as well in all likelihood. 

And if the driver was late because of a failure of planning—not factoring service time, for instance—then the error is going to compound over future stops until the customers scheduled for the end of the day are all frustrated and empty-handed and the driver is frazzled from constantly running behind. 

Simply put, late deliveries can ruin the best laid delivery plans in a hurry.

That’s not to discount some of the more obvious costs of late delivery:

• Redelivery attempts that effectively double your cost per delivery
• Potential damage to goods that have to spend longer in transit 
• Driver overtime hours on top of what’s already the most costly part of most supply chains
• Last-minute cancellations and a drop in repeat business
• Damage to your brand

The good news here is that frequent late deliveries don’t have to be a fact of life. In fact, there are a lot of concrete steps that delivery organizations can take right now to decrease late deliveries, delight customers, and take control of their delivery operations. 

3 Concrete Ways to Improve Your On-Time Delivery Rates

So how do you actually mitigate late deliveries in last mile logistics? Here are a few ways:

1. Configure Your Service Times

This couldn’t be more critical for businesses that offer a range of different delivery types and items. Simply put, you can codify the differences between over-the-threshold, white glove, installation, and other delivery services into your routing process, so that they’re factored into routes automatically. 

In this way, you can improve your ETAs right off the bat—at the same time that you’re able to more accurately estimate your actual delivery capacity. This means not just better on-time performance, but less driver overtime. 

2. Leverage AI to Improve ETA Accuracy

This is not as daunting—or as cutting-edge—as it sounds. While AI has been catching a lot of headlines recently for all sorts of shiny new applications, AI and machine learning models have been used reliably to improve ETA accuracy for many years. The more data you have from your deliveries, the more you can leverage that data into improved estimates for service time, drive time, traffic and weather impacts, and more. 

The right route optimization solution here can help you achieve 98% accurate ETAs. It can also set you up to take greater, quicker advantage of AI improvements that may be coming down the pike. 

3. Loop in the Customer

The value of on-time delivery mostly comes down to customer perception. They feel that you kept your delivery promise; they got what they paid for, and they’re more likely to work with you again in the future. That’s why managing customer expectations is such an important piece of the puzzle. 

Sure, sending the customer a text the day before the delivery with an updated ETA for the morning doesn’t actually make you more timely. But it has the same effect: the customer is more likely to be prepared to receive the delivery when the truck shows up, which keeps your first-attempt-delivery-success rate high and keeps the potential cost of late delivery down. 

Ultimately, showing up on time is a key part of the delivery experience—but it’s most impactful when it’s integrated into a larger customer delivery experience that’s informative and valuable at every touchpoint. This can include text and email notifications, two-way chat, and live delivery tracking—all equipped with the highly-accurate ETAs that you developed in the previous best practice. 

If that ETA changes, your customers will mostly be perfectly happy, as long as you keep them in the loop and let them know the latest ETA information. 

Fighting the Cost of Late Delivery Is Just the Beginning

Constant late deliveries can be a huge obstacle not just to customer satisfaction, but to optimizing your deliveries over time. If every delivery run is chaotic, you never have the chance to step back and really refine your processes—instead, you’re always playing defense. 

That’s why fighting off late deliveries is just the start. Once you’ve got a last mile delivery process where most things are running smoothly, you can focus on exception management and data-driven decision making to really take control of your processes. The result is smarter, more connected, and more cost-effective logistics overall, which is a win for your team, your customers, and your bottom line.