If you’re a decision maker in the delivery and logistics space, we’re willing to bet that questions about delivery costs are one of the most common things that keep you up at night. Are you getting the most out of your fleet and assets? Are you going to be stuck handling a host of unplanned returns tomorrow? Are your deliveries profitable, or are they ultimately costing your money?
If you don’t have visibility into your last mile logistics costs, there’s every chance that your deliveries are costing you money. Luckily, there are proven strategies that delivery organizations can use to decrease logistics costs, improve performance, and keep customers happier in the process.
Here are the top 7 concrete reasons your deliveries aren’t profitable—and how to turn them around:
1. You’re not confirming deliveries
Confirming deliveries in advance is one of the simplest things that a delivery organization can do to manage delivery costs.
When the customer isn’t at the delivery site to receive their order, you have to take everything back to the distribution center and try again the next day. Not only does that increase your fuel and labor costs to ultimately get that order delivered, it also increases the odds of items getting damaged in transit and having to be thrown out and replaced. Simply put, it’s anathema to profitable deliveries.
There’s no way to completely eliminate unplanned returns, but in our experience simply giving your customers the ability to confirm their delivery times via text or email makes a huge difference. The customers who have confirmed are significantly less likely to miss the delivery, and customers who don’t confirm can get extra outreach to turn up potentially problematic time slots.
The best part is that all it takes is a few text and email blasts.
2. Your ETAs are inaccurate
Of course, confirming delivery time slots with your customers only works if your trucks are actually showing up at the right time. If you’re sending out reminders for 2 pm and your delivery teams aren’t getting to the delivery site till 5:30, you’re still going to have issues. Your delivery completion rates will go down and your costs will go up.
Getting ETAs right can feel complicated: you have to account for traffic, weather, differences in driver speed and skill, variations in service time (e.g. time spent on setups and installations), and more. And if you’re committed to optimizing your route and schedules by hand—or with legacy software—then it can be nearly impossible to get right at scale.
But the right routing software can cut through all of that complexity and put you in a position to improve ETA accuracy right off the bat. This helps you improve delivery performance and decrease the costs that come with missed deliveries and redelivery attempts.
3. Your routes are inefficient
Now that we’re on the topic, let’s dig into the routing question a little bit deeper. How many deliveries are you completing per route per day at the moment? Are you able to handle your current level of demand with your existing fleet, or do you find yourself scrambling to find the 3PLs and contractors you need to get the jobs done?
If your gut feeling is that you could probably be delivering more with your existing fleet capacity, there’s a good chance you’re right—and the issue is the efficiency of your routes. When you’re not able to successfully account for all of the factors that go into
4. Skilled teams are being used for unskilled jobs
This one is a little more in the weeds, but since we’re already talking about issues that route optimization solutions can solve out of the box, it seems fitting to add this here. Obviously, you never want to send a skilled technician (who rakes in much more per hour than delivery team members without specialized skills) to do a simple delivery—or vice versa. You’re setting yourself up to overpay per hour.
This is the sort of thing that doesn’t happen because anyone thinks it’s a good idea—instead, it happens because the complexity of your requirements gets the better of your planning capabilities. The right routing technology will help you ensure that the right resources are being used for the right jobs across the board.
5. You’re not capturing effective proof of delivery
Effective proof of delivery—specifically in the form of digitized pictures, signatures, and notes—are more than just valuable documentation. They also help ensure that you and your drivers get paid for the work that you do. How? By making sure you can’t get blamed for damage that you didn’t cause or have a customer falsely claim that the delivery never took place.
These situations aren’t hypothetical. When it comes to expensive items like furniture and appliances—or items like building materials and pallets of food that are being ordered and received by different people—there will always be a subset of customers who don’t want to pay. When this happens, the only way to realize revenue from the delivery is to have incontrovertible proof of what was delivered and when.
The good news here is that difficulty realizing delivery revenue is an issue for you, the fix is simple: equip your drivers with a mobile app that doesn’t let them mark a job as complete without capturing photographic proof of delivery and automatically uploading it to your system.
6. Flexibility and visibility are not the default
Concepts like flexibility and visibility might seem nebulous, but here we mean something quite concrete: are you able to change plans as conditions change and still stay profitable, and are you able to answer questions about your delivery operations quickly and accurately?
Looked at in this way, it’s easy to see how flexibility and visibility can impact your delivery costs. If a snowstorm is threatening to press down on part of your delivery network, how quickly are you able to reroute, reschedule, and communicate with customers? This is just an example, but it should be illustrative. The quicker you’re able to create and roll out a new plan, the more cost effective your operations will be in the face of disruptions.
It’s the same when it comes to visibility—but, luckily, prioritizing visibility is a crucial first step to ensuring that you can stay flexible when you need to. How do you make that happen? First by leveraging the right delivery and logistics technology, ensuring connectivity between different systems, and digitizing the entire chain of custody from the first mile to the last mile and beyond.
7. Inaccurate (or missing) delivery cost data
One of the absolute keys to keeping delivery costs manageable is to make sure you’re measuring it accurately. Anyone who’s ever tried to game out their cost per delivery or cost per case without the right data at hand can tell you that that’s easier said than done—and that result is that key optimizations wind up on the cutting room floor because there’s no data to support them.
At the end of the day, this is something that businesses can fix by prioritizing visibility and making sure the tools are in place to ensure total transparency into delivery costing from end to end. If you can make that happen, you can set yourself up for data-driven decision-making that drives more cost effective logistics operations over time.
Conclusion
If you’re reading this, there’s every chance that your deliveries are costing more money than they should. But they don’t have to: with the right tools and the right best practices in place, you can reduce delivery costs across the board without sacrificing customer satisfaction.
Want to learn more about what that looks like in practice? Reach out to us today and we’d be happy to walk you through it.
