September 8, 2020
Remember the times when you had to take a whole day off work because your new washing machine was arriving between 9am and 9pm? Then it showed up at 10pm because of delays with no message to let you know. These days, those time margins could mean losing more than a few customers. Now, we all want small time windows, instant notifications in case of changes, and on time, every time deliveries. These new demands create increased costs, growing service requirements and even greater supply chain complexity for businesses. It is therefore very important to find the best and most efficient way to plan deliveries, offering convenient delivery windows to customers without breaking the backs of the fleet.
If we look at any regular third-party logistics (3PL) company, they normally accept next-day delivery orders until a certain cut-off time to have enough time to plan the next day’s routes. This is not the case for an on-demand service in which new orders have to be processed and assigned in (almost) real-time with no future information on the orders that may come in. The overall number and value of customer requests is usually not known beforehand, but becomes available incrementally as orders arrive during the booking process. To guarantee a delivery can be made within a promised time window, retailers have to evaluate the feasibility of all the different time windows. After all customer requests have been accepted, the retailer can then build cost-minimal delivery routes considering the customer’s time window choice.
A complicated process, to say the least. Offering narrow time windows means constant route updates with drivers possibly returning to the same street a number of times during the day. This could lead to frustrated drivers and costs mounting, but the customer will be happy. Sticking to longer time windows means inconvenience to customers, but your fleet is well organised and efficient. But is it really as simple as that? According to research, the majority of customers are still satisfied with wider time windows since narrow time windows are usually more expensive. When making choices between same-day, next-day or even a few days out, most consumers choose for the cheapest option.¹ Only a small number of people are willing to pay a premium for a narrow delivery window. Therefore, there is a place for wide delivery windows, ensuring a more cost effective and efficient experience for the last mile supply chain while still taking the customer wishes into account.
Monetizing delivery windows
By offering long, medium and short time windows with a predetermined cut off time, the customer takes charge of their own needs by arranging their delivery accordingly. By monetizing the time windows, you can cover any mounting costs associated with the disruption in scheduling or services. The shorter the window, the more expensive it becomes, thereby limiting the number of people choosing this service. In this way, different route optimization for the different categories of deliveries is possible, ensuring your operation stays as efficient as possible.
Communication is key
After route optimization communication with customers can start, which is arguably the most important step of all. These days, the expectation is that we will be notified of delivery times, changes that occur, expected delays or any other relevant information that could impact the time we have to spend waiting. By using feasible cut-off times for placed orders and effective route optimization, customers can be alerted to a delivery within a 1-hour or even shorter window. This can apply to not only the highest paying customer but also to customers who chose the longest delivery window, which will come as a surprising bonus. By staying in close contact and providing updates as changes occur, customer engagement and satisfaction increases measurably. Waiting isn’t usually the issue; it’s not knowing why we’re waiting that gets on our nerves.
The bottom line is choice and communication. If you can provide your customer with a number of choices, they retain control of their delivery experience. By backing that up with effective route optimization and delivery management software that send notifications, your business is almost guaranteed to have happy customers and satisfied drivers.
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