Can you build a Delivery Partner Network like Amazon?
Challenge of Last Mile Delivery
Traditional LTL deliveries rely on consolidation to keep delivery costs low. As more customer purchases move from brick-n-mortar stores to online ecommerce, the number of unique stops where merchandise delivery is needed increases exponentially. Unlike fixed LTL routes that deliver to defined store/business locations, last mile delivery locations change daily depending on customer and order schedule. More customers are demanding value added white glove services in addition to package deliveries. According to a 2016 McKinsey survey, last mile can cost up to 50% of the total order delivery cost. Shippers have traditionally relied on parcel services like UPS, Fedex and USPS to tackle last mile delivery. However, as ecommerce volumes increase, parcel carriers are facing difficulties ramping up capacity to meet the service levels required of shippers. To add to that, there is a significant shortage of truck drivers predicted in the United States. According to an ATA report released late last year, U.S. will face a shortage of about 50,000 drivers in 2018. All the factors above make it risky for shippers with increasing last mile delivery volumes to rely solely on traditional parcel carriers.
Alternatives to Parcel Carriers for Last Mile Delivery
In response to increased last mile volumes, national LTL and TL carriers have launched their own last mile delivery services. These carriers are offering last mile services through a series of local agents and partners. Last mile has many challenges that are uniquely local, and therefore local agents/partners are best suited to handle that complexity. Partner-based networks provide flexibility and reduce capital expenses on part of the shipper because the assets are owned by partners. Dialing up capacity is far easier with an established partner program who has defined quality of service expectations. This approach is now validated by Amazon who recently unveiled their Delivery Partner Network. Creating a network of delivery partners allows shippers to focus their efforts on driving sales to their ecommerce businesses while their partners ensure that deliveries meet the service levels expected by their customers.
Managing Partner Delivery Networks
The advantages of partner delivery networks can be sustained if there is a good mechanism to track performance and ensure that deliveries meet end customer requirements. This process can be managed through a technology platform that provides planning and visibility across the entire delivery network. The platform should enable shippers to assign deliveries to the appropriate delivery partner based on capability and availability. Assignments need to be based on routes that can be optimally executed by the delivery partner to meet service levels set by the shipper. Once the orders are assigned to the right partner, the platform can seamlessly engage with the end customers to schedule appointments and keep them apprised of the status of their delivery. The platform needs to enable shippers to track the delivery process and manage any exception that can likely affect the end customer’s delivery experience. For orders involving high touch, the platform should enable getting feedback from the end customer so that the shipper can ensure that service levels are met.
Optimizing Your Delivery Network Execution
nuDeliverIt provides a true network-based technology platform that supports your entire delivery network from shipper to last mile partner to local agents. It can facilitate the process, starting from assigning orders to delivery partners, planning routes to execute deliveries, tracking deliveries as they happen across the network, finally ending with obtaining customer feedback. Additionally, nuDeliverIt provides a way to onboard freelance drivers and expand your delivery network above and beyond the traditional partner network, thus leveraging the power of the crowd.
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